Three Ways To Achieve Disruptive Innovation Through Costovation

Clayton Christensen, a Harvard Business School professor, coined the term "disruptive innovation" twenty-five years ago. Clay was a long-time friend and consultant. I can assure you that he didn't know the concept would be so successful. He didn't know that the concept would be so misinterpreted. He regretted not using the term disruptive innovation with a more specific name to prevent it from being used in common parlance to include almost everything. Clay outlined it and demonstrated that disruptive innovation is when a new offering caters for an overlooked customer segment by providing greater accessibility. This might be in the form of low prices, ease-of-learning, extreme convenience, or other forms. These offerings are often overlooked by incumbents because they may not be as financially attractive (at least at first). These offerings are often neglected by incumbents because they may not be as financially appealing (at first) than what they do to their most lucrative customers. These offerings become more popular over time and their customer base grows until upstarts take over the incumbents and completely eliminate them. Consider how traditional camera manufacturers ignored smartphones cameras. At first, they were toys that teens used to socialize. These old-line camera manufacturers are now stuck with severely stricken businesses that cater to only the most demanding hobbyists and professionals in photography. This process, Costovation, which I describe in my 2018 book, is what allows for this disruptive innovation. It allows companies to rethink their industries and find low-cost ways to compete, while still delighting a defined customer base. How can you make this happen? Three disciplines are required: You need to gain breakthrough perspective. Find out who is being overlooked and what the underlying needs are for these customers. Look at how market trends could reshape your needs. Look for new technologies and business models to challenge established norms. Understanding the jobs that potential customers need to do is a great place to begin. Another Clay concept, this one has been twisted into unrecognizable forms. Get back to the roots of Clay and work in a systematic way. What is the real value of these customers? And what can these people do (in a B2C and B2B context) to help them achieve their goals?

Planet Fitness, a low-cost gym that is leading the industry in growth and customer satisfaction, was founded by casual exercisers. They were often not going to the gym, but walking, running, or doing home-based exercises. What drove them to exercise and what kept them from getting to the gym? These insights are the foundation of a wonderful opportunity.

Planet Fitness is focused on providing a friendly customer experience. cheaplyPlanet Fitness Maintain a constant focus - Segment customers based on their jobs to be done. This will help people prioritize different Jobs. Find out which customer group you will appeal to. What do they really want? What do they not need? What is the real competition? Planet Fitness didn't target a single person who went to the gym regularly. You can do this in many ways. They understood that even though casual exercisers may not be able to make it to the gym, they can still get a decent amount of exercise. The gym environment with its complicated equipment, pushy trainers and fitness freaks often made this person feel intimidated. They did not want to be able to climb Mount Olympus, but they wanted to feel better, lose weight, and feel more accepted. They didn't need to be able to lose weight or have jocks around - these actually hindered their experience. They only needed basic cardio machines.

Planet Fitness also considered economics and positioning. Planet Fitness realized that a cardio-focused gym could be run entirely by itself and that it could have long opening hours due to low labor costs. Casual exercisers would not pay a lot of money for a gym, so it was important to keep costs low. Fortunately, there was a strong link between this goal and the low-cost labor model. It also recognized the fact that the casual exerciser market is both large and underserved.

Blur Boundaries: Clay emphasized that disruptive innovators don't always rely on one method to make accessibility possible. They may look at the entire business model to find multiple levers that will help them align their proposition closely to customer Jobs and make it difficult for others to copy.

-- To foster community and emphasize that it was a place where regular people could come. To convey energy and joy, it adopted a brightly lit logo. It was not meant to be a chore but a fun break. You are surrounded by positive energy. It's all part and parcel of the customer experience.

Costovation's three disciplines combine to allow businesses to think and act in new ways. They guarantee customer satisfaction and alignment with the business strategy. They enable disruptive innovation to occur together.