Anthony W. Ulwick

Dominant strategy. A company pursues a dominant strategy when it targets all consumers in a market with a new product or service offering that gets a job done significantly better and for significantly less money. Examples of offerings that successfully employed a dominant strategy include Google Search, Google AdWords, UberX, Netflix’s streaming video, Progressive Insurance’s nonstandard automobile insurance, and Vanguard Group’s personal investment services.

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  Disruptive strategy. A company pursues a disruptive strategy when it discovers and targets a population of overserved customers or
  

nonconsumers with a new product or service offering that enables them to get a job done more cheaply, but not as well as competing solutions. Examples of offerings that successfully employed a disruptive strategy include Google Docs (relative to Microsoft Office), TurboTax (relative to traditional tax services), Dollar Shave Club’s razor offering (relative to Gillette), eTrade’s online trading platform (relative to traditional financial brokerages) and Coursera’s online educational services (relative to traditional universities).

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  Discrete strategy. A company pursues a discrete strategy when it targets a population of “restricted” customers with a product that gets the job done worse, yet costs more. This strategy can work in situations where customers are legally, physically, emotionally, or otherwise restricted in how they can get a job done. Examples of offerings that successfully employ a discrete strategy include drinks sold in airports past security checkpoints, stadium concessions at sporting events, check-cashing and payday-lending services, and ATMs in remote locations.
  

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  Sustaining strategy. A company pursues a sustaining strategy when it introduces a new product or service offering that gets the job done only slightly better and/or slightly cheaper. Examples of offerings
  

that successfully employ a sustaining strategy are plentiful.

A company may have many products and services in one market, each employing different strategies, as defined above. For that reason, it is important to source examples at the product level, not at the company level.

Uber, for example, has offerings that make use of three of the strategies: UberBLACK employs a differentiated strategy, while UberPOOL employs a disruptive strategy (see figure below). The importance of this distinction becomes obvious when we begin to apply the model to predict the success or failure of a new product or service:

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