Understanding the disruption engine: what can I do?

In Zero to One Peter Thiel decried Silicon Valley’s obsession with disruption, declaring “disruption has transmogrified itself into a self-congratulatory buzzword for anything new and trendy”.  He’s not alone.  And yet we can’t help be fascinated by the increasing number of genuinely disruptive business models.  According to CB Insights, there are 113 private companies currently valued at more than $1B (unicorns), including well known examples such as Uber ($45B), AirBnB ($10B) and DropBox ($9.5B).  To put this into perspective, Uber has about the same market capitalisation as Wesfarmers, one of Australia’s top companies (#7 on the ASX by market cap)[1].

Fascinating as these stories are, they do little to help executives and Boards evaluate the risks and opportunities for disruptive business models. What will help are models or frameworks which explain the phenomenon.  And at the end I offer a few thoughts about how you can 'protect' yourself from risk of disruption. 

Read More

Free is not a business model

“Free is not a business model” declared the CEO of Box, a cloud based enterprise storage and collaboration company, feeling the price pressure of the competitive battle between Amazon and Google in the storage space.  While his lament is self-evidently true, it does open the broader question: what is a business model?  Business model is one of the hot topics in management today, usually alongside the adjective ‘disruptive’.      

The term business model really only took off in the first internet boom.  But today everyone is talking about business models.  HBR reported a few years ago “7 out of 10 companies are engaging in business model innovation … 98% are modifying their business model to some extent”.  Can you describe your business model?  And are you at risk of disruption?

Read More