Upstarts & Incumbents
In Clayton Christensen’s book, Seeing What’s Next the authors discuss how new business entrants (upstarts) can target non-core customers of industry incumbents. These come in three categories (overshot, undershot and non-customers) and by targeting these customers, entrants can avoid direct confrontation, while developing skills and expertise in areas outside the core business of the incumbents. Once the entrants have grown “under the radar”, they can grow to directly confront the incumbents. They can develop “asymmetrical skills” based on “asymmetrical motivations”. Basically, they are motivated to do new things that do not have the revenue streams of the existing products and services of incumbents.
According to this model, new entrants to a market should identify potential customers based upon the markets of established incumbent(s):
- Undershot – willing to pay more for more functions/services
- Overshot – find current offering more than adequate
- Non-consumers – lack ability or the wealth for current service / products
For a new entrant, the best market is the non-consumer (also the least demanding) who is under the radar of the incumbents. The second best target group is the Overshot Customer (specialist displacement for mainstream) who is willing to accept a more specialized product/service than the broader offering of the incumbent, or one who is looking for something cheaper and “good enough” (low end).
In business, there are always upstarts with different motivations and new skills looking for new opportunities and disruptive innovations. Some of the key questions to ask when looking for signals of change in any industry or market are:
- What jobs are customers trying to get done?
- Are customers not served, undershot or overshot by current offerings?
- Where are new business models emerging?
- What role do regulatory agencies play?
- Has a recent technology changed how work gets done?
You could look at your current organization as an incumbent and yourself as an upstart and ask similar questions to those above. What is the organization focused on and who are the overshot and undershot customers? Who are the non-consumers? You can do this individually, as a team, or even a department. Perhaps you realize that your organization is not dealing well with networked customers and has poor knowledge-sharing and collaboration skills. With asymmetrical motivation, you can start learning and developing these yourself. Over time this will give you asymmetrical skills, like online community management or mastery of social media tools. None of this would be at odds with the organization or your current work.
If you think that your organization may not survive the next onslaught from an external upstart, then perhaps it’s time to realize that with the right motivation, you and your colleagues could develop the skills needed to take the upstarts on when the time comes. So start doing something the organization does not want to do and few have the skills to do. If you think that successful organizations in the near future will practice networked unmanagement, then you can start developing asymmetrical skills for the networked workplace now by:
- Participating in professional networks.
- Narrating your work.
- Cooperating with others in networks.
- Network weaving.
- Understanding social network and value network analysis.
Organizational, institutional, technological, and market changes are certainly coming as the network era gets into full swing. Watch for the signals of change as existing industries fall to the upstarts and be ready yourself.