An Ode to Disruption Theory via Clay Christensen and Ben Thompson

Recently it’s been in fashion to knock good ‘ol disruption theory, as it was portrayed in the classic, Innovator’s Dilemma… Similar to Ben Thompson, I’m much more inclined to give credit where credit is due… The book was based on case studies, and is a product of it’s time… The theory, like any good scientific theory, created a mental model…. a framework, in which to think of two competing forces… the incumbent, and the new entrant, and attempts to define the tumultuous  effects of the interaction between these two players – disruption.

Clay ultimately favours the new entrant, which creates  a new product which has perhaps LESS appeal than what is currently on the market along the dimensions which NORMALLY would characterize that product’s use cases…. but that by creating a product which has LESS, it allows the product to appeal along a limited set or perhaps entirely NEW, underserved, characteristics, often with a much lower price that accompanies simplicity and focus.

In addition, Clay also favours modular players over integrated players in a mature market… I think the kicker here really ultimately depends on what a mature market sounds like… On one hand, you have phones… which is an established category by this point (with the caveat, that by phones, I really mean, pocket computers)… On the other hand, if what you do is RE-INVENT the definition of the product every few years in terms of the capabilities of that product, adding use cases, then it’s really not the same thing at all….

At first, the iPhone was about 3 main things: 1) Phone 2) iPod and 3) Internet… but in the intervening years, think about the critical functionality that was added to those core, original use cases:

a) Native Apps – a software layer for doing ordinary, everyday things, replacing stand-a-lone devices (imagine needing to explain what an “alarm” clock is to your kids in 20 years)

b) Camera – significant improvements in software and mixture camera technology has, in the last 2-3 years, made pocket cameras the most dominant method of taking digital photos

c) Password – iTouch on iPhones… makes the authentication experience just so much better… perhaps not a game changer, but definitely a new user experience, that didn’t previously exist, that ultimately makes the user’s original goal better

d) iPay – obviously recently introduced, but it has all the hall marks of a new use case being added yet again to the versitile pocket computer form factor

There are probably more… So in this way, if the product continually gets refreshed based on the definition of what that product needs to do, even mature markets like Phones can be “re-invented” along the way.

But in other news, markets like the Laptop computer or Desktop computer market, really are mature… with essentially NO innovation in that technology or platform or form factor in the last 3-5 years…. what we really need is a breakthrough in battery technology… but aside from modest speed, RAM and graphics performance, there is nothing to write home about, and Apple seems to still be doing well in Laptops and Desktops… So that’s another point against Disruption Theory as Clay explained it…

So…. what to do…

This is why it’s so appealing that Ben Thompson over at Stretechery comes riding to our resume, with a post provocatively titled – “What Clayton Christensen Got Wrong in his Theory of Low-End Disruption“…

The essential component of that post is that Clay Christensen’s model of “low end” disruption works best in a rational, logical environment where decisions are based on benefits and costs, function and utility against price… such as the business market for technology, where buyer and user CAN and often ARE separated… but that consumer markets work differently, because the buyer and consumer are the same person…

In this model, there are THOUSANDS of consumer goods premium products not only generate the majority of profit in a particular category, but where launching a NEW product might not get much traction at all, even IF the effectiveness of the new product is only slightly less, but the price is much less.. Think about T-Shirts… or Shoes… Talk about a mature market…

In this environment, in the Consumer space, you need to take into account all sorts of “fuzzy” (dare I say, artistic/creative) factors into account… Things like STATUS or looking COOL or being POPULAR or FITTING IN…. in some cases, the “jobs” to be done here on the consumer side may have more to do with TRUST or BRANDING or LOOK than just pure functionality… In this case, now we enter the USER EXPERIENCE as a way to replace the concept of functionality…

The “intangibles” (as Ben calls it) which makes a product a pleasure to use, rather than merely sufficient… And on the whole, this makes sense… it does, I think Ben’s really on the right rack.

But, then it got me thinking… was Ben REALLY on the right track?

Ben asks us a good question.. can the user experience EVER be TOO good, for the consumer market to support Apple’s gross margin’s, into the future???

Phrased another way, can the user experience, which is a SUPPLY driven factor, ever be TOO good?

It’s a good question, but I think, it’s the wrong one. You can see it with these new iPad’s… the product’s features and functionality have literally overshot the current use cases (and keeping around the A5 processor in the original iPad Mini, to ATP’s consternation, doesn’t help) available for that tablet form factor..

I think the better question is to ask… “Too good, compared to WHAT”? And I don’t think the answer is competitors… People absolutely can favour iOS at more than 2x or 3x the value than Android… This isn’t a discussion about switching from one platform to another.

No, I think the right dynamic to compare it to, the “right question”, to ask, is as follows:

– Can the user experience of a product or service ever be TOO GOOD, compared to the original “jobs to be done” framework from the perspective of the user/buyer… (ie. use cases)

After all, a person is buying (“hiring”) a product or service to achieve a certain set of outcomes.. while the method by which these outcomes are achieved (the “user experience”) has inherent value, what has even more inherent value? Actually achieving the outcomes… Or, in other words, the “Use Case”…

And in the case of the iPad 2 and the iPad Mini 3, I think the answer is yes… these products fundamentally have gotten so good from the supply side, that there simply isn’t anything to keep up on the DEMAND side…. sure, you can keep slamming “faster” and “thiner” and “lighter” down our throats all day long, but if those factors actually aren’t significantly improving a user’s ability to get done their “use cases”, then those attributes are improving the product, but along dimensions which aren’t particularly valuable to people.

Sure, the products are OBJECTIVELY better, and if you’re buying a new device, you probably ought to get the new, latest generation device over the previous generation device, prices being equal.

But prices are NOT equal… Year old models often are at least $100 dollars less, and sometimes $50 less… You’ve got to ask yourself, what DRIVE’s the upgrade cycle, essentially defining for customers, what makes the tablet form factor device VALUABLE to that person???

Well, think about Laptops and Desktops… what drives those devices? Games, Multi-Tasking??… Essentially, it’s the answer to the question, why do I need to buy the EXPENSIVE version of this device? For Apple, it’s the Macbook Pro… or for non-Apple people, it’s about the advanced desktop computer… What can that do, that a Macbook Air or “ultrabook” can’t do…

And a huge amount of the answer to that question are:

a) GAMES (graphics performance, speed)

b) MULTI-TASKING (mission critical tasks, critical path workflows etc…)

Personally, I bought a Macbook Pro 15 Inch, because it’s my MAIN computing device… I wanted the power, the speed, the 16 gigs of ram… and everyday, I often use my laptop up to or near to those limits… if there was an option to put in 32 gigs of ram into this laptop at a reasonable price, I might have done it… An even faster processor, absolutely… While 60-70% of my computing tasks are covered by my current machine’s capabilities in year 1 and would see limited benefit with additional improvements, there are some occasions when I run up into 80-90 or even 100% of my computer’s capabilities….

What I’m trying to say is that, even laptops, even desktops, as mature markets… the dimensions along which people care about improvements, STILL, the DEMAND side still outstrips supply… in fact, if you use your computer as a WORK computer, there might not be ANY upper limit of incremental improvements for a reasonable price which would NOT be useful…

And think of how we use our phones… Improvements to the Camera, NFC with Apple iPay… larger screens… even the phones, seems to have continuous innovation into that device and platform… and with a mobile device like a phone, you will always have a driver of updates or new purchases be replacements (broken devices, damages, theft)….

But the iPad….. or tablets in general… simply put, there are basically VERY few new games or applications launched…. the ability to use NEW applications which ONLY work with the LATEST and FASTEST iPad device spec’s, really doesn’t exist. Take out multi-tasking for a second, and suddenly you don’t have the option for a chained load of resource intensive applications running all at the same time, increasing the computing requirements on your device at peak load…

So, the real issue here isn’t that there is an upper limit to the “user experience” (ie. SUPPLY SIDE)…. it’s that there’s an upper limit to the ability for those improvements to software and hardware to actually result in an IMPROVED experience, as measured against the “jobs-to-be-done”…..

When creating the calculation a consumer goes through to calculate VALUE (ie. benefit – cost) before making a purchase, a customer will look at the interplay between the device/service and their objectives… so, the answer is that, YES, there IS an upper limit to the amount that a user experience can be improved, and still be valued by a customer…

The answer is that, when a user experience fundamentally outstrips the job-to-be-done or use cases a user is attempting to do, then the value to that additional “improved user experience” simply doesn’t accrue real customer value (the type someone will pay more for)….

So here’s the point… In response to Clay and in response to Ben…


The key to look at a company like Apple, and determine if they will be able to continually release hit products year after year after year, is not at whether they can innovate on the user experience in isolation. It is to look at whether Apple has the ability to generate the DEMAND (ie. increase existing use cases, and create NEW use cases) for the premium software/hardware experience they continually want to be improving on an annual basis..

Essentially, you need to “feed the dragon” as it were… where the “dragon” represents the incremental improvements you want to continually make, but which have the capacity to “overshoot” a customer’s actual needs – user experience be damned – and you “feed” it by continually, and repeatedly innovating to re-define the EXISTING and NEW user cases of that product, to make it even “more” useful, as it were, in order for customers to “consume” the new improvements, therefore symbiotically creating the additional value allowing you to sustain above-market gross margins.


So far, innovations like Touch ID and Apple iPay and camera improvements seem to indicate to me that, at least for the iPhone, they have a few more good years of life out of the phone platform, but the slowdown in iPad sales really speaks to me about the dynamic above… They simply have hit the wall… Apple simply does NOT know how or what to do, to drive DEMAND for any additional improvements they might normally promote as valuable, upgrade-worthy, improvements…

So, in that case, Apple is also doing something really smart… it’s entering an entirely NEW product category – the “watch”… and given the difficulty with working with a device/software combination at that form factor and size, it’s quite likely that the Watch, will require many, many, many years of innovations to even GET to the point at which the SUPPLY side of user experience will MEET the DEMAND side of what a user expects to be able to do with one of these devices, never mind SURPASSING a user’s expectations.

S0, in summary, my vote is still with Apple as a whole, as a company. But I am NOT very enthusiastic with the iPad product line as a huge driver of revenue or profit growth. It still will likely remain a nice business for Apple, but it’s not going to define the company the way the iPhone product did for Apple in the past, or how the iWatch product (I know, I know, the Apple Watch) has the potential to do so in the future.

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