Adam Hartung’s book Create Marketplace Disruption changed some of my views, and considering that I immediately wanted to read a few ideas to my husband and quote the book during school discussions – it was quite amazing!
I always thought that marketplace disruption just “happened” because of some rogue invention and businesses need to react on it. The book author shows clearly that the disruptions need to be “setup” within the company, and this internal disruption could lead to the market change.
My notes from the book:
A typical company goes through business lifecycle, which is described as river:
- Infancy (wellspring)
Starting of the business, exploration, “finding one customer who will buy the product, and then finding the second,” proving the business idea
- Adolescence (rapids)
Thriving business, new products and services are introduced, customer value proposition is created, “it is about staying alive by growing faster than everyone else”
- Maturity (flats)
Growth slowdown, “focus shifts from high growth to greater predictability and the focus on revenue shifts to costs”
- Decline (swamp)
Limited growth, tools applied to hide low growth (including the concentration on earning per share, acquisitions, and bankruptcy)
- Old age (whirlpool)
“The company’s product or service is so costly or competitively ineffective that it becomes impossible to maintain a profit”
While in the rapids, companies create their “success formula” (identity, strategies, and tactics), which helps the business to become more efficient. However, business Locks-in on its success formula, what is good initially, but will be detrimental in the future when the market environment changes. The Lock-in is reinforced by company’s institutions and culture.
Defend and Extend Management approach is “defending” existing approach to business (even if the environment and technology changed), and “extending” this approach to different territories, etc. This approach reinforces “lock-in” and prevents the company from finding new approaches.
Solution: The Phoenix Principle (constant internal renewal of the company)
Great book! Highly recommend!