The_Innovators_Dilemma__Clayton

models, such as Camry, Previa, and Lexus, with added features and functionality, creating a vacuum at
the low end of the market into which entrants such as Saturn and Hyundai have entered. Saturn’s
strategy has been to characterize the customer’s entire experience of buying and owning the vehicle as
reliable and convenient, but it, too, judging by recent reports, 15 will soon take its turn moving
upmarket, creating a new vacuum at the low end for even simpler, more convenient transportation.
In all likelihood, therefore, the winning design in the first stages of the electric vehicle race will be
characterized by simplicity and convenience and will be incubated in an emerging value network in
which these attributes are important measures of value. Each of the disruptive technologies studied in
this book has been smaller, simpler, and more convenient than preceding products. Each was initially
used in a new value network in which simplicity and convenience were valued. This was true for
smaller, simpler disk drives; desktop and portable computers; hydraulic backhoes; steel minimills as
opposed to integrated mills; insulin-injecting pens as opposed to syringes. 16
Using these qualities as my guiding principles, I would instruct my design engineers to proceed
according to the following three criteria.
First, this vehicle must be simple, reliable, and convenient. That probably means, for example, that
figuring out a way to recharge its batteries quickly, using the commonly available electrical service,
would be an immutable technological objective.
Second, because no one knows the ultimate market for the product or how it will ultimately be used, we
must design a product platform in which feature, function, and styling changes can be made quickly
and at low cost. Assuming, for example, that the initial customers for electric vehicles will be parents
who buy them for their teenaged children to drive to and from school, friends’ homes, and activities,
the first model would have features and styling appropriate and appealing to teenagers. But, although
we may target this market first, there’s a high probability that our initial concept will prove wrong. So
we’ve got to get the first models done fast and on a shoestring—leaving ample budget to get it right
once feedback from the market starts coming in. 17
Third, we must hit a low price point. Disruptive technologies typically have a lower sticker price per
unit than products that are used in the mainstream, even though their cost in use is often higher. What
enabled the use of disk drives in desktop computers was not just their smaller size; it was their low unit
price, which fit within the overall price points that personal computer makers needed to hit. The price
per megabyte of the smaller disk drives was always higher than for the larger drives. Similarly, in
excavators the price per excavator was lower for the early hydraulic models than for the established
cable-actuated ones, but their total cost per cubic yard of earth moved per hour was much higher.
Accordingly, our electric vehicle must have a lower sticker price than the prevailing price for gasolinepowered
cars, even if the operating cost per mile driven is higher. Customers have a long track record
of paying price premiums for convenience.
Technology Strategy for Disruptive Innovations
Our technology plan cannot call for any technological breakthroughs on the path critical for the
project’s success. Historically, disruptive technologies involve no new technologies; rather, they
consist of components built around proven technologies and put together in a novel product
architecture that offers the customer a set of attributes never before available.
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