Having decided that electric vehicles are a potentially disruptive technology, my next challenge wouldbe to define a marketing strategy that could lead my company to a legitimate, unsubsidized market inwhich electric cars might first be used. In formulating this marketing strategy, I would apply threefindings from earlier chapters in this book.First, I would acknowledge that, by definition, electric vehicles cannot initially be used in mainstreamapplications because they do not satisfy the basic performance requirements of that market. I wouldtherefore be sure that everybody having anything to do with my program understands this point:Although we don’t have a clue about where the market is, the one thing we know for certain is that itisn’t in an established automobile market segment. Ironically, I would expect most automakers to focusprecisely and myopically on the mainstream market because of the principle of resource dependenceand the principle that small markets don’t solve the growth and profit needs of big companies. I wouldnot, therefore, follow the lead of other automakers in my search for customers, because I wouldrecognize that their instincts and capabilities are likely to be trained on the wrong target. 7Nonetheless, my task is to find a market in which the vehicles can be used, because the early entrantsinto disruptive technology markets develop capabilities that constitute strong advantages over laterentrants. They’re the ones that, from a profitable business base in this beachhead market, will mostsuccessfully throw impetus behind the sustaining innovations required to move the disruptivetechnology upmarket, toward the mainstream. Holding back from the market, waiting for laboratoryresearchers to develop a breakthrough battery technology, for example, is the path of least resistancefor managers. But this strategy has rarely proven to be a viable route to success with a disruptiveinnovation.Historically, as we have seen, the very attributes that make disruptive technologies uncompetitive inmainstream markets actually count as positive attributes in their emerging value network. In diskdrives, the smallness of 5.25-inch models made them unusable in large computers but very useful onthe desktop. While the small bucket capacity and short reach of early hydraulic excavators made themuseless in general excavation, their ability to dig precise, narrow trenches made them useful inresidential construction. Odd as it sounds, therefore, I would direct my marketers to focus onuncovering somewhere a group of buyers who have an undiscovered need for a vehicle that acceleratesrelatively slowly and can’t be driven farther than 100 miles!The second point on which I would base my marketing approach is that no one can learn from marketresearch what the early market(s) for electric vehicles will be. I can hire consultants, but the only thingI can know for sure is that their findings will be wrong. Nor can customers tell me whether or how theymight use electric vehicles, because they will discover how they might use the products at the sametime as we discover it—just as Honda’s Supercub opened an unforeseen new application formotorbiking. The only useful information about the market will be what I create through expeditionsinto the market, through testing and probing, trial and error, by selling real products to real people whopay real money. 8 Government mandates, incidentally, are likely to distort rather than solve the problemof finding a market. I would, therefore, force my organization to live by its wits rather than to rely oncapricious subsidies or non-economic–based California regulation to fuel my business.The third point is that my business plan must be a plan for learning, not one for executing apreconceived strategy. Although I will do my best to hit the right market with the right product and theright strategy the first time out, there is a high probability that a better direction will emerge as thebusiness heads toward its initial target. I must therefore plan to be wrong and to learn what is right asfast as possible. 9 I cannot spend all of my resources or all of my organizational credibility on an all-or-162
nothing first-time bet, as Apple did with its Newton or Hewlett-Packard did with its Kittyhawk. I needto conserve resources to get it right on the second or third try.These three concepts would constitute the foundation of my marketing strategy.Potential Markets: Some SpeculationWhat might emerge as the initial value network for electric vehicles? Again, though it is impossible topredict, it almost surely will be one in which the weaknesses of the electric vehicle will be seen asstrengths. One of my students has suggested that the parents of high school students, who buy theirchildren cars for basic transportation to and from school, friends’ homes, and school events, mightconstitute a fertile market for electric vehicles. 10 Given the option, these parents might see the productsimplicity, slow acceleration, and limited driving range of electric vehicles as very desirable attributesfor their teenagers’ cars—especially if they were styled with teenagers in mind. Given the rightmarketing approach, who knows what might happen? An earlier generation met a lot of nice people ontheir Hondas.Another possible early market might be taxis or small-parcel delivery vehicles destined for thegrowing, crowded, noisy, polluted cities of Southeast Asia. Vehicles can sit on Bangkok’s roads allday, mostly idling in traffic jams and never accelerating above 30 miles per hour. Electric motorswould not need to run and hence would not drain the battery while idling. The maneuverability andease of parking of these small vehicles would be additional attractions.These or similar market ideas, whether or not they ultimately prove viable, are at least consistent withthe way disruptive technologies develop and emerge.How Are Today’s Automobile Companies Marketing Electric Vehicles?The strategy proposed here for finding and defining the initial market for electric vehicles stands instark contrast to the marketing approaches being used by today’s major automakers, each of which isstruggling to sell electric vehicles into its mainstream market in the time-honored tradition ofestablished firms mishandling disruptive technologies. Consider this statement made in 1995 byWilliam Glaub, Chrysler general sales manager, discussing his company’s planned offering for 1998. 11Chrysler Corporation is preparing to provide an electric powered version of our slick new minivan intime for the 1998 model year. After an in-depth study of the option between a purpose-built vehicle andmodification of an existing platform, the choice of the minivan to use as an electric powered platform,in retrospect, is an obvious best choice for us. Our experience shows that fleets will likely be the bestopportunity to move any number of these vehicles . . . . The problem that we face is not in creating anattractive package. The new minivan is an attractive package. The problem is that sufficient energystorage capacity is not available on board the vehicle. 12To position its offering in the mainstream market, Chrysler has had to pack its minivan with 1,600pounds of batteries. This, of course, makes its acceleration much slower, its driving range shorter, and163
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TheInnovator’sDilemmaWhen New Tec
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ContentsIn GratitudeIntroductionPAR
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Clayton M. ChristensenHarvard Busin
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Digital Equipment Corporation creat
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they lose their positions of leader
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Disruptive Technologies versus Rati
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understand what has caused those ci
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Chapter 7 discusses a different app
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But the electric car is a disruptiv
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Part OneWHY GREAT COMPANIESCAN FAIL
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was the size of a large refrigerato
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To test this hypothesis, I assemble
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Figure 1.5 describes a sustaining t
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Source: Data are from various issue
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Between 1978 and 1980, several entr
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The 3.5-inch drive was first develo
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Figure 1.8 Leadership of Entrant Fi
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Rigid Disk Drive Industry: A Histor
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CHAPTER TWOValue Networks and theIm
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toward sustaining innovations and a
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how each value network exhibits a v
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structure. Research, engineering, a
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Figure 2.5 The Conventional Technol
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firms’ decision-making processes
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annually introduced as a percentage
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ecause they have no moving parts, t
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Figure 2.7 Improvements in Areal De
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IMPLICATIONS OF THE VALUE NETWORK F
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esident in companies today result f
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CHAPTER THREEDisruptive Technologic
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Source: Data are from the Historica
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Because their capacity was so small
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was thus a hybrid of the two techno
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its archives, and Toth and Haddock
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CHAPTER FOURWhat Goes Up, Can’t G
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challenges of their competitors. Gr
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organization’s middle managers pl
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Managers in disk drive companies we
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Minimill steel making first became
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Once their position in the market f
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Indiana, in 1989, and constructed a
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Part TwoMANAGING DISRUPTIVETECHNOLO
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The sum of these studies is that wh
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want? One option is to convince eve
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engineering workstations, and has a
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those laws, people flew quite succe
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The first discount store was Korvet
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expansion in the regular variety st
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laser jet division is headed, will
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CHAPTER SIXMatch the Size of theOrg
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What benefit, if any, did leadershi
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Source: Data are from various issue
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Finally, there is substantial evide
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Because emerging markets are small
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