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Monday, August 09, 2004

A Diagnostic for Disruptive Innovation via HBSWK

Would-be innovators know that one of their biggest challenges is systematically identifying the innovations with the greatest likelihood of creating disruptive growth. Pick the wrong one, and squander a year or more of focus and investment.The good news is that it doesn't have to be the luck of the draw anymore. By conducting a series of diagnostics, companies in any industry can quickly identify the most promising opportunities.By conducting customer, portfolio, and competitor diagnostics to pinpoint the highest-potential opportunities and the best business models for bringing them to market. The diagonostic dimensions are:
a.Customer diagnostic -This diagnostic assesses customers in order to identify "disruptable" market segments. Conducting this diagnostic involves looking for signs that specific customer groups either are overserved or are unsatisfied nonconsumers.
b.Portfolio diagnostic -The portfolio diagnostic assesses whether any current or potential innovations, such as new ideas or acquisition targets that produce appealing innovations, can be deployed in a way that successfully meets the needs of a disruptable customer group. This diagnostic involves looking at the technological characteristics of the innovation and at the potential business model by which the innovation might be brought to market.
c.Competitor diagnostic -The third diagnostic assesses competitors to ensure that the selected opportunity takes unique advantage of their weaknesses and blind spots. First, it helps to evaluate whether a competitor will be motivated to respond. Second, it identifies whether that competitor has the ability to do so effectively.
Disruptive innovations typically take advantage of "asymmetries of motivation" by entering markets that incumbents are motivated to exit or ignore. Looking at a competitor's income statement, balance sheet, history of investment decisions, and customers can help identify the developments to which a company might not respond.Companies that introduce disruptive innovations also tend to create asymmetric skills. In other words, they develop the unique ability to do what their competitors are unable to do.

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