Index

advertising, 48–49, 56–58

agent-agent problem 76

Amazon, 149

Anadarko, 109–110

analytical planning, 11

Apple Computer, 1, 17–18, 20–21, 81–82, 83, 94, 106–107, 164, 165

Arm & Hammer brand, 54–55

asset write-downs, 73

automobile industry, 62–64, 137–139

Avid Technology, 30–31

background processes, 27

Best Buy, 119

Blockbuster, 163–164

brand building, 45, 55–62

brand equity, 55–56, 58–62

brand extensions, 58–62

Bucyrus-Erie, 2

business model

acquisitions and, 104–106, 112–117

analyzing current, 83–84

building, 87–93

components of, 84–87, 88

disruptive, 113–115, 143–145, 164

identifying need for new, 84–85, 93–96

innovation, 81–101, 112–117

obstacles to reinventing, 99

of target company, 104–106

when to keep old, 97

business schools, 130–131

capabilities

employee, 23–24

organizational, 24–43

capital assets, usable versus competitive lifetime, 72–73

causal mechanism, 176, 185

causation, 176, 181–184

change management, capabilities for, 35–42

Chaparral, 70–71

Charles Schwab, 34

chief executive officer (CEO)

compensation of, 74, 75, 76

disruptive change and, 40

Chrysler, 36, 41, 119

Church & Dwight, 54–55

Cisco Systems, 41–42, 107, 118–119, 129

commoditization, 115–117

Compaq, 170

competition

in auto industry, 137–138

bases of, 124–127, 137–138

price, 143–144, 168

responding to, 96

competitive advantage, 123

components, 125–126

computer industry

business failures in, 1–2

dis-integration of, 128–129

disk-drive technology and, 5–13, 18–19, 136–137

personal computers, 4, 32, 34, 134–137, 144

profitability in, 133–136, 138–139

conglomerations, 108

Conner Peripherals, 12–13

Control Data Corporation (CDC), 13, 20

corporate performance

boosting, with acquisitions, 106–111

EPS as measure of, 74

correlation, 176, 181–184, 190, 191

costs

fixed, 65, 70–73, 110, 133, 201

reducing, 107–111

sunk, 65, 70–73, 201

variable, 133

cost structure, 86

Crest, 60–62

cross-selling, 111–112

culture, 200–201

customers

existing, 2–4, 8–13, 34, 167

jobs to be done for, 46–52, 54–55, 84–86, 89–90, 94, 145–147

mainstream, 2–4, 7, 127

needs of, 2–4, 8–13, 34, 46–47

observing, 48, 52, 54–55

power of, 2

customer value proposition, 84–92, 104

DaimlerChrysler, 41, 119

decommoditization, 115–117

Dell Computer, 128–129, 139

Digital Equipment Corporation, 1, 32, 128, 170

discountability, 115

discounted cash flow (DCF), 65, 66–69

discovery-driven planning, 78–79

dis-integration, 128–132

disk-drive industry, 5–13, 18–19, 136–137, 166, 167

disruption

as process, 162–164

disruptive business models, 113–115

disruptive technologies, 1–22

advantages of, 143–148

anomalies in, 168–170

assessment of, 15–22

barriers to, 147–148, 153–154

business failures and, 23, 164–165

challenges of, 23–43

defined, 3–4, 7, 143, 158–159

in disk-drive industry, 5–13

evaluation of, 8–9

existing customers and, 2–4, 8–13, 34

extendable core of, 142–145, 149–150

identifying, 14

independent organizations for, 5, 19–22, 36–40

initial market for, 5, 17–19

in low-end footholds, 160, 167–168

mainstream customers and, 161–162

model, 122, 164

in new-market footholds, 159–161, 167–168

performance trajectories of, 7, 15–16

purpose brands and, 53

response of established companies to, 11–13, 165, 167, 170–171

strategic response to, 141–156

strategic significance of, 5, 14–15

theory of, 157–171

Uber and, 159–162, 165, 166–167

versus sustaining, 33–35

value chain evolution and, 123–124

See also technological change/innovation

Dow Corning, 96–100

downmarket, 10

DRAM industry, 136

DSL technology, 126–127

earnings per share (EPS), 66, 73–76

education

higher, 169

online, 169–170

economies of scale, 86, 87, 92, 107–108, 110, 111, 134

e-learning, 144–145

Eli Lilly, 36

EMC, 115, 119

emerging markets, 2–4, 7, 10–11, 21–22

employees

organizational culture and, 31, 33

prioritization decisions by, 28

processes used by, 27, 31–32

endorser brand, 59–62

estimation errors, 69

executive compensation, 74, 75, 76

experimentation, 17–18

extendable core, 142–145, 149–150

failures, 164–165

failures (in business), 177, 186–188, 199–200

family relationships, 199–200

FedEx, 55, 94

financial analysis tools, 65–79

financial performance, 18

fixed costs, 65, 70–73, 110, 133, 201

Ford Motors, 126, 138–139

fragmented markets, 133–134, 136–139

functional teams, 38–39

future predictions, 121–140

Geek Squad, 119

General Motors, 126, 133, 138–139

grocery industry, 148–155

gross margins, 28–29

growth (in business), 29–30

growth markets, 52, 54–55

growth trajectory, 116

happiness, 194–196, 200–201

hard-disk-drive industry, 5–13, 18–19, 136–137

health care industry, 164

heavyweight teams, 36, 38–39

Hewlett-Packard, 37

higher education, 144–145, 169

Hilti, 89–93, 95

human resources, 23–24

humility, 202–203

IBM, 1, 2, 18, 36, 41, 121–123, 126, 133, 136–139

independent organizations, for disruptive technologies, 5, 19–22, 36–40

industry standards, 127

industry value chains, evolution of, 121–140

innovation

business model, 81–101, 112–117

disruptive, 4, 7, 33–35, 141–156, 157–171

financial analysis and, 65–79

nurturing, 4–5

processes that support, 76–79

stage-gate, 77–79

sustaining, 4, 6–7, 14, 33–35, 161–162, 167

types of, 158

See also disruptive technologies

integrated companies, 126, 129, 132, 136–137, 139

integrated markets, 133–134

integrity, 201–202

Intel, 19, 193

interdependent links, 125–126, 133–134, 138–139

Intuit, 90

investment decisions

discovery-driven planning and, 78–79

financial analysis tools and, 65–79

investment decisions (continued)

technological change and, 1–6

technology development and, 10–11

iPhone, 164, 165

jail, staying out of, 178

job-defined markets, 46–52, 54–55, 94, 146–147

jobs to be done (see customers, jobs to be done for)

Johnson & Johnson, 115

Kerr-McGee, 109–110

key processes, 84, 87, 88, 91–93, 104

key resources, 84, 86–88, 91–93, 104–105

Kodak, 53

legacy operations, 141–142, 145–147

lending industry, 132

leveraged buyouts, 75, 108

“leverage my business model” (LBM) acquisitions, 105, 110–111, 117

life

applying theories to, 193–204

purpose for, 196–198

strategy for your, 196–197

lightweight teams, 38–39

low-end markets, 159–161, 167–168

Lucent Technologies, 129, 136, 173–174, 188

mainstream customers, 2–4, 7, 127, 161–162

management

disruptive technologies and, 23–24

education, 130–131

myopia, 10

theories, 173–191, 194

marginal costs, 72, 201–202

margin model, 86

marketing, 45

market needs, 8–13

market research, 17

market(s)

for disruptive technologies, 8–13, 34

emerging, 10, 11, 21–22

growth, 52

initial, 5, 17–19

job-defined, 46–52, 54–55, 146–147

structure of, 46–47

market segmentation, 45–48, 49

Marriott International, 59

McKinsey & Company, 31

Medtronic, 36

mergers and acquisitions, 103–120

to boost performance, 106–111

business models and, 104–106, 112–117

conglomerations, 108

creating capabilities through, 40–42

cross-selling and, 111–112

to decommoditize, 115–117

evolution in values and, 30

integration mistakes, 118–120

to lower costs, 107–111

overpaying for, 105–106, 117

reasons for, 103–104, 106–117

right price for, 117–118

target company, 104–106

Merrill Lynch, 33–35, 38–40

metrics, 99

milk-shake example, 48, 49–51, 63

Milwaukee Electric Tool, 59–60

minicomputers, 169, 170

minimills example, 70–71, 94, 113–114, 193

modular products, 127–129, 138–139

Netflix, 163–164

net present value, 66–69

new markets, 160–161, 167–168

norms, 99

Nucor, 70–71, 113–115, 170

one-stop shopping, 111–112

online education, 169–170

online retailing, 148–155

on-the-job training programs, 130–131

organizational boundaries, 36

organizational capabilities, 24–43

creating, for change management, 35–42

migration of, 30–33

processes, 25, 26–27, 31, 33

purchasing, 40–42

resources, 25, 33, 37

values, 25, 27–30, 33

organizational culture, 31, 33, 184–185

organizational structure, 35–36, 38–39

outsourcing, 121, 123

Parmenides’ Fallacy, 68

patience, 100

performance

boosting, with acquisitions, 106–111

EPS as measure of, 74

improvement, 15–16

product, 124–127, 133

performance attributes, of new technologies, 4–5

performance trajectories, 6–7, 15–16

personal computer (PC) industry, 4, 34, 128, 134–137, 144, 168, 170

personal lives, 193–204

Pfizer, 116–117

planning, discovery-driven, 78–79

predictability, 176–177, 184–186

price competition, 143–144, 168

price premiums, 106–107

principal-agent theory, 74, 75–76

priorities, 28

private equity buyouts, 73, 108

processes

key, 84, 87, 88, 91–93, 104

to support innovation, 25, 26–27, 31, 33, 76–79

Procter & Gamble, 93

product categories, 52

product development, 46–52, 54–55

product performance, 124–127, 129, 133

products

interdependent, 125–126

modular, 127–129

profitability, 133–136

profit formula, 84, 86, 88, 90–91, 104, 116

purpose brands, 47–49, 53, 55–64

Quantum Corporation, 13

“reinvent my business model” (RBM) acquisitions, 105, 112–118

relationships, 194

resources

acquisition of, 106–111

allocation of, 37, 199–200

key, 84, 88, 91–93, 104–105

lower costs and, 107–111

to support innovation, 25, 33

resource velocity, 86

retail grocery stores, 148–155

revenue model, 86

Rolm, 41

rules, 99

scale, 86, 87, 92, 107–108, 110, 111, 134

Seagate Technology, 11–13, 16, 18

shareholder value, 73–76, 113

Sony, 52, 58–59

spin-off organizations, 5, 19–22, 36–40

stage-gate innovation, 77–79

start-ups, 30–31, 35

steel industry, 70–71, 170

stock price, 29–30, 73–76, 113

StrataCom, 42

strategic change, 167

strategic reviews, 14–15

strategy, 73, 196–197

subsystems, 125, 127, 129, 131, 134, 138

sufficient information, 129

sunk costs, 65, 70–73, 201

sustaining innovation, 4, 6–7, 14, 33–35, 161–162, 167

Tata Group, 89–92, 94

teams

functional, 38–39

heavyweight, 36, 38–39

lightweight, 38–39

technological change/innovation

business failures and, 1–6

evaluation of, 8–9

in hard-disk-drive industry, 5–13, 18–19

management of, 10–11

performance trajectories of, 6–7

spotting and cultivating, 14–15

See also disruptive technologies

Telecommunications Act of 1996, 126

terminal value numbers, 68–69

Tesla Motors, 170

theories (of management), 173–191, 194

applying to life, 193–204

circumstance-contingent, 185–186

defined, 174–175

development of, 176, 178–188

evaluation of, 177, 188–191

failures and, 177, 186–188

uses of, 176–177

value of, 175–176

Toyota, 29, 183–184

transistor radios, 168

Uber, 160–162, 165, 166–167

UberSELECT, 166–167

Unilever, 56–57

upmarket, 10

U.S. Steel (USX), 71

value chains, evolution of, 121–140

value proposition, 84–92, 104

values, 25, 27–31, 33, 84–90

variable costs, 133

VMWare, 115, 119

Xerox, 1, 2, 160–161

Xiameter, 98–100