Clayton Christensen essentials on what to include in developing a business plan or a business model. Also elements of disruptive innovation and some charts on the process of constructing theory from statements of association, to correlation to causality.

1. Disruptive Innovation
Clayton M. Christensen, Jerome H.
Grossman, M. D., and Jason Hwang, M.D.
The Innovator’s Prescription: A Disruptive
Solution for Health Care (New York, NY:
McGraw-Hill, 2009).

2. Elements of a Business Model
Profit Formula: Processes:
Assets and fixed cost Ways of working together to
structure, address recurrent tasks in a
and the margins and velocity consistent way:
required to cover planning, budgeting, training,
them development, manufacturing
4 3
The Value Proposition: Resources:
A product or service that helps People, technology, products,
customers do more effectively, facilities, equipment, brands,
conveniently, and cash that are required
and affordably a job to deliver the value proposition
they’ve been trying to do to the targeted customers
1 2
Clayton M. Christensen, Jerome H. Grossman, M. D., and Jason Hwang, M.D. The Innovator’s Prescription: A Disruptive Solution for Health Care (New York, NY: McGraw-Hill, 2009).
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3. A Typology of Business Models
Business Prescription
Models Business
Models
(Øystein Fjeldstad) (C. M. Christensen)
Classically intuitive, trial and error process of
Value Shops Solution Shops problem solving. Uses experts who draw on
intuition, experience and analytical skills to
diagnose and solve unstructured problems.
VAPs They take in incomplete or broken things and
Value Chains Value-Adding transform them into more complete outputs of
Process higher value. Value embedded in equipment and
Businesses processes rather than the intuition of experts.
The networked users themselves are a key part of
Value Networks Facilitated the product. Ongoing activity and often behavior
Networks dependent, like collectives of chronic diseases, or
Apple Computer users, or casinos.
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4. A Typology of Business Models
Business Prescription
Models Business
Models
(Øystein Fjeldstad) (C. M. Christensen)
Value Shops Solution Shops Decentralized expertise and decentralized
resources. Expensive per unit.
VAPs
Value Chains Value-Adding Commoditized expertise and centralized
Process resources. Less expensive per unit.
Businesses
Value Networks Facilitated Commoditized expertise and decentralized
Networks resources. A lot less expensive per unit.
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5. Type of Business Model
Solution Shop Value-Adding Process Network Facilitator
Business Model Type
Toyota
Disruptions within a
Boston Consulting Group Wal-Mart, Target Electronic clearing networks
Bain Capital Canon (ECNs)
Bloomberg Cisco Cellular telephony
Community colleges Skype (VOIP)
Fidelity
Ford
Disruptions that changed
the Business Model Type
Kodak
TurboTax
Geek Squad
Amazon
eBay
Second Life
Linux
Google
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6. Elements of Disruptive Innovation
Disruption
Key Enabler Goal
Sophisticated technology Routinizes the solutions to
1. Technology that simplifies problems that previously needed
intuitive experimentation.
Lower-cost innovative Profitably delivers the simplified
2. Business business models solutions to customers affordably
and conveniently.
Systemic reform with mutually
3. Value Economically coherent reinforcing economic models. A
value network “system of interlinked chains”
rather than piecemeal insertions.
Lubricate interactions. Make it
4. Government Regulations and standards easier rather than more difficult.
that facilitate change Foster, stabilize, make it more
affordable.
Clayton M. Christensen, Jerome H. Grossman, M. D., and Jason Hwang, M.D. The Innovator’s Prescription: A Disruptive Solution for Health Care (New York, NY: McGraw-Hill, 2009).
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7. The Cycles of Theory
Building in Management
Research
Paul R. Carlile
School of Management Copyright ©
Boston University Working papers are in draft form.
Boston, MA 02215 This working paper is distributed
carlile@bu.edu for purposes of comment and
discussion only.
Clayton M. Christensen
Harvard Business School
Boston, MA 02163
cchristensen@hbs.edu
October 27, 2004
Version 5.0
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8. The Process of Building Theory
Statements
of association
(models)
Predict Confirm
Categorization based
upon attributes of phenomena
(frameworks & typologies)
Anomaly
Observe, describe & measure
the phenomena
(constructs)
The Cycles of Theory Building in Management Research
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9. The Process of Building Theory
Statement
of causality
Preliminary
statements Predict Categorization of the Confirm
circumstances in which we
of correlation might find ourselves
Predict Categorization by the Confirm Anomaly
attributes of the Observe, describe &
phenomena measure the phenomena
Anomaly
Observe, describe &
measure the phenomena Normative Theory
Descriptive Theory
The Cycles of Theory Building in Management Research
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10. Veritas
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