IS3320Developing and Using Management Information SystemsLecture 3: Trends in IT-based markets

Rob Gleasure

R.Gleasure@ucc.iewww.robgleasure.com

IS3320

Today’s lecture Christensen’s Signals of Change Exercise

Design as Improvement?

So we want to analyse existing systems and come up with something better

What does better mean?

Seriously…?

Signals of Change

Christensen’s ‘Signals of Change’ refer to a way to evaluate customer segments within an industry and identify how that industry is likely to change in the future

At it’s essence, looking for signals of change requires that we view markets in terms of waves and consider three types of consumers Undershot consumers Overshot consumers Non-consumers

Signals of Change

Each type of consumer can be targeted by different types of innovations, namely New-market disruptive innovations Sustaining up-market innovations Low-end disruptive innovations

If we can determine which consumers are going to be most profitable in an industry in the future, we can estimate the value of these different types of innovations

Signals of Change

Signals of Change

Per

form

ance

& C

om

ple

xity

Time

Pace of p

erform

ance im

provements

Overshot customers

Undershot customers

Non-consumers

Signals of Change

Market signals High and increasing rate of growth in new smaller emerging markets High volumes of action in certain targeted customer segments Links being removed in the service delivery chain

New market disruptive innovation

Target people who are not consuming in existing markets by

1. Introducing simple, affordable option that makes it easier for customers who lack money or skills for existing options

2. Trying to facilitate what the customers are already attempting to do, rather than seeking to ‘educate’ them to new behaviour

Signals of Change

Market signals Customers are paying for upgrades Customers expressing frustration or ‘if only’ discussionsIntegrated companies are more successful than specialists

Opportunity for up-market sustaining innovations!

Look for improvements in the industry’s dimension for competition Early in a technology’s life, this is usually functionality and/or

reliability These improvements can be incremental or radical

Look to integrate as much of development as possible

Signals of Change

Market signals Consumers aren’t making use of new additionsEase-of-use becomes the main dimension for competition, most notably with regard to convenience, customisation, and price

These lead to three forms of disruptive innovations

1. Low-end disruptive innovations amongst most overshot customers

2. Displacement by specialist innovations

3. Migration of producer towards end-user innovations

Signals of Change

Market signals Emergence of companies making money in different ways than established rivals

Low-end disruptive innovations amongst most overshot customers

Target the lowest tier in terms of needs Remove all excessive functionality, then compete on price and

wait for this customer segment to grow in size

Signals of Change

Market signals Functionality is overshooting customers Modular and standard-based interfaces exist between product/ service components

Displacement by specialist innovation

Focus on one modular aspect of the solution being offered to the mainstream marketStreamline your business towards dominating this aspect of the solution

Signals of Change

Market signals Propagation of standards Lessening importance placed upon theoretical knowledge during hiring processes

Migration of producer towards end-user innovation

Look for opportunities to get closer to customers and develop customised solutionsLook for aspects of supply, etc. that can be done ‘in house’

Exercise

What market did AirBnB enter?

How would you describe the impact of AirBnB on that market?

What value does AirBnB offer that its competitors don’t, i.e. is it capabilities, reliability, ease-of-use, customisation, price?

Exercise (Part 2)

Where do you think AirBnB are vulnerable?

What (if any) IT capabilities could be used to break into AirBnB’s market and possibly even overtake them?

Imagine you are starting a business to compete with AirBnB – what would you do?

Want to read more?

Christensen, C. 2004. Seeing What's Next: Using the Theories of Innovation to Predict Industry Change, Harvard Business School, Cambridge, MA. http://books.google.ie/books?

id=SZQnfdM9O7wC&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false