The_Innovators_Dilemma__Clayton

The first step in making this chart involves defining current mainstream market needs and comparing
them with the current capacity of electric vehicles. To measure market needs, I would watch carefully
what customers do, not simply listen to what they say. Watching how customers actually use a product
provides much more reliable information than can be gleaned from a verbal interview or a focus
group. 2 Thus, observations indicate that auto users today require a minimum cruising range (that is, the
distance that can be driven without refueling) of about 125 to 150 miles; most electric vehicles only
offer a minimum cruising range of 50 to 80 miles. Similarly, drivers seem to require cars that accelerate
from 0 to 60 miles per hour in less than 10 seconds (necessary primarily to merge safely into highspeed
traffic from freeway entrance ramps); most electric vehicles take nearly 20 seconds to get there.
And, finally, buyers in the mainstream market demand a wide array of options, but it would be
impossible for electric vehicle manufacturers to offer a similar variety within the small initial unit
volumes that will characterize that business. 3 According to almost any definition of functionality used
for the vertical axis of our proposed chart, the electric vehicle will be deficient compared to a gasolinepowered
car.
This information is not sufficient to characterize electric vehicles as disruptive, however. They will
only be disruptive if we find that they are also on a trajectory of improvement that might someday
make them competitive in parts of the mainstream market. To assess this possibility, we need to project
trajectories measuring the performance improvement demanded in the market versus the performance
improvement that electric vehicle technology may provide. If these trajectories are parallel, then
electric vehicles are unlikely to become factors in the mainstream market; but if the technology will
progress faster than the pace of improvement demanded in the market, then the threat of disruption is
real.
Figure 10.1 shows that the trajectories of performance improvement demanded in the market—whether
measured in terms of required acceleration, cruising range, or top cruising speed—are relatively flat.
This is because traffic laws impose a limit on the usefulness of ever-more-powerful cars, and
demographic, economic, and geographic considerations limit the increase in commuting miles for the
average driver to less than 1 percent per year. 4 At the same time, the performance of electric vehicles is
improving at a faster rate—between 2 and 4 percent per year—suggesting that sustaining technological
advances might indeed carry electric vehicles from their position today, where they cannot compete in
mainstream markets, to a position in the future where they might. 5
In other words, as an automotive company executive, I would worry about the electric vehicle, not just
because it is politically correct to be investing in environmentally friendly technologies, but because
electric vehicles have the smell of a disruptive technology. They can’t be used in mainstream markets;
they offer a set of attributes that is orthogonal to those that command attention in the gasoline-powered
value network; and the technology is moving ahead at a faster rate than the market’s trajectory of need.
Because electric vehicles are not sustaining innovations, however, mainstream automakers naturally
doubt that there is a market for them—another symptom of a disruptive innovation. Consider this
statement by the director of Ford’s electric vehicle program: “The electric Ranger will sell at
approximately $30,000 and have a lead-acid battery that will give it a range of 50 miles . . . . The 1998
electric vehicle will be a difficult sell. The products that will be available will not meet customer
expectations in terms of range, cost or utility.” 6 Indeed, given their present performance along these
parameters, it will be about as easy to sell electric vehicles into the mainstream car market as it was to
sell 5.25-inch disk drives to mainframe computer makers in 1980.
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