Korva is a scroll of the internet’s best ideas.
Growth comes from non-consumers
Why industries start at the top
Industries begin with the customers who have the most money, because the first products are so costly and complicated that only they can buy them. Technology improves faster than customers can use it. In the 1980s, typists had to pause every 30 seconds for the Intel 286 chip to catch up, and today only about 15% of a processor's capability gets used in mainstream applications.
Toyota's climb
Incumbents usually stay on top while companies fight over better products for the best customers, and a newcomer that tries it gets killed. Entrants typically win at disruption instead. Toyota arrived in America in the 1960s with a rusty little subcompact called the Corona, affordable enough for college students to own, while General Motors and Ford built big cars for big people. Toyota then climbed through the Corolla and Camry to the Lexus.
Why incumbents miss it
Detroit's finance people saw no sense in defending the low end when bigger SUVs and pickups earned more. Behind a disruptive product stand no customers at all, only potential ones, so from inside the incumbent everything looks fine. That is why a disruption almost always needs a new company with new people looking in the other direction.
Why does technology outrun what customers use?
Engineers improve products along a steady curve, while customers' ability to use the improvements rises more slowly. The two curves therefore drift apart over time. A product that was too limited for the mainstream at launch eventually becomes good enough for it. At that point price and convenience start to matter more than extra performance.
How did Toyota get to the top of the market?
Toyota began selling the Corona in the United States in the mid-1960s, and the model became a small, inexpensive entry into the market. It later introduced the Corolla and the Camry, each larger and more expensive than the last. In 1989 Toyota launched Lexus, a luxury brand that competed directly with Mercedes-Benz and BMW. Each step moved upward while the established makers were still focused on larger vehicles.
Why do incumbents ignore low-end entrants?
The low end earns smaller profits per sale, and the incumbent's best customers do not ask for it. A manager who invests there gives up money and attention from products that earn far more. Defending the low end looks like a bad decision on every spreadsheet, even when the entrant later moves upward. Christensen called this pattern disruption when he described it in the late 1990s.
How did Sony reach American teenagers?
Sony, founded in 1946 as Tokyo Tsushin Kogyo, licensed transistor technology from Western Electric in 1953. Its TR-55 pocket radio went on sale in Japan in 1955, and its TR-63 followed in 1957 and was marketed in the United States. Transistors let radios run on small batteries, so teenagers could carry music out of the living room. Console radios of that era used vacuum tubes and had to stay plugged into a wall.
More from Talks at Google
