The

1
The listening to customers conundrum

• Assumption most mangers will shift over time the
  center of gravity in their product lines to
  tiers in the market offering higher profit
  margins (e.g., Toyota and Honda).
• Results
• 1. Innovations which will take their companies
  toward more profitable products and customers
  will generally receive substantial attention.
• 2. Managers keep close to customers that warrant
  close listening (the higher-end tiers).
• 3. Missing marketing opportunities.

2
Disruptive technologies

• These are innovations that introduce a very
  different package of attributes to the
  marketplace than the ones that mainstream
  customers historically have valued.
• Result mainstream customers are unwilling to use
  disruptive product in application they know and
  understand
• Outcome disruptive innovations tend to be used
  and valued only in new markets or applications.
  Initially, disruptive technologies are being used
  in new or unimportant low-end markets and then
  improving at such a rapid pace that they attack
  and penetrate mainstream applications from the
  underside.

3

• Example Sonys early transistor pocket radios
  were a disruptive innovation relative to the high
  fidelity, tabletop radios built with vacuum
  tubes.
• They have traded off-sound fidelity for small
  size, light weight, portability gt a new market
  application (lower-performing product).
• Examples
• Sears and Wal-Mart
• Apple computer lagged 5 years behind the leaders
  in bringing its portable computer to market
• IBM and minicomputers

4

• The argument Performance attributes that
  existing customers do value, improve at such a
  rapid rate that the new technology previously not
  valued by these customers, can later invade those
  established markets.
• Example The Hard Disk Drive industry. Not one of
  the independent disk-drive companies that existed
  in 1976 exists today.

5
Relationship to Lead User Model

• Argument Lead Customers are usually the most
  sophisticated customers who purchase products at
  the high-end product range.
• These customer guidance is important as long as
  a large portion of the market is fundamentally
  dissatisfied with the functionality of available
  products. Listening to the needs of the
  highest-end customers can be misleading, in a
  situation where the critical lead customers whose
  needs must be understood are those at the bottom
  of the market.

6

• Conclusions In project approval meetings, work
  with a set of assumptions not a set of number
  (i.e. investment needs). Furthermore, define the
  strategic significance of the disruptive
  technology. Note According to this model, lead
  users are reliable when it comes to answering the
  potential of sustaining technologies. They want
  to stay ahead of the competitors, pushing the
  performance of their products.