You can’t disrupt a market just because you want to: the market has to be ripe for disruption–ready, in other words, for replacement with a new product/service platform. There are two situations in which new platforms are required: (1) when a market is highly overserved and (2) when a market is highly underserved.
A market is highly overserved when customers (job executors) are highly satisfied with how well they’re able to do the job they’re trying to get done and when the needs associated with that job are relatively unimportant. These customers are not struggling in the least. In fact, they’d be happy to have fewer bells and whistles associated with getting the job done if it meant they could pay less for the solution.
Figure 1 is a visual representation of this situation. Each dot represents a need in the market. People measure the successful execution of a job by how well these needs are satisfied. Typically any job will have between 50 and 150 needs (or desired outcomes) associated with it. Figure 1 shows clearly that the market as a whole is highly overserved, as nearly all the needs are highly satisfied, yet not that important. In our experience there are very few markets that are this ripe for disruption. The desktop document management market is one example, however, with Google Docs playing the role of a disruptor, replacing Microsoft Office products.
A market is highly underserved when the job executors’ needs are very important and poorly satisfied. In this situation, customers are struggling to get a job done: the products and services available to them offer only limited help. These customers are generally willing to pay more to get the job done better. This situation represents an opportunity for accelerated growth and profit share.
Figure 2 is a visual representation of an underserved market. Unlike overserved markets, underserved markets are quite common.
Most companies do not realize when they’re dealing with an over- or underserved market, or when a market is appropriately served. Only by defining a market as a job and job executor and uncovering all the needs in the market can a company know for sure. If it turns out the market is highly under- or overserved, then a strategy for sustaining innovation or product improvement is a recipe for failure: more radical change is called for. Knowing the market is ripe for disruption is the first step toward the right market and product strategy–and growth. This is a critical step in our innovation process, Outcome-Driven Innovation (ODI).