modplanman
2 HN recommenders · recommended in 3 months, 2014–2017
9:11 · 36K views · Apr 5, 2009
Clayton Christensen explains disruptive innovation using the steel industry, showing how mini-mills beat incumbents from the low end. He argues disruption is not about stupid or bad management.
HN recommends it as an amazing, clear explanation of why incumbents move upmarket and lose to low-end challengers.
3 comments from Hacker News
It immediately reminded me of the mini-mills example from Clayton Christensen's amazing talk on Disruptive Innovation this video
The logic you present is correct from the incumbent's perspective. But followed to its logical conclusion, it leads to the downfall of the incumbent according to Christensen's model of disruptive innovation. The incumbents will continually cater upmarket to their higher value customers while the challenger picks up more and more low value customers. But there's only so far upmarket you can go until you run out of customers and that's when the low end challenger has completely consumed the incumbent. I think much of this thread is a testament to the lower value customers being ignored. Things about how DO is much less complex, simpler and as a result cheaper. Here's part of a great talk from Christensen describing the same logic but in the Steel industry: this video
The economics behind this disruptive innovation in the steel industry were broken down really well by Harvard professor Clayton Christensen in his writings and this clip: this video