How to Become a Market Disrupter

By Kent Bjorklund

April 12, 2016

It is natural to gravitate toward a product or service as the focus rather than a business model when incubating a new business. We also tend to name these things accordingly because we are attracted to the tangible and finite. Yet, from a user perspective it is not about the product or the service but rather the experience or feelings created by them.  Here is where most companies miss their opportunity.

It follows that you get what you focus on.  If you focus on a product, you get an improved product.  However, if you focus on a business model, you improve the odds of disrupting the market and gaining an advantage over the competition.  It is intrinsic that a business has both, however the business model need to drive the product or service and not the other way around.  It stands to reason that an ordinary business model will yield ordinary results.  In today’s competitive environment it should be increasingly apparent that products are fairly easily imitated. It is the business model that hopefully creates a unique play.

In an ocean of crowed competition or “red ocean” as Kim and Maugorgne have coined it, you have to look for a “blue ocean” so that you can sail past your competition.  You have to change the model to disrupt the market. The Apple, Inc. case is overused but still a great example.

A Very Brief Case Study

Apple machines has long been regarded by many as superior to most PC technologies. Yet for years Apple held less than 10% of the market share.  Why? Because Apple was perceived as high priced, niche products primarily positioned for the creative types rather than the masses.  What change this?  Broader market acceptance.  What triggered this?  The Apple iPod.  At least, so it would seem.  What really catapulted Apple to the market dominance that it is enjoying today was not the iPod technology. There were other equally good technologies and products at the time. Rather, the catalyst proved to be the new distribution platform now known as iTunes.

Leading up to iTunes, music distribution belonged to entrenched music labels and pirates.  Apple disrupted the marketplace by changing the distribution model.  It did so by solving the digital copyright management and royalties concerns for the record labels in exchange for legitimate access to content.  It is therefore apparent that the iPod as a product played a smaller role in the revolution that followed. The iPod was good technology which enabled the crossing of the chasm to large consumer segments easier but it was not the reason for crossing.  Consumers did so for the content and Apple’s new business model made it possible. That business model created a new and revolutionary distribution platform.

From the iPod we see a series of product extension by Apple. The iPhone evolved from the iPod by adding cellular capabilities to existing technology and software.  The iPad became an extension of the iPhone. Now, Apple is about to introduce the Apple television set which is really a much larger version of the iPad.  The point is that the Apple revolution was not primarily fueled by products though great products most certainly played a role in the rate of adoption.  Apple products are easy to use to get to the desired content.  To create a sustainable network effect you have to make adoption as frictionless as possible.

What ties all of the apple products together is the distribution model and the platform it created. In other words, the business model disrupted the market and opened up a new “blue ocean” of opportunity thereby leaving the competitors to chase the first mover.  Once Apple gained sufficient momentum through the network effect that it created, it became nearly impossible for imitators to displace or replace the platform.

As we can see market disrupters continue to enjoy a tremendous advantage once they succeed in shifting the market.