This framework is developed by a team of former McKinsey and Big 4 consultants. The presentation follows the headline-body-bumper slide format used by global consulting firms.
This product (Disruptive Innovation Primer) is a 16-slide PPT PowerPoint presentation slide deck (PPT), which you can download immediately upon purchase.
Disruptive Innovation, a concept pioneered by Clayton Christensen, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.
In his book, "The Innovator's Dilemma," Christensen showed that time and again almost all the organizations that have "died" or been displaced from their industries could see the disruption coming, but did nothing until it was too late.
Most good companies are on a path of sustaining innovations by catering to their most profitable customers. This leaves them open for disruptive technologies. This is because the established companies are designed to maximize profits through sustaining innovations.
When Disruptive Innovations emerge, established companies are unable to react quickly enough. They almost always go up-market rather than to defend these new or low-end markets, and ultimately the disruptive innovation improves, steals more market share, and replaces them.
Companies tend to innovate faster than their customers' needs evolve. Thus, they produce offerings too sophisticated, too expensive, and too complicated for many customers.
This presentation delves into the core elements of Disruptive Innovation, breaking down the model into digestible components. It highlights how incumbents often fail to respond effectively to disruptive threats, despite having the necessary capabilities. The PPT provides a nuanced understanding of why established companies are unable to defend against low-end market entrants, ultimately leading to their displacement.
The primer also outlines the limitations of the Disruptive Innovation model, emphasizing the need for a separate strategy process and a deep understanding of customer needs. It includes real-world examples of disrupted markets, offering valuable insights for executives aiming to navigate and leverage disruptive forces in their industries.
This PPT slide outlines 4 critical elements of the theory of Disruptive Innovation, a concept popularized by Clayton Christensen. Each element is visually represented in a puzzle format, emphasizing their interconnectedness.
The first element highlights that incumbents are on a continuous path of innovation. This suggests that established companies often focus on refining their existing products and services, which can lead to complacency. The second element points out that the pace of sustaining innovation can sometimes exceed customer needs. This indicates a potential disconnect where companies may innovate in ways that do not align with what customers actually want or require.
The third element states that incumbents possess the capability to respond to disruptive changes, but often fail to do so effectively. This reflects a common scenario where organizations have the resources and knowledge to adapt, but struggle with execution or decision-making. The fourth element illustrates that as a result of disruption, incumbents may flounder. This can lead to a loss of market share or relevance if they do not pivot in response to emerging threats.
The slide also hints at additional factors that may influence disruptive innovation, suggesting that the model is not exhaustive. This could imply that external variables, such as market dynamics or consumer behavior shifts, also play a significant role. Understanding these elements is crucial for any organization looking to navigate the complexities of innovation and market disruption effectively.
This PPT slide presents a clear comparison between disruptors and their corresponding disruptees across various industries. On the left, the disruptors include personal computers, mini mills, cellular phones, community colleges, discount retailers, and retail medical clinics. Each of these innovations has fundamentally altered the market dynamics of their respective sectors. For instance, personal computers have largely replaced mainframe and mini computers, while cellular phones have rendered fixed line telephony obsolete.
The right side of the slide lists the disruptees, which are traditional business models or services that have been significantly impacted by these innovations. Integrated steel mills, four-year colleges, full-service department stores, and traditional doctor’s offices represent the older paradigms that have struggled to compete against the more agile and cost-effective disruptors.
The bottom section outlines characteristics common to disruptive businesses. These include lower gross margins and smaller target markets, which may not initially attract attention from larger players. However, their simpler offerings often appeal to underserved segments, allowing them to gain traction and eventually challenge established competitors.
This slide serves as a vital resource for understanding how innovation reshapes industries. It emphasizes the importance of recognizing emerging trends and adapting strategies accordingly. For decision-makers, the insights provided here can inform strategic planning and investment decisions, ensuring that organizations remain relevant in a rapidly evolving market landscape.
This PPT slide outlines 3 primary limitations associated with the model of Disruptive Innovation. Each limitation is presented in a structured format, emphasizing the need for a nuanced understanding of the innovation process.
The first point highlights that Disruptive Innovation necessitates a distinct strategic process. This process should be emergent, focusing on unanticipated opportunities and challenges rather than being strictly planned. It suggests that successful innovation relies on a deep understanding of what works and what doesn't, which can often be unpredictable.
The second limitation stresses the importance of understanding the underlying aims of potential customers. Rather than merely designing products based on existing customer behaviors, innovators should delve into what people genuinely need. This insight is crucial, yet it is often difficult to ascertain. The implication here is that a surface-level understanding of customer preferences may lead to missed opportunities.
The third point addresses the financial aspect of disruptive businesses. It notes that these ventures typically cannot generate significant profits quickly. This is attributed to their focus on new markets or the lower end of existing markets, which inherently limits immediate profitability.
The concluding remark suggests that venture capitalists are becoming increasingly impatient with businesses that do not deliver quick returns. This impatience could influence funding decisions and the overall viability of disruptive innovation efforts.
In summary, the slide serves as a cautionary note for executives considering disruptive innovation strategies, emphasizing the need for a robust understanding of both customer needs and the financial realities of such ventures.
This PPT slide outlines 2 critical elements of disruptive innovation: the trajectory of improvement by incumbents and the pace at which sustaining innovation exceeds customer needs.
The first element emphasizes that in every market, established companies follow a distinct trajectory of innovation. This trajectory is marked by year-over-year improvements that are typically incremental. For instance, auto manufacturers enhance their products by improving aspects like engine horsepower or torque. Good management practices focus on creating superior products aimed at higher profit margins, targeting customers who are not yet satisfied with existing offerings.
The second element highlights a crucial insight: the speed of sustaining innovation often surpasses the ability of customers to fully utilize new features or improvements. This disconnect can lead to a situation where products designed for mainstream customers exceed the actual needs of those customers. The example given from the 1983 computer industry illustrates this point well. Early personal computer users, primarily typists, struggled to keep pace with the rapid advancements in processing power, such as the introduction of the Intel 286 chip.
These elements suggest that while innovation is essential, there is a risk of overshooting customer expectations and needs. Companies must be mindful of this gap to ensure that their innovations align with what customers can realistically adopt and benefit from. Understanding these dynamics is vital for any organization looking to navigate the complexities of market demands and technological advancements effectively.
This framework is developed by a team of former McKinsey and Big 4 consultants. The presentation follows the headline-body-bumper slide format used by global consulting firms.
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