The_Innovators_Dilemma__Clayton

its braking distance longer than other available gasoline-powered automobiles. Because of the way
Chrysler has positioned its electric vehicle, industry analysts naturally compare it to gasoline-powered
minivans, using the metrics paramount in the mainstream value network. At an estimated cost of
$100,000 (compared with $22,000 for the gasoline-powered model), nobody in their right mind would
consider buying Chrysler’s product.
Chrysler’s marketers are, naturally enough, very pessimistic about their ability to sell any electric
minivans in California, despite the government’s mandate that they do so. William Glaub, for example,
continued the remarks cited above with the following observation:
Markets are developed with fine products that customers desire to own. No salesman can take marginal
product into the marketplace and have any hope of establishing a sustainable consumer base.
Consumers will not be forced into a purchase that they do not want. Mandates will not work in a
consumer-driven, free market economy. For electric vehicles to find a place in the market, respectable
products comparable to today’s gasoline-powered cars must be available. 13
Chrysler’s conclusion is absolutely correct, given the way its marketers have framed their challenge. 14
Mainstream customers can never use a disruptive technology at its outset.
WHAT SHOULD BE OUR PRODUCT, TECHNOLOGY, AND DISTRIBUTION
STRATEGIES?
Product Development for Disruptive Innovations
Guiding my engineers in designing our initial electric vehicle will be a challenge, because of the classic
chicken-and-egg problem: Without a market, there is no obvious or reliable source of customer input;
without a product that addresses customers’ needs, there can be no market. How can we design a
product in such a vacuum? Fortunately, the principles described in this book give us some help.
The most valuable guidance comes from chapter 9, which indicated that the basis of competition will
change over a product’s life cycle and that the cycle of evolution itself is driven by the phenomenon of
performance oversupply, that is, the condition in which the performance provided by a technology
exceeds the actual needs of the market. Historically, performance oversupply opens the door for
simpler, less expensive, and more convenient—and almost always disruptive—technologies to enter.
Performance oversupply indeed seems to have occurred in autos. There are practical limits to the size
of auto bodies and engines, to the value of going from 0 to 60 in fewer seconds, and to the consumer’s
ability to cope with overchoice in available options. Thus, we can safely predict that the basis of
product competition and customer choice will shift away from these measures of functionality toward
other attributes, such as reliability and convenience. This is borne out by the nature of the most
successful entrants into the North American market during the past thirty years; they have succeeded
not because they introduced products with superior functionality, but because they competed on the
basis of reliability and convenience.
Toyota, for example, entered the U.S. market with its simple, reliable Corona, establishing a low-end
market position. Then, consistent with the inexorable attraction to migrate upmarket, Toyota introduced
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