How to establish and then sustain a decisive advantage over competitors with a disruptive business model
By way of background, “disruptive innovation,” a term of art coined by Clayton Christensen, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.
Characteristics of disruptive businesses, at least in their initial stages, can include lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics. Because these lower tiers of the market offer lower gross margins, they are unattractive to other firms moving upward in the market, creating space at the bottom of the market for new disruptive competitors to emerge.
Ray Wang is well-prepared to explain how to create an authentic customer experience in the peer-to-peer economy and thereby create – in process – what Ben McConnell and Jackie Huba characterize as “customer evangelists.” Wang is the principal analyst, founder, and chairman of Silicon Valley-based Constellation Research, Inc. He’s also the author of the popular business strategy and technology blog “A Software Insider’s Point of View.” With a viewership of millions of page views a year, his blog provides insight into how disruptive technologies and new business models such as digital transformation impact brands, enterprises, and organizations. Wang has held executive roles in product, marketing, strategy, and consulting at companies such as Forrester Research, Oracle, PeopleSoft, Deloitte, Ernst & Young, and Johns Hopkins Hospital.
Almost all of the information, insights, and counsel Wang provides is relevant to almost any organization, whatever its size and nature may be. As he explains, “The key to companies’ success will be to develop disruptive business models of their own. Organizations and individuals will have to know what they want to be — and to live and breathe it. To develop disruptive digital business models, companies aspire to be transformation focused, relevant, authentic, intention driven, and networked.” Success, he asserts, requires mastery of all five separate but interdependent areas. This is the “what.” Wang also explains the “how” and the “why.”
These are among the dozens of passages of greatest interest and value to me, also listed to suggest the scope of his coverage:
o Organizational DNA (Pages 15-22)
o Business Model Shifts (23-34)
o Mini-case study: Zingerman’s deli (46-54)
o Mini-case study: Marriott (54-66)
o Trust (72-79)
o Mini-case study: Fox News (79-84)
o Mini-case study: Bitcoin (84-88)
o Intention-Driven (93-97)
o Self-Learning: (100-103)
o Force Multipliers (118-124)
o Freemium (135-143)
o Co-Innovation and Co-Creation (143-144)
o Designing New Customer Experiences (148-152)
o Developing a Culture of Digital DNA (152-157)
o Applying New Technologies to Existing Infrastructure (157-163)
o Moving to from Gut-Driven to Data-Driven Decisions (163-166)
o Co-Creating and Co-Innovating with New Partners (166-170)
I agree with Wang that the goal is to establish an authentic business brand. The organization has to ask itself what the company would be like if it were a person. Digital leaders have to think about this every day and then reflect that [in their relationships with] customers, employees, partners, and suppliers. The goal is to identify the technologies that will disrupt the business model, so that we get the transformational change.” Only then can an organization achieve and sustain higher margins, greater market share, increased brand relevancy, and massive scale.