Disruptive strategy pt.1 'Overshooting'

'Overshooting' - a concept to explain that the pace of product/technological improvement overshoots the capacity of consumers to absorb more functionality. This means that groups of customers are not willing to pay a premium price for your advanced product.

This leaves the door wide open for new entrants at the low-end of the market to create new business models and to steal customers away from your existing business. Another effect is that they create a new market because the entries to buy the product are lower.

My prediction is that this will happen with the iPhone X. I have already observed weak signals that consumers are dropping to the low-end of the market and choose a phone that is 'good enough' for the 'job to be done'. Motorola has launched new cheap smartphones (Moto) which aims precisely at the low-end of the market. Low price strategies only work when there are high price competitors.

However, how big organizations are structured to make money determines the boundaries of their innovation capability. They have built- in a system's inability (most of the time financials ) to observe these weak signals as opportunities (first) that later become threats, if not acted upon. Big companies serve 'high margin' customers with ever improving products. Which most of the time will lead to commoditization in the market because low price competitors will enter your market. As commoditization develops within an industry, profits decline. Companies are forced to find profitability in new ways. In other words, companies must seek the performance-defining component. See attached graph.

A deep understanding of how disruption might work in your market, not only looking at technological possibilities, will help you create growth strategies that work.

Interested in how this might work for you (CEO, innovation director, strategy consultant) and change this around? Let me know if you want to be updated about my second book 'Survive the future', by sending me a message or leaving a comment. This book deals with the issue how a big company can become disruptive again without damaging existing capabilities and business. The emphasis is on 'how' you can implement this within your company.

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