Strategy.

The framework

1. 01

   Distinguish sustaining from disruptive innovation.

   Sustaining innovations make existing products better for existing customers — better features, higher performance, lower defect rates. Incumbents are almost always better at sustaining innovation because they understand their customers deeply and have the processes to deliver incrementally. Disruptive innovations do not initially compete on the same performance dimensions. They're worse on the metrics incumbents and their customers care about, but better on dimensions the incumbent ignores: cost, simplicity, accessibility, or fit for a new use case. The discipline is to recognise which type of innovation is threatening you, because the strategic response is completely different.

2. 02

   Identify the non-consumer threat.

   Disruptors rarely start by attacking incumbents' core customers. They start with non-consumers — people who couldn't afford or access the incumbent's solution — or over-served customers who are paying for more than they need. Christensen's examples: personal computers disrupted minicomputers by serving individual users that mainframe vendors had no interest in. Netflix started with the small segment of DVD renters who wanted obscure titles — a market Blockbuster actively abandoned. The threat arrives through a door you've left open because it didn't look like a door.

3. 03

   Understand why your processes make you vulnerable.

   Christensen's insight went beyond strategy to organisational mechanics. Established companies have processes optimised for the economics of their current market: margins above a certain threshold, sales cycles that justify investment, support structures built for complex products. A disruptive opportunity that comes with lower margins and a different buyer profile gets killed by those same processes — not through bad intent, but because the organisation can't see it as an opportunity. This is why disruption often requires a separate unit with separate economics, separate metrics, and separate management. The parent company's immune system will kill the threat otherwise.

4. 04

   Create a separate unit before you need to.

   The companies that survived disruption — IBM with the PC, Amazon with AWS, Apple with the iPhone cannibalising the iPod — did so by creating a separate organisation with permission to compete against the parent. The unit needs different success metrics (not the parent's margin thresholds), different sales motions, and insulation from the parent's resource allocation processes that would defund it at the first quarterly pressure. The time to create this unit is before the disruptive threat is existential — when it still looks like a niche experiment. By the time the threat is obvious, the window for this response has usually closed.