disruptive innvoation

8/8/2019 Disruptive Innvoation

http://slidepdf.com/reader/full/disruptive-innvoation 1/24

PADMASHREE DR. D.Y.PATIL UNIVERSITY PADMASHREE DR. D.Y.PATIL UNIVERSITY

DEPARTMENT OF BUSINESSDEPARTMENT OF BUSINESS

MANAGEMENTMANAGEMENT

MBA (IB)MBA (IB)



DISRUPTIVEDISRUPTIVE

INNOVATIONINNOVATION

BY :BY :

NIROSHA NIROSHA

NILADRI NILADRI

JAIDEEP SINGH JAIDEEP SINGH

VARISH VARISH



DisruptiveDisruptive

InnovationInnovationThe theory holds that existing companiesThe theory holds that existing companies

have a high probability of beating entranthave a high probability of beating entrantattackers when the contest is aboutattackers when the contest is about sustaining sustaining innovations. But establishedinnovations. But establishedcompanies almost always lose to attackerscompanies almost always lose to attackers

armed witharmed with disruptivedisruptive innovations”innovations”



Disruptive InnovationDisruptive Innovation

““ Disruptive innovation points to situationsDisruptive innovation points to situations

in which new organizations can usein which new organizations can use

relatively simple, convenient, low-costrelatively simple, convenient, low-costinnovations to create growth and triumphinnovations to create growth and triumph

over powerful incumbents.”over powerful incumbents.”



Disruptive InnovationDisruptive Innovation•Bring a difference value proposition to the market.Bring a difference value proposition to the market.

•Initially under perform established products in mainstreamInitially under perform established products in mainstreammarket.market.

•But, the products improve at a rapid rateBut, the products improve at a rapid rate

•Superior in ways that are not valued by the established market — Superior in ways that are not valued by the established market —

more reliable, easier to use, or cheaper.more reliable, easier to use, or cheaper.



High-end Customer

Low-end Customers

Disruptive Innovation

P e r f o r

m a n c

e

Time



Disruptive InnovationDisruptive Innovation

Established firms often retreat upmarketEstablished firms often retreat upmarket

in the face of disruptive attacksin the face of disruptive attacks

They give up their least valuedThey give up their least valued

customers in pursuit of higher marginscustomers in pursuit of higher margins

Asymmetry of motivation.Asymmetry of motivation.

Disruptive attacker develops skills andDisruptive attacker develops skills andcontinues up market.continues up market.



ypes oypes odisruptivedisruptive

innovations:innovations:Low-End Disruptive InnovationLow-End Disruptive Innovation

New-Market DisruptiveNew-Market Disruptive

InnovationInnovation

L E d Di i



Low-End DisruptiveLow-End Disruptive

InnovationInnovation::

A low-end disruptive innovation addresses customers that areA low-end disruptive innovation addresses customers that are

over served by the market, e.g. by the extra product featuresover served by the market, e.g. by the extra product features

that they rarely use.that they rarely use.

The low-end disruptive innovation uses a low-cost businessThe low-end disruptive innovation uses a low-cost business

model to enter the market.model to enter the market.



Examples of low-endExamples of low-end

disruptive innovations:disruptive innovations:

k i iN M k t Di ti



New-Market DisruptiveNew-Market Disruptive

InnovationInnovation

The new-market disruptive innovation targets non-consumers, rather The new-market disruptive innovation targets non-consumers, rather

than overshot customers.than overshot customers.

New-market disruptive innovations are successful because they New-market disruptive innovations are successful because theyoutperform the established products on a new performance dimension.outperform the established products on a new performance dimension.

They are typically simpler, more convenient or cheaper than the oldThey are typically simpler, more convenient or cheaper than the old

products. products.



Examples of new-marketExamples of new-market

disruptive innovations.disruptive innovations.



Examples of DisruptiveExamples of Disruptive

Tech.Tech.

Sun Microsystems Workstations: disrupted the market for Sun Microsystems Workstations: disrupted the market for

main frame computers.main frame computers.

PCs disrupted the market for workstationsPCs disrupted the market for workstations

Xerox plain paper copier: disrupted the market for offsetXerox plain paper copier: disrupted the market for offset

printing. printing.

Cannon’s desktop photocopiers: disrupted Xerox’s highCannon’s desktop photocopiers: disrupted Xerox’s high

speed photo copying market.speed photo copying market.



TVS Kirana ComputersTVS Kirana Computers

For Kirana stores with sales of Rs.100,000 per monthFor Kirana stores with sales of Rs.100,000 per month

A rugged PCA rugged PC

No out right purchase of software or hardware: Pay Rs.2,500.00 No out right purchase of software or hardware: Pay Rs.2,500.00

per month. per month.

Software for accounting, inventory, etc.Software for accounting, inventory, etc.

In 180 days there was a 3.9% increase in profitIn 180 days there was a 3.9% increase in profit



Disruption in Progress Today

Consumer electronics:

Cellular phones and home gaming systems are continuing their assault on other industries.

Cameras on cellular phones have gotten so good so quickly

that they will soon affect the sales of stand alone digitalcameras.

Telecommunications:

A technology known as Voice over Internet Protocol now

allows companies to offer cheap, customizable telephonyservice over the Internet. Vonage and Skype are the leadingstandalone providers



A Classic Case:

The Steel Industry

Steel minimills are a classic example of a disruption that

transformed an existing industry with a cheaper solution. At first,

minimill could only sell to the least demanding customers at the

very bottom of the market.

The integrated mills were happy to get rid of these customers since

they produced very little profit. Over the next two decades,

minimills moved progressively up-market until they pinned

integrated steel mills to the very highest market tiers, driving many

historical market leaders to bankruptcy



CASE STUDYCASE STUDY

How Apple Failed to Deliver "Disruptive How Apple Failed to Deliver "Disruptive Innovation" Innovation"

http://posterous.marcopuccia.com/how-apple-failed-to-deliver-disruptive-innova



What do Apple's greatest innovations have in common? What makes SteveWhat do Apple's greatest innovations have in common? What makes SteveJobs' product unveilings so exciting? The answer is "disruptiveJobs' product unveilings so exciting? The answer is "disruptiveinnovation."innovation."

To keep a check on the piracy , Apple stepped in and created a "disruptive"To keep a check on the piracy , Apple stepped in and created a "disruptive"new market for music with the iTunes store and the iPod.new market for music with the iTunes store and the iPod.

Prior to the introduction of the iPhone, the smartphone market was beingPrior to the introduction of the iPhone, the smartphone market was being poorly (if not blindly) led by RIM and the Blackberry. Apple introduced poorly (if not blindly) led by RIM and the Blackberry. Apple introducedtechnology in the iPhone that completely caught the market off guard andtechnology in the iPhone that completely caught the market off guard and

proved itself well ahead of the curve proved itself well ahead of the curve!!



Today, the "old media" market -- books, newspapers,Today, the "old media" market -- books, newspapers,

and magazines -- is facing a similar period of and magazines -- is facing a similar period of

transition experienced by the music industries. Withtransition experienced by the music industries. Withthe launch of the "iPad", Apple had an opportunity tothe launch of the "iPad", Apple had an opportunity to

bring clarity and leadership in defining the future of bring clarity and leadership in defining the future of

"old media"."old media".

Unfortunately, Apple lazily introduced a 10 inch iPodUnfortunately, Apple lazily introduced a 10 inch iPod

touch with a few new programs. They decided to leavetouch with a few new programs. They decided to leave

the creativity and innovation to app developers --the creativity and innovation to app developers --offering no guidance or leadership whatsoever.offering no guidance or leadership whatsoever.



ReferencesReferences

C. K. Prahalad and Allen Hammond, Serving the World’sC. K. Prahalad and Allen Hammond, Serving the World’s

Poor, Profitably,Poor, Profitably, Harvard Business Review, September 2002 Harvard Business Review, September 2002

http://www.moneycontrol.com/promos/prahlad.htmlhttp://www.moneycontrol.com/promos/prahlad.html

http://www.moneycontrol.com/promos/prahlad.html





THANK THANK YOU YOU

disruptive innvoation

Documents