Market phases in disruptive innovations

In the new market radical innovations, often created by newcomers, dominate. However, these innovations are not, in and of themselves, enough to break into the mainstream market beyond the early adopters. Instead, architectural innovations reshape the linkages between core concepts and components of the product while retaining the core concept behind it. This results in the creation of the 'dominant design'*, which pulls together all of the dispate strands into the industry-defining set of features and configuration that more or less everyone uses from then on out. In this phase, newcomers and incumbents both have a shot at stumbling onto the dominant design, although there are reasons to believe that the newcomers may be structurally better placed to do so. 

However it happens, once the dominant design has emerged and adoption has crossed into the mainstream, further innovation tends to come in the form of 'efficiency innovations'. These serve to commoditize the product, driving prices down and allowing cost-conscious customers to access the product. Often, the innovation here is a business or supply-chain innovation rather than a change to the product itself. Ironically, Montoya & Kita identify this rather unglamorous phase of the innovation cycle as being the closest to Christensen's original vision of worse performance and low-end disruptive innovation.

The takeaway from all of this is that, if you want to disrupt the market, it pays to know both what phase the market is in and what sort of innovation your product or service represents. Trying to launch a low-end innovation into a undeveloped market, for instance, will probably result in the product failing to make any money. To my eyes, this seems to indicate that services like IP landscaping are a necessary part of the process of analysing a new product or service, as you need to situate it in its context.

* Recall our earlier discussion about ecosystems and niches. In this analogy, the new market is something like the opening of a new ecological niche, followed by an adaptive radiation as all the market actors try things out (recall the period of cellphone design from around 2000 to the release of the iPhone). The dominant design is the niche-filler, which out-competes other species until it controls the niche. The other species must then move to a new niche (sometimes functionally separated, sometimes geographically) in order to survive (in market terms, either move to new markets/product categories, or become me-too products which copy all of the dominant design's features). There is also an element of convergent evolution here, as the dominant designs within a given niche will tend to resemble each other by the process of convergence.

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