A very interesting article has recently appeared in the McKinsey Quarterly by Marc de Jong and Menno van Dijk entitled ‘Disrupting beliefs: A new approach to business-model innovation’. The article provides advice on how industry incumbents can reframe their underlying business models in an era of digital disruption.
Established business models, according to the authors, are under attack - being subject to rapid displacement, disruption, and, in extreme cases, outright destruction because of the digital and social media revolutions. A simple but very useful Infographic is presented showing how business models can be reframed when threatened by digital disruption.
The five main stages are:
1. Outline the dominant business model in your industry.
2. Dissect the most important long-held belief into its supporting notions.
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.
4. Sanity-test your reframe.
5. Translate the reframed belief into your industry’s new business model.
Please click on the image below to enlarge the infographic.
The above reframing should be applied to each core element of the incumbent’s business model, especially the need for innovation in four key areas:
- Customer relationships: from loyalty to empowerment.
- Key activities: from efficient to intelligent.
- Resources: from ownership to access.
- Costs: from low cost to no cost.
It is well worth taking the time to read the full article which you can find here.
In an era where no industry, no company is immune from the threat of digital disruption, we would encourage you to apply the five step approach to your own organisation. The results may surprise you.
As usual, all comments and feedback are very welcome. Is your business model about to be disrupted?