Christensen and Disruptive Innovation

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It should be no surprise that Bottom of the Pyramid countries, also known as BoP, are doing what the Japanese did after WWII, it is Christensen’s theory playing out in real time. However there is one key difference between how Japan did it and how China and India are trying to do it today. This difference are the customer markets that they are focusing on. Japan focused on business that needed products to create other products, like creating steel to sell to companies that will be used in their products. China and India are focusing on creating a product and selling directly to customers, like the Nano and LePhone. While these products might be easy to produce, they run into two major problems: they lack brand recognition that drives sales and they are usually technologically inferior to the brand name products. In today’s world that second aspect can be a sales killer. The average consumer wants a reliable product with the latest and greatest. Selling a cheaper but inferior product might be appealing to a sliver of the market but it is going to miss the mark with the rest. This technological advantage is actually a business’ best weapon to combat BoP products. As long as you can manage to consistently offer an improving product, these BoP products will be seen as second rate items. And as such their sales will hold little threat to disrupting brand name products.

As I stated earlier Christensen could have benefitted from offering a clearer definition on his theory. In the future, he will most likely need to expand his theory to include big bang markets. Apps can severely disrupt a market and yet fall out of favor in under sixteen months. This throws a wrench in Christensen’s theory, especially since he uses the poaching of low end customers as a warning sign of disruption. Nowadays companies don’t have the luxury of taking their time in trying to recognizing threats. They need to be on guard 24/7. It is just like transitioning from boxing to mixed martial arts. Instead of worrying just about getting punched in the face, you need to be wary of fists, feet, knees, elbows and take downs. Companies realize this and it is one of the reasons that major companies, Google and Facebook come to mind, are actively snapping up smaller companies and startups. One it can help them stay ahead of the technological curve and you can eliminate a potential disruption through osmosis. I really like when the authors say that, “Old style disruption posed the innovator’s dilemma. Big bang disruption is the innovator’s disaster”. I feel that it accurately captures the current state of business. Even though Rome didn’t fall in a day, you can still lose the battle in a day.