1. Rob Gleasure R.Gleasure@ucc.ie www.robgleasure.com
IS3320 Developing and Using Management Information Systems Lecture 2: Trends in IT-based markets
Rob Gleasure

2. IS3320
Today’s lecture
Christensen’s Signals of Change
Exercise

3. Design as Improvement?
So we want to analyse existing systems and come up with something better
What does better mean?
Seriously…?

4. Signals of Change
Christensen’s ‘Signals of Change’ refer to a way to evaluate customer segments within an industry and identify how that industry is likely to change in the future
At it’s essence, looking for signals of change requires that we view markets in terms of waves and consider three types of consumers
Undershot consumers
Overshot consumers
Non-consumers

5. Signals of Change Pace of performance improvements
Undershot customers
Pace of performance improvements
Performance & Complexity
Overshot customers
Non-consumers
Time

6. Signals of Change
Each type of consumer can be targeted by different types of innovations, namely
Sustaining up-market innovations
Low-end disruptive innovations
New-market disruptive innovations
If we can determine which consumers are going to be most profitable in an industry in the future, we can estimate the value of these different types of innovations

7. Signals of Change Market signals
High and increasing rate of growth in new smaller emerging markets
High volumes of action in certain targeted customer segments
Links being removed in the service delivery chain
 New market disruptive innovation
Target people who are not consuming in existing markets by
Introducing simple, affordable option that makes it easier for customers who lack money or skills for existing options
Trying to facilitate what the customers are already attempting to do, rather than seeking to ‘educate’ them to new behaviour

8. Signals of Change Market signals Customers are paying for upgrades
Customers expressing frustration or ‘if only’ discussions
Integrated companies are more successful than specialists
 Opportunity for up-market sustaining innovations!
Look for improvements in the industry’s dimension for competition
Early in a technology’s life, this is usually functionality and/or reliability
These improvements can be incremental or radical
Look to integrate as much of development as possible

9. Signals of Change Market signals
Consumers aren’t making use of new additions
Ease-of-use becomes the main dimension for competition, most notably with regard to convenience, customisation, and price
These lead to three forms of disruptive innovations
Low-end disruptive innovations amongst most overshot customers
Displacement by specialist innovations
Migration of producer towards end-user innovations

10. Signals of Change Market signals
Emergence of companies making money in different ways than established rivals
 Low-end disruptive innovations amongst most overshot customers
Target the lowest tier in terms of needs
Remove all excessive functionality, then compete on price and wait for this customer segment to grow in size

11. Signals of Change Market signals
Functionality is overshooting customers
Modular and standard-based interfaces exist between product/ service components
 Displacement by specialist innovation
Focus on one modular aspect of the solution being offered to the mainstream market
Streamline your business towards dominating this aspect of the solution

12. Signals of Change Market signals Propagation of standards
Lessening importance placed upon theoretical knowledge during hiring processes
 Migration of producer towards end-user innovation
Look for opportunities to get closer to customers and develop customised solutions
Look for aspects of supply, etc. that can be done ‘in house’

13. Exercise: WhatsApp WhatsApp
Summary at
Founded in 2009 by two former Yahoo employees
Based in California
User base > 1 billion (making it the most popular messaging app)
Acquired by Facebook in 2014 for almost $20 billion

14. Exercise What market did WhatsApp enter?
How would you describe the impact of WhatsApp on that market?
What value does WhatsApp offer that its competitors don’t, i.e. is it capabilities, reliability, ease-of-use, customisation, price?

15. Exercise (Part 2) Where do you think WhatsApp are vulnerable?
What (if any) IT capabilities could be used to break into WhatsApp market and possibly even overtake them?
Imagine you are starting a business to compete with WhatsApp – what would you do?

16. Want to read more?
Christensen, C Seeing What's Next: Using the Theories of Innovation to Predict Industry Change, Harvard Business School, Cambridge, MA.