Disrupting Markets and Creating New Ones: The Harvard Method

True game-changers don’t just compete in existing markets—they create entirely new ones. This approach, known as disruptive innovation, was popularized by Harvard Business School professor Clayton Christensen. I want to share how we identify opportunities for disruption and how to apply the Harvard method to create new markets.

Understanding Disruptive Innovation

Disruptive innovation, as defined by Christensen, describes a process by which a product or service initially takes root in simple applications at the bottom of a market—typically by being less expensive and more accessible—and then relentlessly moves upmarket, eventually displacing established competitors.

Key Principles of the Harvard Disruption Method

1. Look for Non-Consumption: Identify areas where people aren’t being served because existing solutions are too expensive or complicated.
2. Focus on Jobs-to-be-Done: Understand the fundamental job that customers are trying to get done, rather than focusing on product features.
3. Embrace “Good Enough”: Initially offer a product that’s not as good as existing solutions but is good enough for underserved customers.
4. Leverage New Technologies or Business Models: Use innovative approaches to deliver solutions more efficiently or effectively.
5. Start Small and Iterate: Begin with a focused approach and gradually expand your market.

How to Identify Opportunities for Disruption

1. Analyze Market Overshoots: Look for markets where existing products have overshot the needs of mainstream customers.
2. Identify Pain Points: Find areas where customers are frustrated with current solutions or where there’s a high barrier to entry.
3. Spot Inefficiencies: Look for industries or processes that haven’t changed much over time.
4. Follow Regulatory Changes: New regulations can create opportunities for innovative solutions.
5. Watch for Technological Advances: New technologies can enable solutions that weren’t previously possible.

A Step-by-Step Approach

As with any scientific pursuit it starts with asking a lot of questions, and entrepreneurship is a science.

• Identify the Job-to-be-Done:
  
  • What fundamental task are customers trying to accomplish?
  • Example: In the early days of ride-sharing, the job wasn’t just “get a taxi” but “get from A to B conveniently and affordably.”
• Find Non-Consumption:
  
  • Who isn’t being served by current solutions?
  • Example: Netflix initially targeted movie enthusiasts frustrated with late fees and limited selections at traditional rental stores.
• Develop a “Good Enough” Solution:
  
  • How can you create a simpler, more accessible solution?
  • Example: Early personal computers were less powerful than mainframes but were accessible to average consumers.
• Create a New Value Network:
  
  • How can you deliver your solution in a fundamentally different way?
  • Example: Airbnb created a new value network by enabling homeowners to become part of the hospitality industry.
• Iterate and Improve:
  
  • How can you gradually enhance your offering to appeal to a broader market?
  • Example: Amazon started with books but gradually expanded to become “the everything store.”

Case Study: Disrupting the Education Market

Let’s apply this method to the education market:

1. Job-to-be-Done: Acquire skills and knowledge to improve career prospects.
2. Non-Consumption: People who can’t afford traditional higher education or don’t have the time for full-time study.
3. “Good Enough” Solution: Online courses that teach specific, job-relevant skills.
4. New Value Network: Platform connecting industry experts with learners, offering certification programs recognized by employers.
5. Iteration: Gradually expand from individual courses to full degree programs, partnering with established institutions for credibility.

Challenges and Considerations

• Resistance from Incumbents: Established players may fight back or try to copy your approach.
• Regulatory Hurdles: New markets often face regulatory challenges.
• Balancing Innovation and Sustainability: Ensure your business model is sustainable as you disrupt the market.
• Timing: Entering too early or too late can be detrimental.

The Art of Market Creation

Creating new markets through disruptive innovation isn’t just about having a great idea—it’s about identifying real needs, understanding the jobs people need to get done, and finding innovative ways to serve underserved segments of the population. By following the Harvard disruption method, entrepreneurs can not only identify opportunities but also create entirely new markets that can reshape industries.

Remember, true disruption often looks unimpressive at first. It starts at the bottom of the market, gradually working its way up. But for those who can spot these opportunities and execute effectively, the potential for impact—and success—is enormous.

As you look at your industry or consider your next venture, ask yourself: Where is there non-consumption? What jobs are not being done? How can you create a “good enough” solution that opens up a new market? The answers to these questions could lead you to the next big disruptive innovation.