The book “Disruption by Design” provides a guide to designing and executing a disruptive business strategy. The author provides a framework of what are the key characteristics of an idea that has a potential to disrupt the industry. 

The first part of the book introduces the disruption concept by summarizing Clay Christensen’s work. The key concepts of disruption as well as the criteria for an idea to have a disruptive potential are outlined. In the second part of the book, the author lays the foundation work on steps needed to design a disruption methodology. The topics include:

• What should my product do?
• Segmentation
• Positioning
• Pricing
• Messaging and
• A disruptive business model

In the last section of the book the author describes the “end game” as well as “what it takes to stay on top?” once you have reached there.

Overall, the ideas presented in this book are in full coherence with the ideas taught in class given that the disruptive innovation is only a subset of any innovative process. As such, the disruptive business model along with other topics discussed in this book are virtually identical with the Business Model Canvas discussed in class.

The premise of this book is that innovative disruption can be predicted and the chances of becoming a disrupter will increase if the techniques outlined in this book are followed.

The author asserts that an innovation will have disruptive potential if the following four conditions are present: 

• ·       An addressable market scarcity
• ·       A unique solution to key jobs customers need to be done that mitigates the scarcity
• ·       The price-to-value ratio is significantly lower than any other solution
• ·       Execution

These points are similar to the lecture notes on how good business ideas generate enough revenue by having a value proposition, critical mass and addressable customers.

Customers buy products or services to do a job. If they do not have a job to do they would not buy any products or services. The most important concept for a start-up company is to determine what Job -To-Be-Done (JTBD) are there and how the product or service will deliver on the task to complete these jobs.

This message is consistent with the idea of focusing on “what value are we delivering to our customers?” instead of “what product or service do we offer?”. This resonates with Guy Kawasaki’s message on the video “Jump to the next Curve”.

The author describes that “Disruptive Innovation” creates shareholder and economic value with a typical market cap growth rates 20 times or more the index averages.

Some successful disruptors are: Facebook, Google, Apple, Twitter, Whole Foods, Netflix, Amazon, Microsoft, Oracle, Starbucks, LinkedIn. Some other companies that were disrupted themselves are: Yahoo, Nintendo, RIM, Best Buy, Myspace, Nokia, and Blockbuster.

There are repeating disruption patterns that have emerged over the years. The author asserts that if you are able to learn and see these patterns, then disruption can be predicted. More importantly, by following these techniques your can design a product that will have a disruptive potential.

Disruptive innovations are innovations that have attributes that are inferior when compared with existing attributes that current customers value. Instead, they bring forth new set of qualities. This means that they compete based on a new set of benefits. These benefits can include simplicity, convenience, accessibility, significantly lower price, or ease of use, but can occasionally include breakout innovations that redefine the product category. For example, iPhone initially was addressed at consumers as it was thought to be less secure and not fit for the business sector, and then later disrupted the business sector against Blackberry.

The author lists two types of disruptions: low-end and new market disruptions. Low-end disruptions occur when the current customers are over-served. This means that the product offering is too complex and not all features are used. As simpler product with a lower cost can disrupt the existing one. For example; less than 10% of MS Word’s capability is used by an average user yet new versions with additional features are introduced. Simpler products with reduced functionality at a dramatically reduced price can disrupt the current product.

On the other end the new market disruptions focus on under-served needs. These disruptions normally tend to have a technological component and at the beginning it is not clear of what their purpose would be. Twitter is an example of new market disruptor.

The author outlines a list of characteristics that define the “Fingerprint of Disruption” as well a list of characteristics that define the anti-Disruption Fingerprint. The concept of the “lean start-up” approach to innovation is compared with being "good enough" and it is almost equivalent of the MVP, or minimum viable product described in class.

The author lists 10 steps to validate if an idea has disruptive potential. The most important ones that we have direct control are:

·       Pricing/cost of production advantage

·       How precisely matched your product is to a job to be done when there are unmet or under-served needs?

·       Whether you can compete against non-consumption

·       How likely it is that incumbents will view you as a competitive threat or not.

The JTBD concept matches very closely with the validation tests that need to be created during the customer discovery phase as discussed in class.

·       Build validation tests and key metrics

·       Run validation tests and measure

·       Learn

·       Reiterate model and hypothesis

·       Repeat until new iterations not required

Job To be Done (JTBD) is the most important predictor of disruption. The author compares the hiring of a “candidate” to do a job with the process of hiring a product to do a job. Conceptually, they both follow the same process because similarly to hiring a person, no one chooses to spend money on a product unless they have a job to get done. Similar to “job description” for hiring a candidate, the author offers steps to analyse and collate a “job description” on hiring a product. Some of the techniques used are face-to-face interviews and seeing in action how the customers deal with current issues.

“Paraphrasing former Harvard professor Ted Levitt, people don’t buy quarter- inch drill bits, they are trying to find a way to get a quarter-inch hole. Conceptually, when we are searching for a product to buy, we are conducting a hiring process to find the candidate who can best satisfy our desire for a quarter-inch hole. And, if there was a better, cheaper, easier, safer, cleaner, or more convenient way to accomplish that goal than a quarter-inch drill bit, that’s what we would choose.”

This is an important lesson to truly dig deep and understand what the customers want and what is their reason for wanting to buy our product. The author illustrates two stories of Febreeze and Ethoca and how they struggled initially with their product launches. It wasn’t until they truly understood the JTBD their customers needed that they finally had a breakthrough.

These stories illustrate the need for a full understanding of JTBD. Particularly for new market entrants and start-ups, finding the right JTBDs is essential to success.

The secret to disruptive segmentation, and successfully growing the pie, is to focus only on the jobs to be done (JTBD) for which your solution is best matched. One of the worst market-entry mistakes you can make, if you are potentially disruptive, is to go after existing mainstream segments where incumbents are strong, unless you have a huge cost advantage and can win on low price alone. Even if you can price below the competitive alternatives, it’s better to initially target segments that incumbents view as undesirable or low-end and are currently un-served.

GrabTool is a company aiming at providing unlimited access of tools to anyone in a membership and subscription basis. The major market segments are households and trades.

GrabTool’s idea to supply tools to anyone may have the potential to be categorized as a low-end disruptive innovation. Currently, there is no direct competitor in this field. People are finding various ways to accomplish their JTBD’s. This solution seems to not be appealing to existing tool rental companies therefore GrabTool would be competing against non-consumption.

GrabTool's challenge would be to truly create a JTBD description or based on the terminology used in class find the pain points that exist and tailor our solution so it will be the best candidate to best match these needs. Once we get enough momentum we can then expand to competitor’s customers. Only then, GrabTool may have the potential to be disruptive in the tool rental/leasing business.

In the next blog, the balance of the discussion topics will include: Positioning, Pricing, Messaging, Disruptive Business Model as well as the “End Game” and “Staying on Top”.

References

Paetz, P. (2014). Disruption by design: How to create products that disrupt and then dominate markets.

Daze, S. (2017). MBA6262 – Lecture Slides