Creating new markets or at least thinking about how they emerge, is what I like to do. You might want to call it my profession or my hobby. I love it.
This is my recipe. I start off with the innovators dilemma a theory by Clayton Christensen. Expressed in a very populistic way. 1) Offer your customers (the existing customer base) a poorer service 2) Search for a new emerging attribute 3) Watch how new customers are being recommended toward the service 4) Be active when the market is scaling up and ride the emerging technology wave. 5) The value creation process changes. Redefine your role in the value creation process. And beware incumbent industries will die.
As an example and on a very practical level since 2009 I have been offering my students poorer teaching. I moved some of my classes online. 1) At the begiinning the quality of the service and available elearning platforms were poor. 2) The new and emerging attribute was independence of time and place.3) Currently some universities recommend e.g. courses provided by coursera.org if the student, for one reason or another can not attend regular classes. 4) This is why I am now testng Eliademy. 5) I still teach in the class, but it is really a value added service, built on top of an online offering.
The same process of disruptive innovation also hit the mobile handset provider Nokia. 1) A poorer service was a phone which you looked at 2) the new emerging attribute was connectedness to the internet 3) ”Mokkula”, a usb inserted device to your computer, (a dongle in English?) offering all you can eat data through mobile networks was the first service that customers considered ”a killer service”. 4) Since 2006 the mobile internet market has grown at an exponential rate and has provided many opportunities for companies riding the growth wave 5) The mobile operators are facing a tough situation in which growth in data usage does not translate into growth in income. Nokia is no longer in the mobile handset business, in this respect incumbents die away.
The idea of disruptive innovation is that with technology, it is one key attribute, at the core, which drives market development and the building up of a market. However with services the market has matured and settled into a competitive market situation in which players attempt to find and define market niches and through them shape the market. This thery was described by Mauborgne and Kim in their article Creating New Market Space. When reading the article carefully note the connection to Porters five forces.
Hnery Chesbroughs idea of open innovation has received a lot of attention. I have met with Henry Chesbrough once and by talking with him understood that the word ”open” does not mean free. Perhaps because of my Finnish background I had in my mind regarded open and free as synonyms. Henry Chesbrough talks about an environment in which there are far more places and points for transaction. Some of these can be for free. The purpose however is to speed up the innovation process.
I was impressed by the book of Charlene Li and Josh Bernoff titled Groundswell. Even the word Groundswell is intriguing. With the word the authors refer to the fact that from the perspective of a company users/ consumers are no longer a mass of people with the sole purpose of buying your products. They argue that consumers are active and continuously in interaction with each other and that they will take on the jobs of the service providing companies, if they feel that these services could be taken care of more efficiently.
Lisa Gansky in her book has an interesting idea of how to find segments in which you can make a business by renting or sharing goods owned by individual users. This one could regard as the corner stone of a sharing economy.
Platforms – a new way to understand markets and to regulate them
The topics we have been discussing in earlier chapter, like game theory and interdependencies, information and information asymmetries, netwrok externalitie, value creation and value capturing, disruptive innovation are all put into place in the context and concept of a pltafrom.
A good book to read is the book Platform Revolution (Parker, Van Alstyne, Choudary 2016). The Book addresses how companies have been putting these concepts into practice. It also describes how these platforms should be and can be managed. Finally it sets limits to what can be done and what should not be allowed. It gives guidance to policy makers on how platforms should be regulated and also in how they should not be regulated.
Please keep in mind that this is an emerging phenomenon. As new companies, new solutions embracing latest technologies emerge in the ,market place, policy makers are pushed to implement new laws and new principles on how to regulate this phenomenon.
References
Christensen, C. M. (1997). The innovator’s dilemma: When new technologies cause great firms to fail. Boston, Mass: Harvard Business School Press.
Gansky, Lisa (2012) The Mesh, Why the future of Business is Sharing
Kim, W. C., & Mauborgne, R. (2005). Blue ocean strategy: How to create uncontested market space and make the competition irrelevant. Boston, Mass: Harvard Business School Press.
Li, C., & Bernoff, J. (2008). Groundswell: Winning in a world transformed by social technologies. Boston, Mass: Harvard Business Press.
The Digital Landscape 