This article is authored by Marc de Jong and Menno van Dijk. Following is the gist.
Existing industries such as financial services, education, telecommunication are being disrupted by the likes of Bitcoin, MOOCs, Wattsapp. What can an existing player do to disrupt themselves instead of being disrupted by other companies:
1) Reframing beliefs: Existing players have set of beliefs about the value creation and what drives profitability. Authors suggest an approach to articulate the underlying notions and reframe them.
The fuller process and the questions to ask along the way look like this:
1. Outline the dominant business model in your industry. What are the long-held core beliefs about how to create value? For instance, in financial services, scale is regarded as crucial to profitability.
2. Dissect the most important long-held belief into its supporting notions. How do notions about customer needs and interactions, technology, regulation, business economics, and ways of operating underpin the core belief? For instance, financial-services players assume that customers prefer automated, low-cost interfaces requiring scale. Because the IT underpinning financial services has major scale advantages, most of a provider’s cost base is fixed. Furthermore, the appropriate level of risk management is possible only beyond a certain size of business.
3. Turn an underlying belief on its head. Formulate a radical new hypothesis, one that no one wants to believe—at least no one currently in your industry. For instance, what if a financial-services provider’s IT could be based almost entirely in the cloud, drastically reducing the minimum economic scale?
Existing industries such as financial services, education, telecommunication are being disrupted by the likes of Bitcoin, MOOCs, Wattsapp. What can an existing player do to disrupt themselves instead of being disrupted by other companies:
1) Reframing beliefs: Existing players have set of beliefs about the value creation and what drives profitability. Authors suggest an approach to articulate the underlying notions and reframe them.
The fuller process and the questions to ask along the way look like this:
1. Outline the dominant business model in your industry. What are the long-held core beliefs about how to create value? For instance, in financial services, scale is regarded as crucial to profitability.
2. Dissect the most important long-held belief into its supporting notions. How do notions about customer needs and interactions, technology, regulation, business economics, and ways of operating underpin the core belief? For instance, financial-services players assume that customers prefer automated, low-cost interfaces requiring scale. Because the IT underpinning financial services has major scale advantages, most of a provider’s cost base is fixed. Furthermore, the appropriate level of risk management is possible only beyond a certain size of business.
3. Turn an underlying belief on its head. Formulate a radical new hypothesis, one that no one wants to believe—at least no one currently in your industry. For instance, what if a financial-services provider’s IT could be based almost entirely in the cloud, drastically reducing the minimum economic scale?
Executives can begin by systematically examining each core element of their business model, which typically comprises customer relationships, key activities, strategic resources, and the economic model’s cost structures and revenue streams. Within each of these elements, various business-model innovations are possible. Having analyzed hundreds of core elements across a wide range of industries and geographies, we have found that a reframe seems to emerge for each one, regardless of industry or location. Moreover, these themes have one common denominator: the digitization of business, which upends customer interactions, business activities, the deployment of resources, and economic models
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