Step (1)- Be aware of the concept of a disruptive innovation
- Disruptive Innovation: It is a process of targeting the demand of the low-end customers (lower cost) and non-consumption customers (new market or new customers) with better offering product and lower selling prices. It will disrupt the market offering by offering more convenient product or a product with an upgraded features with lower selling prices. It consists of low-end and new-market disruptive innovation.
- Incremental innovation: it is the process of targeting the demand of the high-end customers with a better performance of an improved product. It is basically an incremental improvement in an existing product. This is usually ending up with a higher price offering than it used to be.
Step (2)- Develop a product that customers want
- Segmenting the market: Identifying a group of customers that are similar enough demographically and physiographically and the product-idea will appeal to them all. This can be done through collecting and analysing relevant information through researching, observing, interviewing and narrowing options with the right potential customers.
- Customers analysis: After market segment is identified and selected, then deep customer analysis to discover specific details on product-idea is conducted. This analysis will include identifying the jobs (professional, emotional and social), pains and desired gains. The product-idea will be hired to do the job to them and thus the product should be fit to the customer needs.
- Understand target customers: After jobs, pains and desired gains are concluded with prioritization scale, it is then the time to conduct deep understanding and validation of collected data and conclusions. This process can be done as through serious and digging tools, like observing, interviewing and living with target customers to better understand their relevant jobs, pains and gains that compellingly their needs for the product-idea to do the job for them.
- Understand the competition: Then you will need to understand the competition and how the market works. Disruptive product usually comes with full set of values including unique value proposition, low-end price, convenient to use, accessible channels, better fit to satisfy customers’ jobs and pains ..etc. You will need to come up with a market strategy that strengthening the competitive positions as based on priorities set by target customers and to ensure better supply of these propositions to win the market.
- Disruptive business model: Disruptive requires focus on all blocks of business model, including in focus on the right subset customer segment that best fit the product.
- Disruptive product: Think to improve or create a product with unique value propositions that better fit customers’ need and to be solid with lower prices. Go for the non-consumption product (untapped) to enjoy disruptive benefits ( higher penetration rate of market and growing revenues and profits). Finally, you list recommended products (solutions) that best fit to do the jobs for the large group of customers evidenced with sufficient level of data.
Step (3)- Test product-idea for disruptive innovation
A product-idea is tested on two key elements before it is qualified for disruptive innovation. Those elements are the low-end and new-market disruptive product. Tests are carried out through interviewing earlyenvangelists and collecting enough evidences on whether they are seriously willing to buy low-end and new-market disruptive product and solve their pressing problem. Tests are also including collecting information the target customers, the market, the competition and the rest of assumptions for the business model.
- Test an idea for the new-market disruption:
- Is there a large population of people who can’t afford buying or facing capability difficulties to own or use the referenced product? If yes with validating evidences, this a positive sign of disruption.
- Does this target segment need to go through inconvenient or centralized channels to buy the referenced product? If yes with validating evidences, this a positive sign of disruption. This is due to the fact that disruptive innovation is a whole value networking including channels.
- Test an idea for the lower-end disruption:
- Is there a large population of people who can buy the referenced product? If yes with validating evidences, this a positive sign of disruption.
- Can the business model be successful in selling and capturing the market segment? If yes with validating evidences, this a positive sign of disruption. This means that various business model blocks, like customer segmentation, channels, customer relationship, unique value propositions, revenue streams, resources, partnership, key activities and cost structures are all fit and aim at achieving the ultimate objective of lower-end disruption.
- Testing techniques:
- Idea testing will go through three distinctive tests: problem-solution test, product-market test and scalability test.
- Test can be conducted through mainly direct research, observation and interviews with potential customers.
- Test plan should be prepared before implementation and include, list of interviews, questions, criteria of acceptance or rejection and actions plan.
- Testing should be accompanied with a reliable and validated evidences that will support product development and offerings.
- The three leap assumptions are: large group of customers will accept the defined problem, accept the solution and will buy the product.
Step (4)- Choose the right customer segment for your product
- Low-end users: Those subset segment who are hiring your product to do the job for them with fairly to better value propositions and lower price offering. This segment will require a fair-performance product with low-end price offering.
- New-market users: Those subset segment who can afford buying your product or it is becoming more convenient to use. This segment will require a convenient use of a product with low-end price offering.
- Characteristics for attractive customers:
- Long wanted product (compelling reasons to buy).
- Well funded to buy.
- Easy to access.
- Have significant potential to grow.
- Adjacent subset segment is promising and easy to capture.
- Volume and size of beachhead market is viable and with reasonable level of frequent growing.
- Capture the whole or big share of the market.
- Protected from the advancement of competitors.
- Protected from new entrants.
- Attractive to all value chains.
Step (5)- Getting the right business model
- Develop a business model to create and deliver values to customers.
- A business model should be based on assumptions for all the business blocks concerned.
- Validate the business model through interviewing and collecting evidencing data from sample of potential customers (earlyenvangelists).
- Disruptive innovation should lead into a disruptive business model with innovative assumptions and tools to deliver values to customers.
- A business model will include 9 blocks as customer segmentation, channels, customer relationship, unique value propositions, revenue streams, resources, partnership, key activities and cost structures.
- For developing a disruptive product, it should be based on integrated production system with key supplies chain.
Step (6)- Avoid commoditization for your disruptive product
- Commoditization is the process of depletion and obsoleteness of product’s values.
- Commoditization occurs when competitors will outperform commoditized product in terms of value proposition and lower prices.
- De-commoditization (avoiding commoditization) of a product will be achieved if:
- It targets low-end users (low-end user disruptive) or new-market disruptive users.
- Continual improvement of a product in the right anticipated time frame, better fit customers’ desires and expectation and to support competitive position.
- Form an integrated system of procurement with recognized product supplies. This system will provide absorbing cohesion and enable enough room for price bargaining and reduction.
Step (7)- Get your organization capable for the disruptive growth
- Enabling resources: People, physical assets, intellectual properties and capital. Resources must be qualitatively and quantitatively sufficient to support plans for disruptive growth.
- Enabling processes: the way work is performed and controlled. It should be clear, simple, understood by concerned staff, communicated, controlled and continually improved. It should encourage staff for new-growing targets.
- Enabling values (corporate culture): standards by which employees make prioritization, decisions, making business and networking, and communicating with different stakeholders.
- Capability development: Training of staff to develop their capability as for encouraging and performing disruptive innovation.
- Good hiring: organization capability begins from the point of hiring competent staff. Good hiring, that supports disruptive initiatives, will have strong influence in realization of disruptive growth.
- Management of change: the management should have clear vision, plans and tools to manage changes for the various disruptive inputs, such as resources, processes, values, staff hiring, funding, human development plans, planning, execution and implementation. Management should believe and practice management change in anticipating changes and develop plans for improvement and disruptive growth.
Step (8)- Develop a disruptive strategy
- Manage a disruptive business model that will envision and plan how to create and deliver the disruptive values to the right customers.
- Manage the cost structure and come up with a business model that fiercely supporting deliverables for a low-end users.
- Manage values at the organization to enable disruptive innovation.
- Manage processes for discovery-driven planning.
- Select deliberate or emergent strategy tools for managing disruptive issues.
- Manage resources.
- Manage human development schemes.
- Encourage ideation and disruptive thinking.
- Good hiring of staff is always powerful.
- Looking for good funding and not for bad funding. Good funding will avail patience and support for growth and capturing disruptive innovation.
Step (9)- Be a competent executive to lead the new growth
- Resource allocation.
- Create processes and values that support new growth.
- Change management.
- Good hiring of staff.
- Develop strategy and actions plan.
- Motivating corporate culture for disruptive growth.
- Establishing groups for disruptive ideas.
- Managing training for talented staff to join ideation groups.
Written by: Munther Al Dawood
Enterprise Development Services
Inspired by: Christensen, C. 2003. The Innovator’s Solution.