This week’s product development and innovation news features an online video of Harvard’s Clayton Christensen, author of The Innovators. Christensen describes and provides examples of his theory of the role of disruption in creating innovative companies.

The video, about 37 minutes long, covers his presentation at Startup Grind 2013,  powered by Google for Entrepreneurs. Christensen points out that there are important patterns in the business world that enable entrepreneurs to bypass trial and error starts and move straight to an innovative business model more likely to lead to success.

In other words, identify emerging business patterns to create best practices. Here are three components to look for when identifying emerging patterns.

1. Apply the disruption theory.

Disruption is entering a market at the lowest level with a lesser, more affordable product rather than starting at the top with a complex, expensive product that directly competes with the top company’s product. (Think Kia’s first cars vs. GM’s Cadillac.)

How does it work? It allows you to predict what the competition will do in response to what you plan to do, and to predict whether their competitive response to what you do will kill off your new business.

The standard business model is the creation of improved products based on current successful ones in pursuit of profit. If you think you can win based on that same profit model, competitors will kill off your business. However, if you come in at the bottom rung with a lesser product and a lower price, and slowly move up, the competitors will not bother to mount a toe-to-toe fight.

In another video, “The Innovator’s Prescription” (from a 2009 conference at the Mayo Clinic), Christensen notes that IBM is the only original large computer equipment manufacturer left standing because it developed new, innovative business departments again and again for new products, and dropped outmoded ones, giving it the flexibility to evolve.

2. What customers should I focus on?

If your idea depends on new technology, never go after an established market. Instead, compete against non-consumption. For example, go after people who cannot afford that product or service at all.

Christensen offers the example of Sony’s introduction of “crummy, tinny” transistor radios. The company sold them to teenagers which allowed the teens to do things they could not do before: have a portable radio. Sound didn’t matter to this market, only convenience. Sony then did the same thing by introducing solid state $99 TVs to people who could not afford the old vacuum tube consoles. The new, cheap TV simply was better than nothing. Then Sony just made better and better products and their customers followed them. This wiped out most vacuum tube companies.

Here are two other examples. Are there customers who want an electric car that won’t go far or fast? Yes, parents of teens in suburbia. Are there people willing to settle for cheap, sporadically unusable solar panels since U.S. companies are seven years away from what U.S. consumers want? Yes, new emerging markets in Asia and Africa.

3. How do you know the customer will buy your product or service?

The question to ask is, “What is the job to be done?” In other words, you need to understand what causes us to buy a product or service.

It turns out that it is not propensity nor probability. It is, rather, the job to be done with your product or service. A fast food enterprise sold many milkshakes. Research showed that they were mostly sold early in the morning to people driving solo who had long commutes. Milkshakes filled the bill better than donuts or bananas in doing the job of keeping these drivers awake for most of their commute.

The customer is the wrong unit of analysis. Understanding the job the customer is trying to do, we can design the product for getting that job done.

Applying Christensen’s three steps can lead you to the right business product and model for long-term success.

Clayton Christensen is Harvard’s Kim B. Clark Professor of Business Administration. He teaches Building and Sustaining a Successful Enterprise. In 2011, in a poll of thousands of executives, consultants, and business school professors, Christensen was named as the most influential business thinker in the world.

Want More New Product and Innovation Insights?

If you are moving to more of a product development or innovation role, or are responsible for leading development and innovation, please visit me at Product Mastery Now – the source for online training to learn how to transform ideas into market-winning products.