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Creating Value:Understanding patterns of
market evolution
The first of 3 key questions
How will weCreate value?
How will we
Deliver value?
How will we
Capture value?
Market Evolution over the Life Cycle
• Drivers of diffusion– When does the S curve imply a diffusion curve?
• Managing the market– Market segmentation– Crossing the chasm– New markets, new needs: The Innovator’s Dilemma
What drove the diffusion of the CD?
The diffusion of many products andservices follow a similar pattern:
PenetrationOrCumulative Sales
Time
The diffusion of many products andservices follow a similar pattern:
PenetrationOrCumulative Sales
Time
Sales/year
Time
Understanding market dynamics:Basic segmentation (Rogers)
Units
Bought
Innovators
Early
Adopters
Early
Majority
Late
Majority
Laggards
TimeAdopters differ by, for example, social, economic status --
particularly resources, affinity for risk,
knowledge, complementary assets, interest in the product
Understanding market dynamics:Basic segmentation (Rogers)
Units
Bought
Innovators
Early
Adopters
Early
Majority
Late
Majority
Laggards
TimeMaking the transition from “early adopters” to “early majority” users often
requires the development of quite different competencies: e.g. service,
support capabilities, much more extensive training.
Crossing the chasm?
Characterizing the segments
• Innovators
• Early adopters
• Early majority
• Late majority
• Laggards
Technology Enthusiasts
Visionaries
Pragmatists
Conservatives
Skeptics
Does the “chasm” always occur at“takeoff”?
Performance Maturity
Takeoff
Ferment
Discontinuity
Time
What is the relationship between theS curve and the diffusion curve?
Time Time
Performance Cumulative sales
If technology never changed, wouldthere be diffusion?
Time Time
Performance Cumulative sales
Thinking through diffusionTechnology is:
Static Evolving
Customers are
Homogeneous
Heterogeneous
Thinking through diffusion
Information
(eg w.o.m.)
Externalities
Supply constraint
Price
Technology is:
Static Evolving
Customers are
Homogeneous
Heterogeneous
Thinking through diffusion
Information
(eg w.o.m.)
Externalities
Supply constraint
Price
Technology is:
Static Evolving
Customers are
Homogeneous
Heterogeneous
Thinking through diffusion
“Technology
push”
new capabilities
gate demand
Technology is:
Static Evolving
Customers are
Homogeneous
Heterogeneous
Thinking through diffusion
Market pull:
Diffusion evolves
Across segments
Technology is:
Static Evolving
Customers are
Homogeneous
Heterogeneous
Thinking through diffusion
Information
(eg w.o.m.)
Externalities
Supply constraint
Price
“Technology
push”
new capabilities
gate demand
Market pull:
Diffusion evolves
Across segments
Technology is:
Static Evolving
Customers are
Homogeneous
Heterogeneous
Thinking aboutdiscontinuities from a
market driven perspective
From Moore’s perspective, why shoulddiscontinuities be hard?
Performance Maturity
Takeoff
Ferment
Discontinuity
Time
Managing customers at momentsof disruption
Performance
Who buys a technologywhen it is firstintroduced?
Time
• New technologies sell to:─ New customers─ With new needs─ Often at lower margins
Initially, S&R aligners sold to customerswith different needs:
For example: Semiconductor Photolithography
Scanning Projection
Aligners
Step & Repeat
Aligners
Speed
Yield
But then they improved sufficiently totake the whole marketFor example: Semiconductor Photolithography
Scanning Projection
Aligners
Step & Repeat
Aligners
Speed
Yield
Some new technologies sell to niche marketswith less demanding requirements
Are all discontinuities disruptive inChristensen’s sense?
Managing the change in customergroups may be the hardest task!
Performance
Effort
Leading edge customer
focused research may be
a critical capability
CR&D
A major materials supplier:The Problem
SBU 1
SBU 2
SBU 3 Market
CR&D
$100m
Biomaterials
work
?
?
What can be done?
• Launch and hope?
• Lead user research• Virtual products• Small scale experiments
Significantresources required!
