Strategy & Innovation Disrupt-O-Meter Compares the Disruptiveness of New Products or Services

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Welcome! Innosight chairman Mark W. Johnson's book, Seizing the White Space: Business Model Innovation for Growth and Renewal, is now officially out! In “Making the Worst of Times Into the Best of Opportunities,” Mark explains how business model innovation can help companies when their markets and industries face discontinuity. In a piece from our archives, “One Hundred Days To Disruption,” Scott D. Anthony explains how a company can move from idea to business model in 100 days. Scott tackles how best to approach emerging markets in “Innovation in Emerging Markets,” while Mark explains how “white space” is defined as a specific type of opportunity in “Where Is Your White Space?”

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In this Issue

Making the Worst of Times into the Best of Opportunities
Business model innovation can help companies handle discontinuities.

Mark W. Johnson

The history of business is full of stories of entire industries cut off at the knees when some natural, political, or market catastrophe felled them. Consider the way we have lit our homes over the years. In the 19th century, whale oil lamps were common, until the whale oil industry was wiped out as kerosene lighting ignited the rise of the petroleum industry. Then Edison threw a light switch, and the world changed again. No one wanted the foul smell and dangerous flame of kerosene lanterns in their homes when they could have clean and easy electric light. Demand for fossil fuels plummeted, and only rose again with the advent of the automobile. Now, the ramifications of climate change threaten the automobile, utilities, and oil industries. For those who develop innovative new products in response to market-driven circumstances, these are unsettling stories. The idea that unpredictable, revolutionary forces can sweep away entire industries is daunting. No less daunting are the unforeseen, industry-specific shifts: the rise of an agile disruptor that changes the playing field for an incumbent who, typically, didn't see the threat coming. Never mind the difficulty of responding to a larger discontinuity, such as the 9/11 attacks, or the global financial contraction of 2008 and the subsequent evaporation of consumer demand in Western markets. How can a business meet unexpected threats such as these?
One Hundred Days To Disruption
How businesses in any industry can move quickly from disruptive idea to disruptive plan.

Scott D. Anthony

The concepts of disruptive innovation are powerful tools with which to spot high-potential opportunities. However, we've noticed a disturbing pattern. If we check back with a company 60 days after a one-time ideation workshop, we frequently find that nothing has happened. Why? Managers returned to their desks, stepped back into the daily grind, and the optimistic feelings generated in the session slowly disappeared or were consumed by near-term priorities. The gap between the germ of a disruptive idea and successful commercialization can be wide. But there is another way. Through work with some of our clients — many of them in Asia — we have developed a simple, five-step process that can help companies go from a desire to disrupt to a funded disruptive business plan in less than 100 days.
Where Is Your White Space?
For all its ambiguity, 'white space' is a metaphor about business opportunity.

Mark W. Johnson

"We see local as the big white space." That's America Online (AOL) CEO Tim Armstrong recently explaining to a group of investors how AOL's "digitizing towns" initiative (to offer one-stop website-management services to municipalities all across the U.S.) would position the company to compete against the likes of Google, Yelp, and CitySearch as the company looks for a clear path away from the disappearing dial-up subscription market. In this context, white space basically means "a place where a company might have room to maneuver in a crowded playing field." As a metaphor, white space is at once ubiquitous and frustratingly ambiguous. There may be as many definitions circulating as there are business thinkers. In that spirit, let me offer up another way to look at white space — a very specific meaning I think would be particularly useful to Tim Armstrong and to any other top executive engaged in strategy formulation.
Innovation in Emerging Markets
Three critical factors should not be overlooked in any strategy aimed at emerging markets.

Scott D. Anthony

Management gurus – most notably University of Michigan's CK Prahalad – have long urged companies to step up efforts to drive growth in developing markets. Yet success in emerging markets remains frustratingly out of reach to most companies – the average S&P 500 company earns only about 10 percent of its revenues from emerging markets. When he took over as CEO of Procter & Gamble (P&G) last July, Bob McDonald used a simple calculation to put this challenge in context. He noted that if P&G were to increase per capita consumption of its products in India and China to the levels it enjoys in Mexico, it would be worth $40 billion in incremental revenue. The challenge for many companies isn't recognizing the opportunity that exists in emerging markets – it's actually doing something about it. Our own fieldwork suggests that most companies overlook – or underestimate – three critical factors.

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