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Clayton Christensen essentials on what to include in developing a business plan or a business model. Also elements of disruptive innovation and some charts on the process of constructing theory from statements of association, to correlation to causality.
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Disruptive Innovation
Clayton M. Christensen, Jerome H. Grossman, M. D., and Jason Hwang, M.D. The Innovator’s Prescription: A Disruptive Solution for Health Care (New York, NY:
McGraw-Hill, 2009).
Elements of a Business Model
9/7/2012 [email protected] 2
Profit Formula:
Assets and fixed cost structure, and the margins and velocity required to cover them
Processes:
Ways of working together to address recurrent tasks in a consistent way: planning, budgeting, training, development, manufacturing
Resources:
People, technology, products, facilities, equipment, brands, and cash that are required to deliver the value proposition to the targeted customers
The Value Proposition:
A product or service that helps customers do more effectively, conveniently, and affordably a job they’ve been trying to do
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Clayton M. Christensen, Jerome H. Grossman, M. D., and Jason Hwang, M.D. The Innovator’s Prescription: A Disruptive Solution for Health Care (New York, NY: McGraw-Hill, 2009).
A Typology of Business Models
Business Models (Øystein Fjeldstad)
Prescription Business Models (C. M. Christensen)
Value Shops Solution Shops
Classically intuitive, trial and error process of problem solving. Uses experts who draw on intuition, experience and analytical skills to diagnose and solve unstructured problems.
Value Chains
VAPs Value-Adding Process Businesses
They take in incomplete or broken things and transform them into more complete outputs of higher value. Value embedded in equipment and processes rather than the intuition of experts.
Value Networks Facilitated Networks
The networked users themselves are a key part of the product. Ongoing activity and often behavior dependent, like collectives of chronic diseases, or Apple Computer users, or casinos.
9/7/2012 [email protected] 3
A Typology of Business Models
Business Models (Øystein Fjeldstad)
Prescription Business Models (C. M. Christensen)
Value Shops Solution Shops Decentralized expertise and decentralized resources. Expensive per unit.
Value Chains
VAPs Value-Adding Process Businesses
Commoditized expertise and centralized resources. Less expensive per unit.
Value Networks Facilitated Networks
Commoditized expertise and decentralized resources. A lot less expensive per unit.
9/7/2012 [email protected] 4
Type of Business Model
Solution Shop Value-Adding Process Network Facilitator
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Boston Consulting Group Bain Capital Bloomberg
Toyota Wal-Mart, Target
Canon Cisco
Community colleges Fidelity
Electronic clearing networks (ECNs)
Cellular telephony Skype (VOIP)
Ford Kodak TurboTax
Geek Squad Amazon
eBay Second Life Linux Google
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Elements of Disruptive Innovation
Key Disruption
Enabler Goal
1. Technology Sophisticated technology that simplifies
Routinizes the solutions to problems that previously needed intuitive experimentation.
2. Business Lower-cost innovative business models
Profitably delivers the simplified solutions to customers affordably and conveniently.
3. Value Economically coherent value network
Systemic reform with mutually reinforcing economic models. A “system of interlinked chains” rather than piecemeal insertions.
4. Government Regulations and standards that facilitate change
Lubricate interactions. Make it easier rather than more difficult. Foster, stabilize, make it more affordable.
9/7/2012 [email protected] 6
Clayton M. Christensen, Jerome H. Grossman, M. D., and Jason Hwang, M.D. The Innovator’s Prescription: A Disruptive Solution for Health Care (New York, NY: McGraw-Hill, 2009).
9/7/2012 [email protected] 7
The Cycles of Theory Building in Management Research
Paul R. Carlile School of Management Boston University Boston, MA 02215 [email protected]
Clayton M. Christensen Harvard Business School Boston, MA 02163 [email protected]
October 27, 2004 Version 5.0
Copyright © Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only.
The Process of Building Theory
9/7/2012 [email protected] 8
Observe, describe & measure the phenomena
(constructs)
Categorization based
upon attributes of phenomena
(frameworks & typologies)
Statements
of association
(models)
Predict Confirm
Anomaly
The Cycles of Theory Building in Management Research
The Process of Building Theory
9/7/2012 [email protected] 9
Observe, describe & measure the phenomena
Categorization by the attributes of the
phenomena
Preliminary
statements
of correlation
Predict Confirm
Anomaly
Observe, describe & measure the phenomena
Categorization of the circumstances in which we
might find ourselves
Statement
of causality
Predict Confirm
Anomaly
Descriptive Theory
Normative Theory
The Cycles of Theory Building in Management Research
