ToyotaThe future is .

Q1Is Toyota developing

a “Disruptive Technology”?

disruptive technology[dis-ruhp-tiv tek-nol-uh-jee] n.

Introduction to a set of very different package of attributes from the ones mainstream customers historically value, and they are often perform far worse along one or two dimensions that are particularly important to those customers (Bower & Christensen, 1995, p. 45).

disruptive technology

radically different

from what mainstream customers

want

performsworsein whatmainstreamcustomerswant

Characteristicsof DisruptiveTechnology

A.

Simpler, cheaper, lower performance

Characteristic #1

Generally promise lower margins, not higher profits

Characteristic #2

Characteristic #3

Does not appeal/cater to the most profitable customers

First commercialized in emerging or insignificant markets

Characteristic #4

Characteristic #5

Tends to be rejected by mainstream players

Performance attributes that existing customers do value improve at such a rapid rate that the new technology can later invade those established markets

Characteristic #6

Any market research on the technology is likely to be incorrect

Characteristic #7

rejectedSimpler

lower margins

not most profitable customers

insignificant marketslater invade

incorrect

rapid rate

B.Characteristics of

Toyota’s Technology

Simpler, cheaper, lower performance

Characteristic #1

Simpler, cheaper, lower performanceCharacteristic #1

Shortened product cycle time.30% faster than its competitors

Federal tax incentive + potential savings on gas

2004 Prius100 miles/hr0 to 60mph in 12sCompetitors do 0-60mph in 10s

o

ox

Generally promise lower margins, not higher profits

Characteristic #2

Lower marginsCharacteristic #2

Initial losses: US$20,000/carNormal cars: 8% profit margin

Does not appeal/cater to the most profitable customers

Characteristic #3

Does not appeal/cater to the most profitable customers

Characteristic #3

Niche market

SingleGeeky 51 year old Female

First commercialized in emerging or insignificant markets

Characteristic #4

First commercialized in insignificant marketsCharacteristic #4

Eco-consumers

Characteristic #5

Tends to be rejected by mainstream players

Characteristic #5 Tends to be rejected by mainstream players

v.+

Performance attributes that existing customers do value improve at such a rapid rate that the new technology can later invade those established markets

Characteristic #6

Performance attributes that existing customers do value improve at such a rapid rate that the new technology can later invade those established markets

Characteristic #6

Any market research on the technology is likely to be incorrect

Characteristic #7

Any market research on the technology is likely to be incorrect

Characteristic #7

No clue about the market

Tendency to focus on the mainstream market

Hitting wrong target

Q1Is Toyota developing

a “Disruptive Technology”?

Q1Yup.

Q2

Do you agree with Toyota’s commercialization

approach?

Marketing

#1

trends:laws +

environmental movement

consumer market

Market Research

$50m budgetSaatchi & Saatchi

Advertising

campaign focused on early adopters fetched Oscar celebs

spread virally

media exposure

Culture

#2

flexible and fast

Quick response to changing market

demands

Smaller factories

Just-in-time production system

Infrastructure

#3

Support

Warranty

3 years of standard coverage + 8 years of hybrid-related component coverage

Trained technicians

Quality assurance Liberty to stop production as necessary

Q2

Do you agree with Toyota’s commercialization

approach?

Q2

Yeah.

To exploit disruptive technology, focus on customers’ future needs, not current desires.

Food for thought

Group

5DominicMichelleMichael

Boberg, E. (2004). Common Sense Not Required. Retrieved September 7, 2010, from http://www.angelfire.com/mech/evbo/prius.html

Christensen, C. M. (2000). The Innovator's Dilemma. Harvard Business School Press.Danneels, E. (2004). Disruptive Technology Reconsidered: A Critique and Research Agenda. The Journal of Product Innovation Management, 246-258.

LaMonica, M. (2008, May 20). Electric cars: iPhones of the auto industry? Retrieved September 7, 2010, from CNet News: http://news.cnet.com/8301-11128_3-9945899-54.html

Masaru Yarime, H. S. (2008). The strategies of the Japanese auto industry in developing hybrid and fuel-cell vehicles. Making choices about hydrogen: Transport issues for developing countries, pp. 193-217.

O'Donnell, P. (2010, January 14). A surge in electric cars. Retrieved September 7, 2010, from EuropeanVoice.com: http://www.europeanvoice.com/article/imported/a-surge-in-electric-cars/66868.aspx

Pollack, A. (2000, November 19). BEHIND THE WHEEL/Toyota Prius; It's Easier to Be Green. Retrieved September 7, 2010, from New York Times: http://www.nytimes.com/2000/11/19/automobiles/behind-the-wheel-toyota-prius-it-s-easier-to-be-green.html

Wright Investors' Services. (2008). A Wright Investors' Service Research Report: Toyota Motor Corporation. CT: Wright Investors' Services.

Bibliography