It’s a Tesla
Christensen’s theory is based on examples drawn from buying decisions made by businesses, not consumers. The reason this matters is that the theory of low-end disruption presumes:
- Buyers are rational
- Every attribute that matters can be documented and measured
- Modular providers can become “good enough” on all the attributes that matter to the buyers
All three of the assumptions fail in the consumer market, and this, ultimately, is why Christensen’s theory fails as well…
.. The reality is the company’s significant research and development costs have been paid for by issuing stock and incurring debt, not the profits of high-end models.
.. Tesla is not disruptive. Rather, their error was a repeat of the mistake Christensen made with the iPhone; first, they don’t understand why people buy Teslas, and two, they assume that disruption is the only viable strategy to enter a new market.