Summary : The Innovator’s Solution – Clayton Christensen & Michael Raynor

Be patient about growth
To adequately fund your disruptive business idea, you’ll need to also keep organically growing the other parts of your business. The better your rate of corporate growth, the better equipped you are to tackle generating new growth and the more patient you can afford to be. If your boss consistently talks about growing very big very fast, that should raise a red flag. It suggests there is an attempt being made to force a disruptive technology into an established market – which never works. If you sense this is what the management are thinking, don’t take the job, because you’ll just be setting yourself up for failure.

business venture will come off the rails before it even leaves the gate.
Find new line managers
The managers who have delivered the best results for you in the past will be the least likely to be able to deliver success in your new-growth business. Therefore, you effectively have to force yourself to distrust those who have earned your trust in the past. Instead, look for new managers who are problem solvers. Find people who have grappled with comparable challenges in the past, and trust their ability to learn whatever is required to succeed with the new products and services.

Live with ambiguity
Realize that in the early years of your new business venture, it won’t be possible to forecast what the best strategy is with any degree of certainty. Therefore, avoid investing in any strategy until there is quantitative data which shows that it works. Do all you can to accelerate the emergence of a viable strategy, but stay flexible until such time as empirical data becomes available.

Forget about “educating” the customer
Never develop a product that will require you to educate the customer before they can appreciate the benefits offered. Instead, find a way to help customers do what they are already trying to do more inexpensively and more conveniently. You don’t have enough resources to educate the customers so they will know to buy from you.

Segment by customer utility
Instead of segmenting the market by your current organizational structure or by conventional measures (price points, demographics, product type), try using a criteria that mirrors the jobs the customer is trying to get done. By providing alternatives to the one-size-fits-all approach your established competitors are presently using, you may discover there are untapped markets available which nobody else has ever thought to target and serve. Don’t just think about product attributes but focus on what the customer actually wants to achieve by buying.

Be impatient to make a profit
If someone tells you that you should be prepared to endure many years of substantial losses before a new business will become profitable, raise a red flag. This type of thinking suggests you’re attempting to inject a disruptive technology into an established market. In a disruptive initiative, the profits will usually flow fairly rapidly or else never at all. Patiently enduring years of losses is the wrong approach because it suggests the development team is actually attempting to execute the wrong strategy. Leave development projects that require years of massive investment to more established companies. Instead, insist that your disruption strategy be validated by the generation of operating profits as soon as possible. That will inject a healthy dose of reality into what’s happening.

Think competencies of the future
If your product development team seems more preoccupied with meeting industry standards, outsourcing deals and partnering arrangements, raise a red flag. Truly disruptive products and services will not be welcomed by the established companies and established market participants with open arms. Therefore, either your product or service is not good enough yet to stand on its own two feet, or your development team are clinging tenaciously to the competencies which worked in the past rather than those which will be important in the future. Get back to focusing on what the customer needs.

Compete against non-consumption
Don’t try and persuade customers to swap from another product to yours. Instead, target the non-consumers. If you can come up with a simple yet effective product for new customers who have nothing at present, it becomes very easy and inexpensive to market to them. Develop new products that will expand the customer pool rather than attempting to win market share from the incumbents.

Always target low-end disruption
If there are no non-consumers you can identify, look at the low end of the market. See whether you can make a decent profit by offering a stripped down version without all the functionality of the full version at a discount price. If you can’t develop a business model to make this approach attractive, don’t invest.

Focus on resources, processes & values
Always ask for the answers to three key questions before you choose the right organizational home and organizational structure:
Do we have the resources to succeed?
Will our business processes facilitate what needs to be done?
Will our values or company culture allow people to set helpful priorities?
Until you can answer these three questions appropriately, don’t proceed with the new business venture.