Foundations for Growth: How to Identify and Build Disruptive New Businesses

Posted: 1 Dec 2009  

Darrell K Rigby

affiliation not provided to SSRN

Clayton M. Christensen

Harvard University - Technology & Operations Management Unit

Mark Johnson

affiliation not provided to SSRN

Date Written: 2002

Abstract

The probability of creating a successful, new growth business is 10 times greater if the innovators pursue a disruptive strategy rather than a sustaining one. A sustaining innovation is one which meets the demands of existing customers in established markets. In contrast, a disruptive innovation is one which creates entirely new markets and business models. One strategy for creating disruptive growth is to compete against non-consumption and target customers who are currently not buying at all (perhaps because existing products are too expensive or complex) with simple, inexpensive products. When it is not possible to compete against non-consumption, the strategy must compete against markets dominated by industry leaders. When the existing market already offers products which are 'more than good-enough' and is 'overserving' its customers, the successful disruptive strategy will be able to target the less demanding customers who would be happy with a product which is just 'good-enough' and is less expensive than those currently available. The business model must also allow the growth company to price the disruptive product with a deep discount. Companies usually fail to capitalize on disruptive opportunities not because they are lacking good ideas, but because they do not have a robust process for creating and launching disruptive innovations. Company should establish a corporate team dedicated to disruptive innovation ideas, made of up select members who intuitively understand the 'litmus tests' that make these ideas successful.(LMH)

Keywords: Disruptive growth, Sustainable innovation, Opportunity recognition, Firm growth, Startups, Market entry, Growth strategies, Market growth, Disruptive technologies

Suggested Citation

Rigby, Darrell K and Christensen, Clayton M. and Johnson, Mark, Foundations for Growth: How to Identify and Build Disruptive New Businesses (2002). MIT Sloan Management Review, Vol. 43, Issue 3, p. 22-32 2002. Available at SSRN: https://ssrn.com/abstract=1513137

Darrell K Rigby (Contact Author)

affiliation not provided to SSRN

No Address Available

Clayton M. Christensen

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

Mark Johnson

affiliation not provided to SSRN

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