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Prescribing Success with Disruptive Innovation


This is a guest post by Michael Mayers, an experienced innovation & new product development leader who has launched successful products in financial services, marketing services and health & wellness.  He tweets about innovation, entrepreneurship, and the joy of being a Brit in NYC at @mikemayers25.

At the time of writing Amazon lists 932 books released in the past 90 days under “innovation.”  Many of these will espouse a theory of one sort or another that seeks to systematize the process of successfully bringing new products to market.  And while most will deliver a superficially cogent model for the limited historic cases provided, nearly all of them will fail to deliver a prescription for future success that works in practice. (That’s right Stage Gate, I’m looking at you!)

Innovators Solution

But some time-tested theories do have prescriptive value.  In this blog post I take one such canonical model – Professor Clayton Christensen’stheory of Disruptive Innovation – and use three of its defining characteristics to help identify entrepreneurial opportunities and kick-start successful innovation strategy.

Look for 5 blade razors.

As markets mature industry leaders seek to capture increasing value from their best customers in an effort to drive profitable growth.  M&A aside this is typically achieved through the development of incremental, sustaining innovations – a process which most businesses become adept at executing.  The inevitable challenge comes when the pace of these innovations oversupply product performance for even the best and most demanding customers.  This oversupply, easily measured, is a key indicator that a sector is ripe for disruption. 

This tendency is surely no more obvious than Gillette’s flagship razor; the Fusion ProGlide with its parody-inducing 5 blades.  Arguably the maximal desired performance from the humble safety razor was surpassed decades ago with the twin-blade Trac II and the addition of a lubricating strip.

Enter Dollar Shave Club who, in 2011, recognized this performance oversupply and launched an innovative business model to attack the razor blade industry’s most over-served customers.  It’s first offering was a twin-blade razor – 70s “technology” in blade terms – sold online via a monthly subscription model at a fraction of the price of its big brand competitors.  And the attack plan is working:  The company raised $12MM in a Series B financing in October last year.

Ignore the best customers.

Take an industry’s best customers – those premium, big ticket whales with the eye-watering margins – and forget about them.  Successful disruptive innovations typically target current category low-end or non-consumers, and for two very good reasons:

Firstly, when a new entrant targets non-consumption the competitive response from industry incumbents is often muted to the extent that they may be ignored altogether; just as the personal computer industry was by mainframe manufacturers in the 1980s.  And if the interloper seeks to serve and incumbent’s low-end, low-margin customers they may even be happy to give up that pesky, profit-dilutive segment in the pursuit of better financial ratios; just as US car manufacturers gave way to Toyota in the 1980s in the compact economy segment.  And let’s face it, who wanted to sell low-margin compacts like the Corolla when you’ve earned the right to sell the S-Class? 

Secondly, the initial performance of new technologies usually fall short of the demands of an industry’s best and most sophisticated customers:  PC performance was a joke for mainframe computer buyers.  Either way a new entrant attack on an industry’s best customers is ill-advised.  Either a crippling competitive response or sophisticated customer demands will bring the upstart to its knees.  Much better to compete for low-end markets or outright non-consumption where your product can be the best alternative to nothing at all. 

Classic examples of this approach include Sony who offered a generation of new consumers access to personal, portable transistor radios while RCA doggedly stuck to heavy vacuum tube technology which afforded significantly better sound quality for the most discerning customer.  Or Nucor’s electric arc furnace, suitable only for the production of rebar at its outset, versus Armco’s integrated steel mills which produced much higher grade sheet steel.  Or Netflix’s streaming DVDs, utterly at the mercy of fickle bandwidth issues in those early days, versus Blockbuster’s DVD rental business with its significantly higher fidelity picture quality. 

When each of these technologies first launched they did not satisfy the current needs of their industry’s best customers.  Crucially – and fatally for the businesses who ignored them – each quickly shed their growing pains and enjoyed a higher performance gradient over time than existing ones.  The consequence?  Having established a beachhead amongst non- or low-end consumers those nascent technologies intercepted and then surpassed the performance of prior technologies.  Each successively picked off “low-value” customer segments from the bottom up until they adequately addressed the performance requirements of the entire market.  And it’s worth noting that Dollar Shave Club now offer 4- and 6-blade razor lines on their subscription model:  The move upmarket has begun.

Understand why the product is hired.

Why did you hire that non-fat latte you had this morning?  It’s an odd turn of phrase but you did, in a sense, hire it to do some jobs.  Maybe it was to give you a boost of energy.  Or to stave off hunger pangs until lunch.  Perhaps it was just a useful distraction or a focal point around which to socialize with colleagues.  Maybe it was all of those things.  Once you accept that we hire products and services to perform “jobs-to-be-done” (JTBD) on functional, emotional and social dimensions a whole world of insight will open up about consumer motivations and the building blocks of competition and product performance from the consumer perspective.

The story of Febreze illustrates this well.[1]  Now a $1B product Febreze was very nearly a total failure for P&G.  Functionally, it performs an obvious JTBD:  It neutralizes odors in household fabrics.  Early marketing efforts focussed heavily on this performance dimension but sales were muted.  Both the R&D and marketing teams were bewildered as to why such an obviously useful product was failing to gain traction.

Post-launch research highlighted an interesting but troubling phenomenon:  Customers were often desensitized and oblivious to even the most pungent odors in their own homes.  Functionally, Febreze solved an issue for a home’s visitors rather than its owners. 

But the P&G team had a stroke of luck:  They observed a few customers who, having worked hard to clean their homes, were then liberally applying Febreze with a final flourish.  Diving deeper into this behavior the researchers found that some customers were hiring the product to provide a visceral emotional reward at the end of a period of cleaning – a means to enhance the satisfaction of having a cleaned a room.  The penny dropped and Febreze was quickly repositioned for its emotive, rather than functional, qualities and sales soared. 

This story is often positioned as a flash of marketing positioning brilliance; a Eureka! moment that’s difficult to replicate.  But when viewed through the lens of JTBD it becomes clear that a more systematic understanding of the emotional dimensions to cleaning a home may have saved P&G from considerable heartache.  And while Febreze is now a roaring success one has to wonder how many potential category killers have been pulled from the market for want of a better understanding of what the customer was actually trying to achieve?

Flip the coin.

I’ve been looking at this in terms of using the Disruptive Innovation framework to find innovation opportunities.  However, if you are an enterprise manager working in an established industry then you can easily turn this around to find corresponding threats.  Ask yourself whether you are oversupplying your customers and delivering your own version of the 5 blade razor.  For a moment, put your best customers out of your mind and think about how traditional non-consumers and low-end markets might be better served by competing technologies.  And put the product marketing brochures to one side and ask what jobs to be done you satisfying amongst your customer base.  And finally, if and when you identify a threat or technology that is picking off your least profitable customers, don’t flee upmarket:  Stand, fight and innovate right back.

[1] This story is recounted from “The Power of Habit: Why We Do What We Do in Life and Business” by Charles Duhigg.

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10 Responses to Prescribing Success with Disruptive Innovation

  1. Rick Mueller says:

    While the 5-bladed razor is a great example of sustaining innovation (such as it is), the Dollar Shave Club seems unlikely to become the dominant paradigm and to additionally presume that those subscribing to it would have been unserved (e.g. would not be shaving were it not for the Club) is very far afield.

    I would direct those who mistakenly interpret Christensen’s “low end” to mean “low price” to John Ruskin, who probably said it best: “There is hardly anything in the world that someone can’t make a little worse and sell a little cheaper and people who consider price alone are this man’s lawful prey.” Making a few bucks by producing something you can sell at the Dollar Store is all well and good but hardly rises to the level of Christensen’s Disruption.

    And while Job2Bdone is a great means to be certain that one is looking at function rather than form – essential when evaluating or understanding an option that might have potential to be Disruptive, what precisely is so different about the Job2Bdone of the user of the 2-bladed razor than that of the user of 5-blades? They both want exactly the same thing, except that one has selected this as a potential means of economizing whereas the other has chosen not to (economize) or economizes differently.

    It while one might be hard pressed to find a worse example of Disruption than knock-offs of obsolete razor blades, does Febreeze really strike you as an example of Creative Destruction and if so, what recalcitrant incumbent industry was put out to pasture as a result?

    While any number of ideas which address real needs might be entrepreneurially sound, only those which transform functions that were once exclusively the purview of the elite into a relatively ubiquitous resource with which after all is said and done we couldn’t even imagine doing without are those that change how we do things and who we are – and to identify this “article” with tags that imply even the slightest relation to Clay Christensen’s great work is blasphemous at best.

    • michaelmayers25 says:

      Hi Rick – thanks for this feedback.

      Before I respond I think it’s worth remembering that Christensen describes two broad types of disruptive innovation: One that targets the low-end of existing markets, and the other that targets outright non-consumption.

      I actually think Dollar Shave Club spans both types. In the case of low-end consumers there’s a large segment of the market (and I include myself in this group) that is completely overserved by current razorblade ‘technology’. Whether by default or design DSC have recognized this and realized that I’ll happily buy 70s blade technology if I have to do nothing more than sign up online for a dollar per month and never worry about buying blades again.

      And I’d argue that DSC also targets non-consumption. If I’m anything to go by then I have a tendency to use blades long after they’ve dulled and routinely forget to buy new blades as it’s just not a regular and salient part of my weekly shop. The low-cost monthly subscription model fulfills my “don’t forget to buy new blades” job that routinely (and painfully in my case) goes undone.

      You’re right to say that low-end does not always mean low-price; but typically disruptive innovations do address some combination of wealth (i.e. price), access, skill, time or inertia issues among low-end or non-consumers. For me personally it solves issues around price (branded blade prices are absurd), access (I routinely forget to buy new blades when shopping), and inertia (a 2 minute sign up process allows me to switch brands forever).

      To be clear, I didn’t use Febreze as an example of disruption. I used the example only to illustrate how JTBD have additional dimensions beyond the functional: Social and emotional. In this instance understanding the emotional job was key to the success of the product.

  2. Rick Mueller says:

    Michael, just as not all black and white animals are zebras – not everything that comes in at a lower price is Disruptive. Skunks are black and white as well and are probably exemplary of the nasty surprise one might be taken by when one mistakes one (animal, or business phenomena) for another.

    Disruption isn’t defined by market share, it’s defined by the potential for market domination – and the only way to become dominant in a mature market is to expand it and leverage that expansion to overwhelm and overtake the influence and position of incumbent institutions.

    As I mentioned earlier – I don’t see Dollar Shave Club (or the paradigm on which it is based) outbidding Gillette (or the paradigm on which it is based) for next year’s (or even next decade’s) Superbowl ads – and I very much suspect that in reality nether do you.

    For those that do want to steer clear of unrealistic expectations, Job2Bdone, properly applied, is actually a tool of choice. Given that you can program Amazon’s subscription service or your smartphone to remind you when you need to buy razor refills, that characteristic of the Shave Club is neither distinctive nor a feature on which authentic Disruption might be based.

    To find the job2Bdone that would lead you to Disruptive Innovation you would first generalize and then narrow back down into some other attainable attribute for which sufficient demand exists to launch an enterprise. People shave to attain credibility and social acceptability that they wouldn’t otherwise have and as such, Disruption of that industry would require a product which would convey that utility to the point where once more fully developed, would make shaving with a razor redundant.

    Precisely what that product is remains a mystery, but I’m pretty sure that the Shave club isn’t it.

    • michaelmayers25 says:

      Hi Rick,

      This is an interesting conversation – dealing with your points in turn:

      “not everything that comes in at a lower price is Disruptive.”

      I agree, and I don’t believe I make that point.

      “Disruption isn’t defined by market share, it’s defined by the potential for market domination”

      Actually I think Christensen defines it by the competitive response of existing market incumbents and their tendency to flee upmarket (in the case of low-end disruption) or just ignore the interloper (in the case of non-consumption disruption) and that through the lens of standard management theory it’s actually rational for them to do so.

      ” – and the only way to become dominant in a mature market is to expand it and leverage that expansion to overwhelm and overtake the influence and position of incumbent institutions.”

      That’s true in the case of non-consumption disruption which first expands the size of a market by bringing in hitherto non-consumers. In the case of low-end disruption the new entrant seeks to serve overserved, profit dilutive, low-margin segments which incumbents are often happy to give up – there’s no market expansion in that instance and, if the new offering is at a lower price point, can actually contract the overall value of a market.

      “I don’t see Dollar Shave Club (or the paradigm on which it is based) outbidding Gillette (or the paradigm on which it is based) for next year’s (or even next decade’s) Superbowl ads – and I very much suspect that in reality nether do you.”

      Here I think you make an interesting point about whether a low-cost monthly subscription model can address every tier of the market. And I think this begs the question of how and whether business model innovation versus product innovation plays with the DI model. Almost certainly DSC is going to have to change it’s business model “technology” if it wants to address more demanding tiers of the market but, with 330,000 subscribers at the time of their Series B (just 2 years after launch), there’s just no denying that they have gained a foothold in the low-end of the market and are positioned to move upwards.

      “To find the job2Bdone that would lead you to Disruptive Innovation you would first generalize and then narrow back down into some other attainable attribute for which sufficient demand exists to launch an enterprise. People shave to attain credibility and social acceptability that they wouldn’t otherwise have and as such, Disruption of that industry would require a product which would convey that utility to the point where once more fully developed, would make shaving with a razor redundant. Precisely what that product is remains a mystery, but I’m pretty sure that the Shave club isn’t it.”

      I think you are being perhaps a little narrow in your assessment of the JTBD here (though your example of maintaining social acceptability, particularly at work, is definitely one of them). Strategyn’s ODI model would suggest that a shaving routine might contain as many as 50 – 150 individual jobs to be done. Off the top of my head I can think of: Decrease chances of nicks; increase blade hygiene; increase maximal speed of shaving; produce acceptably close shave; increase chances of remembering to buy blades; increase feeling of attractiveness, professionalism; and so on and so on. Now, add in an emotional JTBD of a brand that resonates with me as a Gen-Xer in a way that Gillette never has done – and my original point about the performance oversupply of anything with more than 2 blades – and I think it becomes clear that DSC is competing on some very different performance dimensions than that pack of Fusion razorblades sitting in the male grooming aisle.

      • Rick Mueller says:

        Hi Michael and thanks,

        Avoiding nicks (and everything else you’ve mentioned as potential jobs2Bdone) are reasons to select different protocols for shaving, not the core reason(s) for shaving itself, which is where you’d want to start to explore authentic Disruption (the kind that moves the seat of dominance and changes both paradigms and overall standards of living as a result rather than simply exhibits the enforced disposition of public firms noted by Christensen to apply finite resources in a way which continuously increase ROI).

        What such firms are ‘fleeing’ is the wrath of the activist shareholder and I have yet to find a case where low-end markets couldn’t be and weren’t reclaimed by incumbents when slowed growth at the top end began to leave resources more available for low-end reinforcement. (Lots of examples, Brownie and Instamatic cameras, generic drug subsidiaries of big pharma, store-brand consumables, LCC feeder and subsidiaries of flag carriers, and while it is true that sometimes the low-cost subsidiary becomes the tail that wags the dog (Target for example), those examples are rare and have still always been initiated from top down rather than from the bottom up (Dayton Hudson shareholders did just fine, thank you).

        Even in the very best cases of low-end incursion, let’s use the two go-to examples for those who really subscribe to the low-end incursion as a viable, sustainable strategy – Southwest Air and Nucor. In steel mini-mills have never become more than 40% of the global total (and we do know that global is important everywhere and has been in steel for quite some time) and Southwest is still only 15% of the domestic market – hardly imposing or Disruptive if you’ve taken a look at air-fares recently. The point is that Levis does not transform itself into Gucci no matter how much time you give it and neither is Shave Club (or anything like it) likely to either.

        You can agree or disagree about whether Christensen implied that Disruption infers dominance but in all of the examples there is the inference of comparative permanence being assumed by the new paradigm making the prior paradigm obsolete. No one (of significance to their respective industry) uses sliderules or film cameras any more. That is not the pattern one can or should expect of paradigms which are simply low-cost versions of existing paradigms, particularly when the incumbents can be (and clearly do) emulate (or simply buy) the incumbents once they run out of room to grow at the top.

      • Mike Boysen says:

        I would just point out that “Strategyn’s ODI model would suggest that a shaving routine might contain as many as 50 – 150 individual jobs to be done” actually refers to outcomes, not jobs. As you know, outcomes are what customers use to measure how well we get a particular job done across all of the job’s steps (also known as needs).

        BTW, Tony Ulwick has issues with Christensen’s version of JTBD which he wrote about on the Strategyn blog (and I dissected on mine).

        I expected even more innovation experts to jump in bashing JTBD or ODI due to their heavy investment in whatever they do. I found what works in ODI and I’m sticking with it :) Systems work, touchy feely doesn’t.

      • Rick Mueller says:

        Mike, everyone has to go with whatever works for them, but to claim you’re basing it on Christensen when you’re not is then simply a lie. As far as Ulwick goes, he is allowed to have his opinions as is everyone, but all else being equal I’ d go with Christensen sight unseen long before I’ d do that with Ulwick.

  3. Rick Mueller says:

    Last sentence was supposed to read “That is not the pattern one can or should expect of paradigms which are simply low-cost versions of existing paradigms, particularly when the incumbents can be (and clearly do) emulate (or simply buy) the ENTRANTS once they run out of room to grow at the top.”

  4. @Mike

    Thanks for your post – and you’re right, of course. My point – poorly made by conflating JTBD and outcomes – was that DSC is competing on dimensions other than price alone.

    My overall thrust is that in targeting hugely overserved consumers with lower prices, good enough product performance, better access, and a more resonant brand / customer experience DSC is displaying all the hallmarks of pursuing – whether by design or default – a low-end disruptive strategy; and I’d also argue that they are addressing non-consumption with their monthly subscription / home delivery model.

    I’m feeling punchy today so I’ll put my head above the parapet and predict an acquisition by Amazon – a move in keeping with THEIR disruptive strategy – in 2015/16; round about the time that DSC’s VC backers will be itching for an exit.

  5. Rick Mueller says:

    A low-end strategy yes, disruptive – no, at least not in the sense we get from old-line industries being put out to pasture wholesale and permanently.

    Mike, the business model you’re citing isn’t even novel – subscription-based sales models go so far back as to defy memory. The Book of the Month club started in 1926. There have been all kinds of other mail-order subscription services over the years as well, particularly with music records, tapes, and CDs before physical media was made obsolete (rol.st/1iqmz9x), but still with wines and every other sort of good imaginable

    The product you’re citing isn’t novel either. There are 7,021 different products in the “Personal Care” category alone at Amazon that one can subscribe to at this very moment, -many- of which are razors that you can buy for less than $1 each delivered (amzn.to/1dpd9pv is an exact replica of the Shave club product you can get for $0.50 each shipped when purchased in a pack of 10).

    All of that being said, I’m pleased that we had this opportunity to discuss. There are likely more than a few folks out there that were ready to be convinced that Disruptive Innovation is something anyone can do by making something less expensive and employing a subscription base for sales and now hopefully there are fewer folks out there that believe that and more that understand that if you really want to Disrupt the way Christensen talks about it, you need to find and ride a wave back to incumbent space from a starting point where incumbents dare not, and cannot tread.

    Selling out to Amazon (or anyone else) isn’t something Alexander Bell, or George Eastman or Steve Jobs, or Bill Gates, or Jeff Bezos would have even (or ever) considered – and anything having less impact or driving less inspiration than that is also less than that which meets the criteria of Disruptive Innovation per Christensen. Sincere thanks for providing the opportunity to make these points clear.

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