1. IS3320 Developing and Using Management Information Systems Lecture 3: Trends in IT-based markets Rob Gleasure R.Gleasure@ucc.ie www.robgleasure.com

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 Each type of consumer can be targeted by different types of innovations, namely  New-market disruptive innovations  Sustaining up-market innovations  Low-end 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

6. Signals of Change

7. Performance & Complexity Time Pace of performance improvements Overshot customers Undershot customers Non-consumers

8. 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 1. Introducing simple, affordable option that makes it easier for customers who lack money or skills for existing options 2. Trying to facilitate what the customers are already attempting to do, rather than seeking to ‘educate’ them to new behaviour

9. 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

10. 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 1. Low-end disruptive innovations amongst most overshot customers 2. Displacement by specialist innovations 3. Migration of producer towards end-user innovations

11. 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

12. 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

13. 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’

14. Exercise What market did AirBnB enter? How would you describe the impact of AirBnB on that market? What value does AirBnB 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 AirBnB are vulnerable? What (if any) IT capabilities could be used to break into AirBnB’s market and possibly even overtake them? Imagine you are starting a business to compete with AirBnB – what would you do?

16. Want to read more? Christensen, C. 2004. Seeing What's Next: Using the Theories of Innovation to Predict Industry Change, Harvard Business School, Cambridge, MA.  http://books.google.ie/books?id=SZQnfdM9O7wC&printsec=front cover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=fals e http://books.google.ie/books?id=SZQnfdM9O7wC&printsec=front cover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=fals e