Clayton M. Christensen's best selling business book, The Innovator's Dilemma helps executives think "outside the box" by developing the idea of "disruptive technologies." Disruptive technologies have three criterion: 1) simpler and less expensive, 2) commercialized in emerging or insignificant markets 3) embraced by the least profitable customers. Basic Utility Vehicles (BUVs) meet these requirements: they are low-cost vehicles (before freight, duties, profit) focused only on the needs in developing countries for low-income people in rural areas. As a disruptive technology, BUVs may be a stumbling block for established companies.
Historically, companies that listen to their best customers and focus on high profit products often delay investing in a disruptive technology until it is too late. Ironically, the usual answers to companies' problems- planning better, becoming more customer-driven, and taking a longer term perspective – tend to exacerbate the problem.
Christensen classified small, Japanese motorcycles introduced in the USA and Europe in the 1960’s as disruptive technologies. They were much less expensive than Harley cruisers, focused on an insignificant market (small motorcycles and off-road recreation). Product markets that do not exist cannot be analyzed in a traditional way. Suppliers and customers must discover them together. Experts have a terrible track record at forecasting the size of new markets (see chart below). Companies whose investment process demands quantification of market sizes and financial returns before they can enter a market become paralyzed by disruptive technologies.
Example: Honda's initial market studies in 1960 suggested that the North American market would grow at 5% per year. To their surprise, the market grew at 16%. Honda was a key player in fulfilling demand and taking market share from Harley and BMW.
Historically, the best approach for a disruptive technology has been to find a new market that values the current characteristics
