1. Sustaining innovations
Disruptive Innovations: A driver of leadership failure and the source of new growth opportunities
Pace of
Technological
Progress
Incumbents nearly always win
Sustaining innovations
Disruptive innovations
Performance
Performance that customers
can utilize or absorb
Entrants nearly always win
Time

2. Little boys beat giants by disruption
% of tons
25–30%
55%
Sheet steel
Steel Quality
18%
22%
Structural Steel
Quality of integrated mills’ steel
12% 8%
Angle iron; bars & rods
Quality of minimill-produced steel 7% 4%
Rebar
1975
1980
1985
1990
4/11/2019
Copyright Clayton M. Christensen

3. Copyright Clayton M. Christensen
The intent and effect of sustaining innovation is to drive prices up. Disrupting innovation drives prices down.
~ 8% inflation
4/11/2019
Copyright Clayton M. Christensen

4. Copyright Clayton M. Christensen
Replication, rather than disruption, characterized higher education in the past. The future might be different.
~ 8% inflation
4/11/2019
Copyright Clayton M. Christensen

5. The customers are enticed into the new system, not vice versa.
The metric of performance changes
Performance
Time
Tabletop Radios, Floor-standing TVs
Path taken for transistors by vacuum tube manufacturers
Non-consumers or Non-consuming
occasions
Different measure
Of Performance
Time
The customers are enticed into the new system, not vice versa.
Portable TVs
Pocket radios
Hearing Aids
4/11/2019
Copyright Clayton M. Christensen

6. Changes in product architecture have profoundly changed the architecture of the computer industry
– Present
Intel, Komag, etc.
Dell, HP, Quanta, Acer
Best Buy
Geek Squad
Microsoft
Monsanto, Sumitomo Metals, Komatsu, Shipley, etc.
Teradyne, Nikon, Canon, Applied Materials, Millipore, etc.
Equipment
Materials
Components
Product design & assembly
Operating system & applications software
Sales & distribution
Field service
IBM
Control Data
Digital Equipment
Apple Computer
4/11/2019
Copyright Clayton M. Christensen

7. Changes in product architecture have profoundly changed the architecture of the computer industry
– Present
Intel, Komag, etc.
Dell, HP, Quanta, Acer
Best Buy
Geek Squad
Microsoft
Monsanto, Sumitomo Metals, Komatsu, Shipley, etc.
Teradyne, Nikon, Canon, Applied Materials, Millipore, etc.
Equipment
Materials
Components
Product design & assembly
Operating system & applications software
Sales & distribution
Field service
IBM
Control Data
Digital Equipment
Apple Computer
Interdependent architecture
Modular
architecture
4/11/2019
Copyright Clayton M. Christensen

8. Interdependencies in the teaching infrastructure
Conflicting mandates in the way we must teach, vs. the way students must learn
Interdependencies in the teaching infrastructure
Temporal
Lateral
Physical
Hierarchical
Every student is
different
Multiple styles of learning & types of intelligence
Paces of Learning
Home & family backgrounds
Standardization !!
Customization !!
4/11/2019
Copyright Clayton M. Christensen

9. What is a business model, and how is it built?
THE VALUE PROPOSITION:
A product that helps customers do more effectively, conveniently & affordably a job they’ve been trying to do
RESOURCES:
People, technology, products, facilities, equipment, brands, and cash that are required to deliver this value proposition to the targeted customers
PROCESSES:
Ways of working together to address recurrent tasks in a consistent way: training, development, manufacturing, budgeting, planning, etc.
PROFIT FORMULA:
Assets & fixed cost structure, and the margins & velocity required to cover them
4/11/2019
Copyright Clayton M. Christensen

10. A Theory of Hybrid Technologies
When framed as a sustaining innovation: Hybrid is required
Then it can improve
When framed against non-consumption, Pure-play can take root
4/11/2019
Copyright Clayton M. Christensen

11. Three Types of Business Models
Consulting firms
High-end law firms
R&D organizations
Complex medical diagnosis
Special Education
Solution Shop businesses
Manufacturing
Food services
Medical procedures
Instruction
Textbooks; ed. Software today
Value-adding process businesses
Telecomm
Insurance
EBay
D-Life
Education software tomorrow
Facilitated Network businesses
Fee for membership or transaction
Fee for service
Fee for outcome

12. Non-consumers or Non-consuming
The instructional materials business historically has been a value-adding process business
Performance
Time
Path taken by
Educational software developers
Non-consumers or Non-consuming
occasions
Different measure
Of Performance
Time

13. Student-centric software will be a facilitated network business
Performance
Non-consumers or Non-consuming
occasions
Different measure
Of Performance
Time
Facilitated Network: parents, teachers, students, entrepreneurs
Custom classes
Modules
Tutoring
4/11/2019
Copyright Clayton M. Christensen

14. Copyright Clayton M. Christensen
% of tons
Steel Quality
Trucks
SUVs
General Motors
Mid-sized
Toyota
Subcompact
1975
1980
1985
1990
4/11/2019
Copyright Clayton M. Christensen

15. Faculty qualifications, student learning
Student achievement in on-line courses when administered by focused on-line faculty
5.7
Student achievement in on-line courses when administered by faculty in core
4.6
Student achievement in traditional classes taught by faculty in core
5.6
4/11/2019
Copyright Clayton M. Christensen

16. Copyright Clayton M. Christensen
The substitution of one thing substitutes for another always follows an S-curve pattern
% new
% old
.001
.0001
.01
0.1
1.0
10.0 09 11 07 05 03 13 15
% new
4/11/2019
Copyright Clayton M. Christensen

17. Online learning gaining adoption
Enrollments up from 45,000 in 2000 to 1,000,000 in 2007
4/11/2019
Copyright Clayton M. Christensen

18. Market Understanding that Mirrors how Customers Experience Life
SatComs – reliable, secure, dependable 1s and 0s…not that they want a satellite not a copper wire…
Robotics – segment in terms of military activities –
DUALITIES POINT – Job of Lockheed Martin (mission of the future) vs. segmenting by Army, Navy, etc. or by Gov’t versus Commercial
“The customer rarely buys what the company thinks it is selling him” Peter Drucker
4/11/2019
Copyright Clayton M. Christensen

19. A Theory of Hybrids Tesla $100,000 Prius Hybrid
Competing on cost, design, reliability, and performance on the California Freeway
Tesla $100,000
Prius Hybrid
Performance
Time
Sustaining innovations
Disruptive Innovations
Time
Peapod: Are there customers that would love a car that won’t go far, and won’t go fast?
4/11/2019
Copyright Clayton M. Christensen

20. The right product architecture depends upon the basis of competition
IBM Mainframes, Microsoft Windows
Proprietary, interdependent architectures
Compete by improving
functionality &
reliability
Performance
Compete by improving
speed, responsiveness and customization
Modular open architectures
Dell PCs, Linux
Time
4/11/2019
Copyright Clayton M. Christensen