- July 30, 2022
- Posted by: Ramkumar
- Category: Posts
Few books in management add value each time we read them and have high relevance in today’s age. One such book, in my view, is Innovator’s dilemma by #ClaytonChristensen.
In layman’s terms, the book states two kinds of disruption that can happen in markets:
1)Firms that target low-end disruption at customers who do not need the high performance that customers at high-income need and thus do not want to pay high prices. BYJU’S is a classic example that has exploited this by providing online education leveraging technology. People in Tier2 and Tier3 cities want quality education but do not want to pay the high fees that schools charge for the categories they do not need but still need to pay to enjoy quality education.
2)The second disruption is new market disruption,” targeting customers not served by existing businesses. The classic example is #electricalvehicles, where customers are ready to pay high upfront costs to reduce operating costs.
Before others bash me for the nuisance that online #edutech companies give to parents to enrol their children on their platform, i like to emphasise four critical points on disruptive innovations.
1)Any new disruptive technology would perform worse than dominant technology initially.
2)Disruptive innovation attracts price-sensitive customers not served by the status quo by offering cheaper and more convenient products/services.
3)Most profitable customers stay with the status quo, concluding that shifting to new technology/service does not make financial sense.
4)As disruptive technology/innovation improves, it exceeds the status quo standards for established technology/service and eventually becomes the dominant technology/service.
In my view, we are not far from where leading schools and universities get left behind by the Edutech firms unless the universities/schools cannibalise their existing offerings to compete with the Edutech firms.