I could change two nickels into a dime right before your eyes. I could also tell you which card you had chosen out of a deck of cards. I could even tear a dollar bill in half and then put it back together! In fact, if I did the trick more than one time, almost everyone could see what I was doing. What was the difference between me and the kids who could amaze again and again? The kids who were superb at a particular trick practiced that trick until their props burst into flames.
And then they bought more props and kept on practicing. Even as we watch the magician perform his trick, we know that the match was not actually floating above the card. We know that the coin could not leap directly up through the shot glass and leave the glass undamaged. And yet, even though we know it is a trick, we are still amazed. Assumptions are the foundations of how we interpret the world around us. We assume that the information our senses provide to us is complete.
We assume that our experience will allow us to interpret that information. We assume that if everyone around us has the same information as we do, that they will interpret and act on that information in the same way we do.
We assume that new events will fall within the realm of our ability to sense those events fully and that these new events will align with our prior experience. The trick amazes us because it violates one or more of our assumptions, and yet we cannot determine which assumption is being violated. When I performed a magic trick as a kid, it quickly became obvious which assumption I was violating.
Perhaps someone saw me move the card to the top of the deck. Or perhaps someone heard me place the coin on the top of the shot glass. I was unable to trick your senses, nor did I perform the trick well enough to cause it to fit within your realm of experiences and assumptions. And in the process, the trick has become magic. In a disruptive age, established business models are under attack.
Discover how incumbent companies can reframe them. The basic rules of the game for creating and capturing economic value were once fixed in place for years, even decades, as companies tried to execute the same business models better than their competitors did. But now, business models are subject to rapid displacement, disruption, and, in extreme cases, outright destruction.
Consider a few examples:. The examples are numerous—and familiar. What enables them to skirt constraints and exploit unseen possibilities? For incumbents, this kind of innovation is notoriously hard. Some struggle merely to recognize the possibilities.
Others shrink from cannibalizing profit streams. Still others tinker and tweak—but rarely change—the rules of the game. Should it be so difficult for established companies to innovate in their business models?
What approach would allow incumbents to overturn the conventions of their industries before others do? Our work with companies in telecommunications, maritime shipping, financial services, and hospitality, among other sectors, suggests that established players can disrupt traditional ways of doing business by reframing the constraining beliefs that underlie the prevailing modes of value creation. For broad application of reframing as a methodology, see Karim Benammar, Reframing: The art of thinking differently , Amsterdam: This article shows how.
Every industry is built around long-standing, often implicit, beliefs about how to make money. In telecommunications, customer retention and average revenue per user are seen as fundamental. Success in pharmaceuticals is believed to depend on the time needed to obtain approval from the US Food and Drug Administration. Assets and regulations define returns in oil and gas. In the media industry, hits drive profitability.
These governing beliefs reflect widely shared notions about customer preferences, the role of technology, regulation, cost drivers, and the basis of competition and differentiation. They are often considered inviolable—until someone comes along to violate them. But while new entrants capture the headlines, industry insiders, who often have a clear sense of what drives profitability, are well positioned to play this game, too.
How can incumbents do so?
By turning one of these underlying notions on its head—reframing it—incumbents can look for new forms and mechanisms to create value. Outline the dominant business model in your industry. What are the long-held core beliefs about how to create value? For instance, in financial services, scale is regarded as crucial to profitability. Dissect the most important long-held belief into its supporting notions. How do notions about customer needs and interactions, technology, regulation, business economics, and ways of operating underpin the core belief?
For instance, financial-services players assume that customers prefer automated, low-cost interfaces requiring scale. Furthermore, the appropriate level of risk management is possible only beyond a certain size of business. 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.
Examples of companies that have turned an industry belief on its head include the following:. Many reframed beliefs will just be nonsense. Applying a reframe that has already proved itself in another industry greatly enhances your prospects of hitting on something that makes business sense. Business-model innovations, unlike product and service ones, travel well from industry to industry: Airbnb inspires Uber inspires Peerby.
So look again at the reframes described in step three above.
There is public appetite for giving through the very recent advent of online crowdfunding. McKinsey Global Institute Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Where do innovations come from? To ask other readers questions about Innovate the Future , please sign up. Unfortunately, the assumptions and the fallacies that create them are entirely wrong. We envision a future where constant and honest conversation is held between the public, funders and scientists. Hertzel Karbasi added it Dec 26,
All of them have broad application across industries. Typically, once companies arrive at a reframe, the new mechanism for creating value suggests itself—a new way to interact with customers, organize your operating model, leverage your resources, or capture income. Want to Read saving….
Want to Read Currently Reading Read. Refresh and try again.
blacksmithsurgical.com: Innovate the Future: A Radical New Approach to IT Innovation ( ): David Croslin: Books. Innovate the Future has 7 ratings and 0 reviews. When it comes to entering, creating, or dominating markets, disruptive innovation is the most powerful t.
Open Preview See a Problem? Thanks for telling us about the problem. Return to Book Page. Preview — Innovate the Future by David Croslin. When it comes to entering, creating, or dominating markets, disruptive innovation is the most powerful tool you have. Paperback , pages. Published April 30th by Prentice Hall first published April 26th To see what your friends thought of this book, please sign up. To ask other readers questions about Innovate the Future , please sign up. Lists with This Book.