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GILLES LABOURET

INNOVATION &
ENTREPRENEURSHIP
IAE Lyon III – Master International Business Realities
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What do you see

when talking about
Innovation ?
What comes first to our mind ?

Creativity
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INTRO
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What do you see

when talking about
Innovation ?
What comes first to our mind ?

Brainstorming
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INTRO
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What do you see

when talking about
Innovation ?
What comes first to our mind ?

High Tech
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INTRO
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Original
Solution Identification
High-tech of problem
solution
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Blood, sweat
and tears

Innovation
It’s basically where it happens !

INTRO
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No innovation
THE MYTH
Market/user
selection

Innovation
wanted Innovation process
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Concept development Valorization Promotion In-breaking

TRUE INNOVATION

(Frankelius, 2009)

INTRO
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Schumpeter Joseph
1883 – 1950

A novel view on Innovation and

Entrepreneurship

According to Schumpeter innovation is a

"process of industrial mutation, that
incessantly revolutionizes the economic
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structure from within, incessantly

destroying the old one, incessantly creating
a new one".
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Schumpeter Joseph
1883 – 1950

What is Innovation ?

1. Launch of a new product or a new species of

already known product;

2. Application of new methods of production or

sales of a product (not yet proven in the industry);
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3. Opening of a new market (the market for which a

branch of the industry was not yet represented);

4. Acquiring of new sources of supply of raw

material or semi-finished goods;

5. New industry structure such as the creation or

destruction of a monopoly position.
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Importance of
innovation for
economical survival
Schumpeter→ Sustainable
innovation is the only way for a
company to survive!!!

Creative Destruction, process of opening

of new markets and revolution of
economic structures from within.
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Economic growth is sustained by

innovative entry of new entrepreneurs
that (partially) destroy established
companies
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Jean-Baptiste Say
1767 – 1832

A classical economist

What is an Entrepreneur ?

• The organizer and manager of

production or trade.
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• The employer

• The owner of a capital.

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Schumpeter Joseph
1883 – 1950

A novel view on Innovation and

Entrepreneurship

What is an Entrepreneur ?

• Functional character and concerns only

functions and activities related to
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innovation.

• Is not the owner of a capital.

• Schumpeter's “entrepreneur“ concept

gives banks (and banking system) the
possibility of implanting innovations in the
economy.
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Schumpeter Joseph
1883 – 1950

A novel view on Innovation and

Entrepreneurship

What motives an Entrepreneur to act?

• The desire to create "own kingdom."

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• The desire for gain.

• The joy of creation, to achieve

something, or just exercise the energy and
ingeniousness.
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Entrepreneurship
Modern definition

The process by which change

agents(entrepreneurs) undertake economic
risks to innovate – to create new products,
processes and sometimes new
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organisations.
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Entrepreneur
Modern definition

Entrepreneurs are the agents who

introduce change into the competitive
system. They do this not only by figuring
out how to use inventions, but also by
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introducing new products or services, new

production processes, and new forms of
organization. The can start ventures or they
can be found within existing firms
(intrapreneurs).
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Definitions

Innovation
Implementation of a new or
significantly improved product (good
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Innovation management
system (IMS)
Set of interrelated or interacting
elements of an organization to

or service), or process, new establish innovation policies and

marketing method, or new objectives as well as processes to
organizational method in business achieve those objectives
practices, workplace organization or
external relation

INTRO
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Innovation is the
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successful
introduction of a new
product, process or
business model
NETFLIX
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Innovation as a competitive weapon

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NETFLIX
disrupting the TV industry

1980s and 1990s

➔ Cable
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NETFLIX
disrupting the TV industry

1997 ➔ Reed Hastings created

NETFLIX, an on-line shop renting
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DVD delivered through U.S. Mail.

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NETFLIX
disrupting the TV industry

VHS ➔ DVD

Monthly subscription model

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Red envelopes

New rental would not be sent until

the current rental was returned.
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NETFLIX
disrupting the TV industry

Slow start

Reeds approached BLOCKBUSTER

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Selling NETFLIX ?
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NETFLIX
disrupting the TV industry

BLOCKBUSTER refused

NETFLIX survived
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BLOCKBUSTER became online too late

BLOCKBUSTER ➔ bankruptcy
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Continued innovation as a bedrock of NETFLIX’s

business strategy
Queue of movies
➔ NETFLIX could predict future demand

Personal recommendation engine

➔ NETFLIX steer away subscribers from hit movies
➔ NETFLIX offered a greater exposure to movie studios
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➔ NETFLIX was fast to catch the wave of content streaming via the internet.
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NETFLIX
disrupting the TV industry

NETFLIX began streaming content in 2007.

Multi devices and new devices like Apple

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TV, Google Chromecast…

High speed broadband internet connections

High definition flat screens TV

➔ Early 2010, 12 millions subscribers !

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NETFLIX
disrupting the TV industry

Broadcast networks stopped

distributing content to NETFLIX
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➔ www.hulu.com.
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NETFLIX
disrupting the TV industry

www.hulu.com was more a platform to test

new content in a cheap and less risky way.
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➔2011, NETFLIX announced a move to

create and stream original content online.

➔2013, NETFLIX released House of Cards,

followed among others by Orange is the
New Black or The Crown.
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NETFLIX
disrupting the TV industry

2017, 100 millions subscribers

worldwide and 9 B$US revenues.
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2020, NETFLIX plan to spend 15

B$US in new programs.
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WINNING IS
EVERYTHING
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Product Innovation
Warfare
I n a w a r, t h e r e i s n o p r i z e f o r t h e
runner-up. - Omar Bradley, U.S. General

Companies are engaged in a

product innovation war.
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The battlefields are the

marketplaces around the world for
everything.

WINNING IS EVERYTHING
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You are the combatants

1000 largest companies in the world
spend more than 1B$ per working day on
R&D, far more than any military war.

Weapons = New Products

Shock troops = Sales teams, Advertising

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people, Promotional experts…

Senior Executives = Generals

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It’s war: Innovate or die !

Winners and losers, human kind benefits
from the new products and services that
previous generations did not have.

Some companies simply disappeared

because they failed to innovate.
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Companies need a novel business

model.

They need to produce and market

innovative products
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Increased speed of innovation adoption

MP3 Cellphone Radio

Internet PC TV µwave VCR Electricity Telephone Airplane Car

50%
adoption
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6 10 14 19 28 33 35 37 52 71 75 84 Years
Data from US Census Bureau, the Consumers Electronics Association, Forbes and The National Cable and Telecommunications Association
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Blue Ocean
strategy
Va l u e i n n o v a t i o n
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Blue Ocean strategy

Combining differentiation and cost
leadership

Firms can create more economic value and

the likelihood of gaining and sustaining
advantage in one of the 2 ways : either
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increasing perceived consumer value (while

containing costs) or lowering cost (while
offering acceptable value).

Should managers try to do both at the same

time ? 2 strategies in the same time:
differentiation AND low cost ?
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Blue Ocean strategy

Combining differentiation and cost
leadership

In general, the answer is no !

Managers should not pursue this complex

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strategy because of the inherent trade-offs in

different strategic positions.

To meet this challenge, Kim and Maubourg

advance the notion of Blue Ocean, which is a
business level strategy that successfully
combines differentiation and cost leadership.
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Blue Ocean strategy

Combining differentiation and cost
leadership

They used the metaphor of an ocean to

denote the market space.
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Blue oceans represent untapped market

space, the creation of additional demand
and the resulting opportunities for highly
profitable growth.
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Blue Ocean strategy

Combining differentiation and cost
leadership

Red Oceans are known market space of existing

industries.

In red oceans, the rivalry among existing firms is

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cut-throat because the market space is crowded

and the competition is a zero sum game.

Products become commodities and competition is

focused mainly on price.

Any market share gain comes at the expense of

other competitors in the same industry, turning the
ocean bloody red.
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Blue Ocean strategy

Combining differentiation and cost
leadership

With the example of Trader Joe’s, we see that,

investments in differentiation and low cost are not
substitutes but complements.
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2 pricing options :
• Higher price than cost leader, reflecting higher value
creation ➔ greater profit margin

• Lower price below that of the differentiator because

of its lower cost structure ➔ market shares +
increased sales
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Blue Ocean strategy

Combining differentiation and cost
leadership

➔ VALUE INNOVATION

Aligning Innovation with total perceived

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consumer benefits, price and cost (ref. to

Economic Value Creation)

Makes competition irrelevant by providing a

leap in value creation, thereby opening new
and uncontested market spaces.
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Blue Ocean strategy

Combining differentiation and cost
leadership

➔ VALUE INNOVATION

Lowering cost and increase perceived value

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for the buyers.

• Lowering cost by eliminating taken-for-granted

factors that the firm’s industry rivals compete on.

• Perceived value increased by raising existing

KSF and by creating new elements that the
industry has not offered previously.
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Blue Ocean strategy

Combining differentiation and cost
leadership

➔ VALUE INNOVATION: LOWER COSTS

Eliminate : Which of the factors that the

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industry takes for granted should be

eliminated ?

Reduce : Which of the factors should be

reduced well below the industry’s standard ?
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Blue Ocean strategy

Combining differentiation and cost
leadership

➔ VALUE INNOVATION: INCREASED

PERCEIVED CONSUMER VALUE
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Raise : Which of the factors should be

raised well above the industry’s standard ?

Create : Which the factors should be

created that the industry has never offered ?
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Group Exercise 1
How IKEA has used Value Innovation based on the
eliminate-reduce-raise-create framework to initiate
its own blue ocean ?
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IKEA
Apply the Blue Ocean

Find all elements fitting to each aspect of the Value

Innovation approach that IKEA has applied.
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30 minutes
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IKEA
Eliminate taken for granted
competitive elements

Salespeople

Expensive but small retail outlets in prime urban location and shopping malls.
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Long wait after ordering furniture.

After-sales service.

Products displayed in warhouse style setting (reducing cost inventory).

Customers assemble themselves the furnitures.

Customers serve and transport furnitures themselves.

Big-box concept of locating supersized store near major metropolitan areas.

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IKEA
Reduce

Do-it-yourself business ➔ selection, delivery,

assembly ➔ reduced need for staff
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Limited warranty

No customization

Limited number of options like fabrics and patterns

No, or limited use of expensive material such as

leather or hard wood, among other elements.
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IKEA
Raise competitive elements

Huge choice with tens of thousands of home furnishing

items

More than furniture

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Big-box stores, much bigger than traditional furniture

stores

Hundreds of rooms decorated with tagging and

explanations. Customers can touch.

Fully dedicated suppliers, controlling design, quality,

functionality and cost
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IKEA
Create
A new way to shop for furniture

Customer stroll along a predetermined path winding through the fully

furnished showrooms

Customer compare, test and touch the products

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Using the tagging, buyers find the product themselves in the

warehouse and pick them up in the IKEA’s signature flat-packs.

Customers transport the products and assemble the furniture

Target price designed furniture (e.g. 150$ chair, including margin)

Onsite child care

Cafeteria with Swedish food at low price

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The innovation
process
MEGA BLOKS
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The Innovation
Process
IDEA

➔The innovation process begins with an Idea.

➔The idea is often presented as an abstract

concept or as finding derived from basic research.
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➔Basic research is conducted to discover new IDEA

knowledge without any commercial application or

benefit in mind.

➔Basic research is often transformed in applied

research with commercial applications.
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The Innovation
Process
INVENTION

➔The INVENTION describes the transformation of

an IDEA into a new product or process or the
modification and recombination of existing ones.
INVENTION
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➔Practical application of basic knowledge in

IDEA
particular area frequently results in new technology.
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The Innovation
Process
INVENTION

➔If an invention is useful, novel and non obvious,

as assessed by a Patent Trademark Office, it can
be patented :
INVENTION
➔ A patent is a form of intellectual property that gives the
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inventor exclusive rights or benefits from IDEA

commercializing a technology for specific time period
in exchange for public disclosure of the underlying
idea. In US, this period is 20 years. E.g. Many
pharmaceutical drugs are patent protected.
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The Innovation
Process
INVENTION

➔Because other companies can use freely the

patent once protection has expired, some prefer
trade secret:
INVENTION
➔ A trade secret is a Valuable Proprietary information
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that is not in the public domain and where the firm IDEA
makes every effort to maintain its secrecy (Example:
Coca-Cola, Ferrero Nutella, Lego, Netflix algorithm,
Google page rank algorithm…)

➔ A trade secret brings a competitive advantage

because it works best !
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The Innovation
Process
I N N O VAT I O N

➔Innovation is the commercialization of an Invention.

➔An innovation is the commercialization of any new INNOVATION

product or process or modification and recombination INVENTION

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of existing ones.
IDEA
➔The successful commercialization of a new product
or service allows a firm to extract temporary monopoly
profits.

➔Continuous process : Netflix > DVD rentals >

algorithm > Production of proprietary content
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The Innovation
Process
I N N O VAT I O N

➔First mover advantage:

➔ Economy of scale INNOVATION

➔ Network effect INVENTION

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➔ Intellectual property/ patents

IDEA
➔ Lock in key suppliers

➔ Lock in customers through increasing switch

cost (e.g. Ms Word, Apple…)
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The Innovation
Process
INNOVATION

INNOVATION
NOVEL USEFULL
INVENTION
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INNOVATION IDEA

IMPLEMENT
ED
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The Innovation
Process
I M I TAT I O N

➔The Innovation process ends with IMITATION

IMITATION
because competitor will imitate successful
INNOVATION
Innovations
INVENTION
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➔Netflix sees now Amazon Prime and Hulu Plus

IDEA
competing with its offer, contents…

➔Time will tell us if Netflix is able to sustain

competitive advantage.
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MEGA BLOKS™
New products are the key to
B u s i n e s s P r o s p e r i t y.
➔Canadian company started in 1985 with the
dream of a Lego-style toy but aimed at younger
children: larger and easier-to-use.
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➔During 15 years, the company progressed from

merely selling a bag of blocks to major themes,
such as fire stations or farms.

➔ The company introduced in 2002, Dragon™

product line with figures to which kid can identify
with. In 2003, subsequent Dragon themes moved
from « land » to a « sea » theme, and to « fire and
ice » in 2004.
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MEGA BLOKS™
The Keys to Success

➔Vision and strategy based on product innovation

➔Senior management focused on growth through

innovation – “New products drive the company”
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➔The emphasis is on innovation, creativity and

themes, the Dragon™ line being an example

➔4% of the revenue on R&D

➔30% to 40% of that goes to innovative project

and the rest to extensions, modifications, etc.
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MEGA BLOKS™
The right culture

➔Senior management committed to new products

coupled with the company entrepreneurial spirit

➔Very supportive climate for product innovation

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➔Walk into any office, design space, or lab in the

company, and watch the people – they’re excited,
bubbling with enthusiasm, and having fun.

➔No idea is a bad one !

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MEGA BLOKS™
The MEGA Process

➔Idea-to-Launch framework

➔By 1999, product development, the engine of

MEGA BLOKS was in trouble:

➔
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Too many projects underway, no focus, no

priorities.

➔ Too many people with undefined roles were

involved, and accountabilities and communication
suffered.

➔ Too many false start development projects –

“start, then stop, go back, then start again…” –
resulting in many late products.
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The goal was to have a system, but at the same time,

The MEGA Process to have the entrepreneurial methods, spirit, and way of
doing things we had when we were small – we wanted
to make a big company act small again.
Dan Bourgeois – VP of R&D – MEGA BLOKS - 1999
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MEGA BLOCKS™
Benefits of the MEGA Process ?

➔Double the number of projects with about the

same resources ! Why ?

➔ More discipline

➔ Better integration among functions

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➔ Effective cross functional teams with better

communication

➔ Faster Go/Kill decisions

➔ More emphasis on superb upfront homework and

consumer insights resulting in les Go-Back, Go-
forward motion

➔ The MEGA Process became a tool for the entire

company: sales, finance…
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MEGA BLOCKS™
Portfolio Management

➔In 2003, the company had more than 200 projects underway.
The question of priorities and the right mix and balance of
projects looms large.

➔If the project was rated positively, it was put in the MEGA
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process based on its own merits; there was little concern about
the impact one project can have on the entire pipeline of
projects - on mix, balance, priorities and resources limits.

➔With the portfolio management system, management made

better project management and prioritize projects more
effectively.

➔In 2004, MATTEL acquired the company

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Innovation and the

industry life cycle
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Typical industry life cycle

Market size
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Introduction Growth Shakeout Maturity Decline

Time
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The smartphone industry in 2019

Smarphones
Market size Developed economies

Smarphones
Emerging economies
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Smarphones in most
African economies

Introduction Growth Shakeout Maturity Decline

Time
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Market size
The Introduction stage
Time
Introduction Shakeout Decline
Growth Maturity

COST TARGETS COMPETITION PROFITS SALES

High cost per Innovators Little Negative Low sales

customer are targeted competition profits
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acquired
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The network effects

The positive effect(externality)
that one user of a product or
service has on the value of that
product for other users.

➔ Apple : iTunes and numerous Apps, tightly iPhone installed base

integrated in the ecosystem of hardware, software
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and services.

➔ 2001 | iPod Demand for iPhones iPhone Apps

➔ 2003 | iTunes

➔ 2007 | iPhone

➔ 2008 | Appstore
Value of iPhone
➔ 2017 | 2 millions Apps ➔ 130 B downloads ➔
50 B$ revenues
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Market size
The Growth stage
Time
Introduction Shakeout Decline
Growth Maturity

COST TARGETS COMPETITION PROFITS SALES

Cost per Increasing More Profit rise Increasing

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customer falls number of competitors sales

customers
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Product & Process Innovation in Ind. Life Cycle

Product innovations, as
size
Innovation
Product Innovation the name suggests, are
new or recombined
Level ofMarket

knowledge embodied in
new products. ➔ Electric
vehicle, smartphones, etc.
Process innovations
are new ways to
produce existing
products or to deliver
existing services. ➔
Internet, Lean
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Manufacturing, Six
Sigma, Biotech,
nanotech, etc.

Process Innovation

Introduction Growth Shakeout Maturity Decline

Time
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Market size
The Shakeout stage
Time
Introduction Shakeout Decline
Growth Maturity

COST TARGETS COMPETITION PROFITS SALES

Cost per Stabilized Number of Profit erodes Sales growth

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customer number of competitors start to

stabilized customers stabilized and decline
competition
increasing
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Market size
The Maturity stage
Time
Introduction Shakeout Decline
Growth Maturity

COST TARGETS COMPETITION PROFITS SALES

Cost per Mass market Stable Profit high Peak sales

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customer number of
lowest competitors
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Market size
The Decline stage
Time
Introduction Shakeout Decline
Growth Maturity

COST TARGETS COMPETITION PROFITS SALES

Cost per Customer Number of Profit falls Falling sales

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customer low base competitors

contracts falls
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4 possible
strategies
In the decline stage

Market size
➔ Divest / Exit
Time
Decline
➔ Harvest Introduction
Growth
Shakeout
Maturity
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➔ Maintain

➔ Consolidate
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Crossing the Chasm

Geoffrey A. Moore
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Crossing the Chasm

Geoffrey A. Moore

1991, revised in 1999 and 2014

Based on empirical observations, Moore noticed that many

innovators were unable to successfully transition from one
stage in the industrial life cycle to the next, because each stage
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is dominated by a different customer group.

Different customer groups with distinctly different

preferences enter the industry at each stage of the industry life
cycle. Each customer group responds differently to a
technological innovation.
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Crossing the Chasm

Geoffrey A. Moore

1991, revised in 1999 and 2014

This is due to differences in the psychological, demographic

and social attributes observed in each unique customer
segment.
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Moore’s main contribution is that the significant differences

between early customer groups – who enter during the
introductory stage – and later customers – who enter in the
growth stage – can make for a difficult transition between the
different part of the cycle.
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Crossing the Chasm

Geoffrey A. Moore

1991, revised in 1999 and 2014

Such a difference between customer groups lead to a big gulf

or CHASM into which companies and their innovations
frequently fall.
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Only companies that recognize these differences and are able

to apply the appropriate competencies at each stage of the
industry life cycle will have a chance to transition successfully
from stage to stage.
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The Crossing the Chasm Framework

Customers
or Sales
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Maturity of customers
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~2,5%

Technology
enthusiast
Innovators

“Join when it is new”

Technology enthusiast have often an engineering mindset

and pursue new technology proactively.

They frequently seek out new products before products are

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officially introduced into the market. They enjoy beta

versions of products, tinkering with the product’s
imperfections and providing feedback and suggestions to
companies.

Microsoft and Google launch beta versions to accumulate

customers feedbacks.
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~2,5%

Technology
enthusiast
Innovators

“Join when it is new”

Technology enthusiasts will pay a premium price to

have the latest gadget.
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The endorsement by them validates the fact that new

product does in fact work.

Technology enthusiasts love to belong to the

community of tech geeks. This is not only valid for high
tech but also for make-ups, environmental techs,
fashion….
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~13,5%

Googe Glass
Innovators

“Join when it is new”

Beta testing program in 2013

• Google ask those interested to compose a Twitter
message of 50 words or less explaining why they
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would be a good choice to test the announced

device and include #ifihadglass.

• 150 000 applied ➔ 8000 winners ready to pay

$1500 for the developer version.

Nevertheless, no company succeed to cross the

Chasm of computerized eyeglasses. Google spent
10B$USD.
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~13,5%

Early adopters
Join when they perceive a benefit

Customers entering the market in the Growth stage

are early adopters. 13.5% of the total market
potential.
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They are eager to buy early into a new technology

or product concept. Their demand is driven by their
imagination and creativity rather than by the
technology. They recognize and appreciate the
possibilities the new technology can afford them in
their professional and personal lives.
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~34%

Early adopters
Join when they perceive a benefit

Early adopter’s demand is fueled more by intuition

and vision rather than technology concerns.
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Example: Apple fans who lined up at Apple stores in

the spring 2015 when it introduced Apple Watch.

➔ Firms should communicate the product’s

potential applications in a more direct way than
when it attracted the initial the Technology
enthusiasts. ➔ Critical to opening any new high-
tech market segment.
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Crossing the CHASM, Cash Flow, strategies, actors
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~34%

Early majority
Join when they perceive a
productivity gap

Customers entering the Shakeout stage are called

Early Majority.
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Their main consideration in deciding whether or not

to adopt a new technological innovation is a strong
sense of practicality. They are pragmatists and are
most concerned with the question of what the new
technology can do for them. Before adopting, they
weight the benefits and costs carefully.
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~34%

Early majority
Join when they perceive a
productivity gap

These customers are aware that many hype

product introductions will fade away, so they prefer
to wait and see how things shake out.
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Early majority customers rely on endorsements by

others. They seek out reputable references such as
reviews in prominent trade journals or magazines
(Consumers Reports).
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~34%

Late majority
Join when there is a plenty of
help and support

Customers entering the Maturity stage are called Late

Majority.Customers are quite similar to Early majority, but
some differences are important :
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➔ They are not confident in their ability to master the new

technology.

➔ They prefer to wait until standard has emerged.

Uncertainty must be reduced.

➔ These late majority customers prefer to buy from well

established firms with a strong brand image and
service.
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~16%

Laggards
Join only when they have to

Laggards are the last consumers, entering at the

decline stage of the industry life cycle.
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They adopt new products or technologies only if it is

absolutely necessary. E.g. new cellphones
adopters.

Their reluctancy is driven either by personal or

economic reasons. So, they are not considered
worth pursuing. Their demand is far too small to
compensate the reduced demand.
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Limits of the industry life

cycle framework
Industries do not necessarily evolve through these stages.

Innovation can emerge at any stages of the cycle, which can in turn initiate a new cycle.

Industries can be rejuvenate, often in decline stage.

Some industries may never go through the entire cycle, while others are continually renewed
through innovations.
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External factors can affect the dynamics of the industry life cycle: e.g. fashion, changes in
demographics or deregulation. Use the PESTEL model to try to capture these external
changes.

Some innovations may have a second chance: e.g. Iridium is become relevant for
communications in airplanes and air traffic control.
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Types of innovation
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Types of innovations

Architectural Radical
New
MARKETS
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Existing

Incremental Disruptive

Existing New
TECHNOLOGIES
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Radical vs Incremental
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Radical vs Incremental
ECONOMIC INCENTIVES
To maintain its strategic position and market power, an emphasis on incremental innovation strengthens the incumbent firm’s
position and thus maintains high entry barriers.
Many markets where networks effects are important(such as online search), turn into winner-take-all markets (Markets where the
market leader captures almost all of the market share and is able to extract a significant amount of the value created.
New entrants are forced to radical innovation because of high entry barriers.

ORGANIZATIONAL INERTIA
From an organizational perspective, as firm become established and grow, they rely more heavily on formalized business
processes and structure. In some cases, the firm may experience organizational inertia – resistance to changes in the status quo.
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Therefore, they tend to favor incremental innovations avoiding radical innovation that may disturb the existing power distribution.

INNOVATION ECOSYSTEM
Incumbent firms tend to be a source of incremental rather than radical innovation because the become embedded in an innovation
ecosystem, a complex network of suppliers, buyers and complementors. They no longer make independent decisions but must
consider the ramifications on other parties in their innovation ecosystem. Radical innovation disrupt this equilibrium.
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Architectural vs Disruptive

Architectural innovation
A new product in which know components based on existing technologies are reconfigured in a novel way to attack new
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markets.
E.g. Xerox was long dominant copier company worldwide, focused on high-volume, high-quality and high-priced machines leased to
customers through a service agreement. Canon, entered this market by focusing on small to medium-sized businesses, redesigning
copier so that it didn’t need professional service (cartridge could be replaced by users…). Canon applied a razor-razor-blade
business model.

Disruptive innovation
An innovation that leverages new technologies to attack existing markets from the bottom up.
(Clayton Christiansen) The dynamic process of disruptive innovation begins when a firm, frequently a startup, introduces a new
product or process based on a new technology to meet existing customer needs.
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References