Making money with(out) Disruptive Ideas
This is the final conclusion of my journey in studying the Disruptive Innovation theory. You do not have to come up with disruptive ideas to make money. And here is why (and how).
Dear Fellow Innovator,
These post-crisis days see a dramatic reshuffle of Business Principles. Nothing works as before. The Crisis has forced most of the industries to consolidate at un-precedent levels.
The two key “Consolidate or Die” factors are:
· A massive deregulation of international markets
· A dramatic shift in bargaining power towards the “Client”
The first has been designed and implemented by a few dozens of super-rich bankers that have managed to destroy any political barrier to markets, in order to make all the world economy be shaped to fit the maximum economy of scale. This is the way banks make the highest profits, even if it is at the cost of giving-up the beauty of “differentiation” and to allow massive externalization costs to the society (us): air contamination, soil devastation, species diversity homogenization etc etc.
The second has been the consequence of the ubiquitus “mobile internet” that has made possible for anyone of us to find anything, everywhere, anytime we need it. This means that the Client has the power to be picky on suppliers, to select among hundreds of slightly different offers, and to get the best value for money – always. In other word The client has the power to destroy marginality that before “mobile internet” and “market deregulations” was sheltered both by political choices and by asymmetry of information.
The Consequences of the Crisis have hit the Doers:
The consequences of these two Crisis Factors have been that:
· Existing Business consolidate or die
· Disruptive ideas from everywhere kill Existing Businesses.
The first effect of “consolidate or die” is that middle managers are laid off in bulk. If the business model get disrupted: they go home. If the business model get consolidated, the goal is to repeat more of the same with less people: middle managers go home substituted by information tools capable to detect (always the same ) business signals and respond with (always the same ) business decisions. (until the whole business get disrupted…).
The second effect is that there is more people thinking to new business models now than ever before.
Unfortunately getting a disruptive idea is a matter of “Luck”
Unless you are a follower of Mr Altschuler and his TRIZ theory, the way you get a new disruptive idea is almost always fortuitous.
Altschuler is one of the few, if not the only one, who has taken seriously the job of “innovating”. He has stated that there can be a method in innovating and even proposed one.
For all the rest of the people I know, getting a good business idea has been a matter of coincidence: being the right person in the right place, in the right time.
I have seen very few entrepreneurs build multiple businesses on diverse business models. Most of the time, indeed, I have seen Entrepreneurs scared to death by the hypothesis of launching a new business and well willing to content themselves with the existing business model’s revenues stream.
The conclusion is: if you are an experienced and skilled person willing to build his own business, betting your efforts in searching for the “miracle” idea, is a non-sense. Most of the time you have more chance to get rich buying a lottery ticket.
The good news is that:
There could be a safer way to become an Entrepreneur:
If grasping the “miracle” idea can be daunting, nevertheless we should benefit by close watching other people’s Disruptive Ideas.
A Disruptive Idea has some very interesting characteristic from an Entrepreneur point of view:
1) it replaces former solutions.
This means that a Disruptive Ideas has a Market since day 1.
2) It can only grow.
This means that a disruptive business will fight for market, not for share.
And everyone of us has fully understood that swimming into a blue ocean is better than fighting into a red ocean.
3) it needs new Service.
A Disruptive Idea needs new Services.
From the point of view of a wonna-be entrepreneur, this is a dream of a news.
If I observe a Disruptive Idea making its route into the market, I know since the very first moment that that idea will need an ecosystem to made it work.
The point is that the ecosystem is still in its infancy.
In other words:
A Disruptive Idea will generate a business ecosystem of Services, suppliers goods, Norms and regulations, etc etc , call it a “Disruptive Ecosystem”, from scratch.
Let’s make an example:
AirB&B business model is disrupting the Accommodation industry.
Hotels, Resorts are trying to counter-fight bringing their cries to the Regulators, almost without success.
But what can we do after observing this situation?
Can we copy the AirB&B idea?
The chances of being a good 2nd player, given the premises of this booklet about the” Consolidate or Die” new paradigm are less than zero.
We can cope with AirB&B.
And this is exactly what is happening around the world.
AirB&B business model has solicited a new ecosystem around it.
You do not want to enter your home after letting it to an AirB&B host and start cleaning it.
You want your home possibly as you left it.
So AirB&B is fostering an ecosystem of “Cleaning Services” that you can call after you rented your home to bring it to its former splendor.
This is only an example.
But you can see very well where I am trying to drive your attention:
If you want to be an Entrepreneur, the surer way is most probably to:
Look for New Services, not for New Technologies
Spot a Disruptive Idea and build a Service that can sustain it.
You will be into a:
· New Market
· In demand for additional help.
Could you spot a better place to make business?
If you try this way, just let me know the result.
Or call me to help you build your business model.
PS: if you wonder what the initial picture stands for: it represents a Disruptive Ecosystem: where New business model sustain each other.
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