Here is an excerpt from an article written by Maxwell Wessel and Clayton M. Christensen for Harvard Business Review. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.
Photography: Nash Baker
Disruption is less a single event than a process that plays out over time, sometimes quickly and completely, but other times slowly and incompletely. More than a century after the invention of air transport, cargo ships still crisscross the globe. More than 40 years after Southwest Airlines went public, tens of thousands of passengers fly daily with legacy carriers. A generation after the introduction of the VCR, box-office receipts are still an enormous component of film revenues. Managers must not only disrupt themselves but also consider the fate of their legacy operations, for which decades or more of profitability may lie ahead.
We propose a systematic way to chart the path and pace of disruption so that you can fashion a more complete strategic response. To determine whether a missile will hit you dead-on, graze you, or pass you altogether, you need to:
• Identify the strengths of your disrupter’s business model;
• Identify your own relative advantages;
• Evaluate the conditions that would help or hinder the disrupter from co-opting your current advantages in the future.
To guide you in determining a disrupter’s strengths, we introduce the concept of the extendable core—the aspect of its business model that allows the disrupter to maintain its performance advantage as it creeps upmarket in search of more and more customers. We then explore how a deep understanding of what jobs people want your company to do for them—and what jobs the disrupter could do better with its extendable core—will give you a clearer picture of your relative advantage. We go on to delineate the barriers a disrupter would need to overcome to undermine you in the future. This approach will enable you to see which parts of your current business are most vulnerable to disruption and—just as important—which parts you can defend.
Where Advantage Lies
Maxwell Wessel is a fellow at the Forum for Growth and Innovation and a senior researcher at Harvard Business School. Clayton M. Christensen is the Kim B. Clark Professor of Business Administration at HBS.