{"id":476,"date":"2013-11-01T15:09:31","date_gmt":"2013-11-01T23:09:31","guid":{"rendered":"https:\/\/formidableengineeringconsultants.com\/?p=476"},"modified":"2026-05-03T21:19:46","modified_gmt":"2026-05-04T05:19:46","slug":"the-ipod-car","status":"publish","type":"post","link":"https:\/\/formidableengineeringconsultants.com\/?p=476","title":{"rendered":"The iPod Car"},"content":{"rendered":"

\"disruptive_innovation_graph\"<\/a>Everyone who is anyone loves bandying about the name of Clayton Christensen<\/a>, the famed Professor of Business Administration at the Harvard Business School, who is regarded as one of the world\u2019s top experts on innovation and growth and who is most famous for coining the term “disruptive innovation<\/a>“. Briefly, the classical meaning of the term is as follows. A company, usually a large one, focuses on serving the high end, high margin part of their business and in doing so they provide an opening at the low end, low margin market segment.\u00a0 This allows for small nimble, hungry innovators to get a foothold in the market by providing cheap but good enough products to the low end who are otherwise forsaken by the large company who is only willing to provide high priced, over-featured products.\u00a0 These small innovators use their foothold to innovate further upmarket providing products of increasingly better functionality at lower cost that the Big Boys at the high end.\u00a0 The Big Boys are happy with this because those lower margin products are a lot of effort for little payback and “The Market<\/a>” rewards them handsomely for doing incremental innovation at the high end and maintaining high margins.\u00a0 In the fullness of time, the little scrappy innovators disrupt the market with cheaper, better and more innovative solutions and products that catch up to and eclipse\u00a0the offerings of the Big Boys, catching them\u00a0off guard and the once large corporations, with their fat margins, become small meaningless boutique firms.\u00a0 Thus the market is disrupted and the once regal and large companies, even though they followed all the appropriate rules dictated by “The Market”, falter and die.<\/p>\n

Examples of this sort of evolution are many.\u00a0 The Japanese automobile manufacturers used this sort of approach to disrupt the large American manufacturers in the 70s and 80s; the same with Minicomputers versus Mainframes and then PCs versus Minicomputers; to name but a few.\u00a0 But when you think about it, sometimes disruption comes “from above”.\u00a0 Consider the iPod<\/a>.\u00a0 Remember when Apple<\/a> introduced their first music player?\u00a0 They weren’t the first-to-market<\/a> as there were literally tens of MP3 players available<\/a>.\u00a0 They certainly weren’t the cheapest as about 80% of the portable players had a price point well-below Apple’s $499 MSRP.\u00a0 The iPod\u00a0did have more features than most other players available and was in many ways more sophisticated – but $499?\u00a0\u00a0\u00a0This iPod was more expensive, more featured, higher priced, had more space on it for storage than anyone could ever imagine needing\u00a0and had bigger margins than any other similar device on the market. And it was a huge hit.\u00a0 (I personally think that the disruptive part was iTunes<\/a> that made downloading music safe, legal and cheap at a time when the RIAA was making headlines by suing ordinary folks<\/a> for thousands of dollars for illegal music downloads – but enough about me<\/a>.)\u00a0 From the iPod, Apple went on to innovate a few iPod variants, the iPhone and\u00a0the iPad as well as incorporating some of the acquired knowledge into the Mac.<\/p>\n

And now, I think, another similarly modeled innovation is upon us.\u00a0 Consider Tesla Motors<\/a>.\u00a0 Starting with the now-discontinued Roadster<\/a>\u00a0– a super high end luxury 2 seater sport vehicle that was wholly impractical and basically a plaything for the 1%.\u00a0 But it was a great platform to collect data and learn about batteries, charging, performance, efficiency, design, use and utility.\u00a0 Then the Model S<\/a>\u00a0that, while still quite expensive, brought that price within reach of perhaps the 2% or even the 3%.\u00a0\u00a0 In Northern California<\/a>, for instance, Tesla S cars populate the roadways seemingly with the\u00a0regularity of\u00a0VW Beetles.\u00a0 Of course, part of what makes them seem so common is that their generic luxury car styling makes them nearly indistinguishable, at first glace, from a Lexus, Jaguar, Infiniti, Maserati, Mercedes Benz, BMW\u00a0and the like.\u00a0The choice of styling is perhaps yet another avenue of innovation.\u00a0 Unlike, the Toyota Prius whose iconic design became a “vector” sending a message to even the casual observer about the driver and perhaps the driver’s social and environmental concerns.\u00a0 The message of the Tesla’s generic luxury car design\u00a0to the casual observer merely seems to be “I’m rich –\u00a0but if you want to learn more about me\u00a0– you better take a closer look”.\u00a0Yet even attracting this small market segment, Tesla was able to announce profitability for the first time<\/a>.<\/p>\n

With their third generation\u00a0vehicle,\u00a0Tesla promises to reduce their selling price by 40% over the current Model S<\/a>\u00a0.\u00a0 This would bring the base price to about $30,000 which is within the average selling price of new cars in the United States<\/a>.\u00a0 Even without the lower priced vehicle available, Tesla is being richly rewarded by The Market thanks to a good product (some might say great), some profitability, excellent and savvy PR and lots and lots of promise of a bright future.<\/p>\n

But it is the iPod model all over again. Tesla is serving the high end and selling top-of-the-line technology.\u00a0 They are developing their\u00a0technology within a framework that is bound mostly by innovation and their ability to innovate and not by cost or selling price.\u00a0 They are also acting in a segment of the market that is not really well-contested (high-end luxury electric cars).\u00a0 This gives them freedom from the pressures of competition and schedules – which gives them an opportunity to get things right rather than rushing out ‘something’ to appease the market.\u00a0 And with their success in that market, they are turning around\u00a0and using what they have learned to figure out how to build the same thing (or a similar thing) cheaper and more efficiently to bring the experience to the masses (think: iPod to Nano to Shuffle).\u00a0 They will also be able thusly to\u00a0ease their way into competing at the lower end with the Nissan Leaf<\/a>, Chevy Volt<\/a>, the Fiat 500e<\/a> and the like.<\/p>\n

Maybe the pathway to innovation really is from the high-end down to mass production?<\/p>\n","protected":false},"excerpt":{"rendered":"

Everyone who is anyone loves bandying about the name of Clayton Christensen, the famed Professor of Business Administration at the Harvard Business School, who is regarded as one of the world\u2019s top experts on innovation and growth and who is most famous for coining the term “disruptive innovation“. Briefly, the classical meaning of the term […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[31,73,37,68,20,45],"tags":[69,35,33,70,46,40,24,38,23],"class_list":["post-476","post","type-post","status-publish","format-standard","hentry","category-consulting","category-disruptive-technology","category-gadgets","category-innovation","category-patents","category-start-ups","tag-automobiles","tag-collaboration","tag-consultant","tag-electric","tag-ideas","tag-ipad","tag-reinvent","tag-revolutionary","tag-wheel"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/formidableengineeringconsultants.com\/index.php?rest_route=\/wp\/v2\/posts\/476","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/formidableengineeringconsultants.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/formidableengineeringconsultants.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/formidableengineeringconsultants.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/formidableengineeringconsultants.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=476"}],"version-history":[{"count":21,"href":"https:\/\/formidableengineeringconsultants.com\/index.php?rest_route=\/wp\/v2\/posts\/476\/revisions"}],"predecessor-version":[{"id":646,"href":"https:\/\/formidableengineeringconsultants.com\/index.php?rest_route=\/wp\/v2\/posts\/476\/revisions\/646"}],"wp:attachment":[{"href":"https:\/\/formidableengineeringconsultants.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=476"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/formidableengineeringconsultants.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=476"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/formidableengineeringconsultants.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=476"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}