OIM 210 1nd Edition Lecture 1 Outline of Last Lecture I. N/AOutline of Current Lecture II.Tophat StructureIII. Design AssignmentIV. Rules of Innovationa. Disruptive InnovationCurrent Lecture- Disruptive factso 90% of all companies are unable to sustain above average growtho 80% of venture back businesses failo 75% of new products launched by companies 5 years of older failo Most products and services fail- Steel industry was one of the biggest by 1955 but were disrupted and knocked out of thetop by 1975- Companies must reinvent themselves in order to remain relevanto It is almost a guarantee that a corporation will be disrupted at some point- Sustaining innovation is about doing it better. Essential to remain relevant- In the contrast, Disruptive Innovation makes products more simple and more affordable to disrupt the industry- Sustaining Innovation: Improves the performance of established products for mainstream customers in major markets- Disruptive Innovation attempts to supply to the low end Customer as opposed to the high end customer- Precursors to Innovationo A Core Business that is in Controlo A Game Plan….Targeted Innovation Portfolioo Resource Allocationo Disrupt Competitors, Not Customer- Incumbents nearly always win the sustaining warThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Entrants who use Disruptive Innovation have a better chance of beating the incumbents because of their ability to create a new business strategy and be attractive to low cost customers- Low Cost strategy only works when you are fighting against a high cost competitor - Good companies survive by setting up separate businesses with an unfettered charter to kill the mother company- Cannot listen to your customer because in disruptive innovation the customer does not know what they want- Testing for Disruptive Ideaso Test 1: Is there a large enough population?o Test 2: Good enough performance?o Test 3: Disruptive to all the