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Only disruption creates growth
Potential products
Potential products are the first kind, and they depend on understanding the job to be done. Studies of innovation say only about 15 to 25% of the products a company starts developing become financially successful, and innovation is widely viewed as a crapshoot.
Sustaining innovation
Sustaining innovations make good products better. They keep margins healthy and are the mechanism for gaining market share, and most of the innovations people see are of this kind. They replace older products with new ones, so they do not create growth: a buyer who takes a Prius will not also buy a Camry.
Efficiency innovation
Efficiency innovations produce more with less. They keep a company competitive and free up cash, but they reduce jobs. Walmart and the Toyota production system are efficiency innovations, and a company that is not getting more efficient gets killed sooner.
Where did the Toyota Production System start?
Taiichi Ohno developed the system at Toyota in the decades after World War II. It rests on making only what is needed, when it is needed, using the just-in-time approach and kanban cards that signal when parts should be replaced. The method targets waste in all forms, including overproduction, waiting, and defects. It later spread far beyond the auto industry and became the basis of what is known as lean manufacturing.
How does Walmart's cross-docking save money?
Walmart founder Sam Walton opened the first store in 1962. The company later built distribution centers where goods arriving from suppliers are moved directly onto outbound trucks, often without being stored. This practice, known as cross-docking, reduces warehousing and inventory costs. Combined with computerized tracking, it let Walmart restock shelves faster than many rivals.
When did the Prius arrive?
Toyota launched the first Prius in Japan in December 1997. It was sold worldwide beginning in 2000 and became one of the best-selling hybrid cars. Hybrids pair a gasoline engine with an electric motor and battery that capture energy during braking. Toyota has sold millions of Prius vehicles since.
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