Harvard Business School Online's Disruptive Strategy course spurs creativity in the boardroom, in the C-Suite, and in learner Melaine D’Cruze’s notebook. She applied a unique lens to Clayton Christensen’s course by illustrating “sketchnotes” of the concepts she learned. Explore some of D'Cruze’s illustrations and learn three key ideas from the course.
Types of Innovation
There are three types of innovation: sustaining, low-end disruptive, and new-market disruptive.
Sustaining Innovation
Sustaining innovation is technological progress that results in better products that can be sold to an organization’s best customers. Sustaining innovation typically favors industry incumbents and has three qualities:
Makes good products better
Targets the most profitable customers
Improves profit margins
Low-End Disruptive Innovation
Low-end disruption occurs when new entrants to the market introduce new products to the low end of the market, causing incumbents to flee. This type of innovation is identified by three characteristics:
Provides “good enough” products
Targets “over-served” customers, or those at the bottom of the market who require less product functionality
Utilizes a low-cost business model
New-Market Disruptive Innovation
New-market disruptive innovation creates new markets and also disrupts existing competition. This innovation type is characterized by three qualities:
Targets non-consumption
Makes a profit at a lower price-per-unit sold
Provides lower performance for existing consumers, but higher performance for non-consumers
Phases of Business Development and Growth
The growth of a business can be divided into three stages:
Market Creating Phase: The organization focuses on developing a product or service to meet the customer’s needs
Sustaining Phase: The organization evolves the product or service to meet the needs of the best customers in order to beat the competition
Efficiency Phase: The organization sells mature products or services to the same customers at lower prices
Profit Formula
All companies must determine how to allocate their resources, and this process decides which initiatives get funded and implemented. To make these decisions, use the profit formula to drive resource allocation effectively. The profit formula is a mix of deliberate and emergent strategies, which both feed into the resource allocation process. That process, combined with learnings from experience and unanticipated opportunities, results in the organization’s actual strategy and the profit derived from it.
Are you interested in crafting an innovative strategy for your business? Explore our six-week course Disruptive Strategy, one of our online entrepreneurship and innovation courses.