“Competitive battles”Christensen

Munir MandviwallaFox School of Business

Temple University

Companies

Consumers

Signals of change

Competitive battles

Non-consumers / Not consuming

• Change• Simple• Increase access• Increase ability• Reduce financial barrier• Reduce skill barrier• Easily• Effectively

• Signals• Growth rate• Specific segments

(college students!)• Product or service

delivery chain• RELATIVE low price

• How• Convenience• Customization• Lower price

• Leads to: New market disruptive innovation

Undershot

• Change• Incremental• More radical

• Signals• Consumer frustration• Negative reviews• Willingness to pay higher

prices• Prosperity of niche

integrators• Specialists struggle

• How – existing customers• Performance - Reliability• Performance -

Functionality• Integration - need it for

radical• Compatibility• Interoperability• Legacy

• Leads to: Sustaining up-market (radical or incremental innovation)

Overshot

• Change• Basis for competition• Make the product “less

good”• Commoditize

• Signals• Decreasing prices over

time (refusal to pay for more)

• Features not used• Complaints about

‘complicated’• How• Value chain• Convenience• Customization• Low prices

• Ease of use (flexible and convenience, customizability, price)

• Leads to• Low-end disruptions (convenience/price)

• Specialists displace integrated players (need modularity)

• Standards based competition

Signals of change

Source: Christensen, C., Anthony, S., and Roth, E. “Seeing What’s Next: Using the Theories of Innovation to Predict Industry Change.” Harvard Business School Press, 2006, p.2.

Law of gravity (profit)Move up-market

Serve more profitable customers who are willing to

pay higher

Low - cost

Differentiation

The cycle continues

Incumbents

New firms

Resources (do they have or can they

get)

Processes(are they any

good)

Values (Can they seize the

opportunity)

How do you analyze the above?

1. Entrants enter behind a shield of asymmetric motivation; early incumbent response leads to cramming

2. Entrants grow and improve; incumbents chose flight

3. Entrants utilize the sword of asymmetric skills

The sword and the shield