In addition, owners incur the risk that the up-front investment in assets might not pay off as expected. Up-front investments in assets, from factories to taxi medallions to prime real estate, tend to share two common traits: delayed returns on investment and lower margins. Relative to traditional asset builders-businesses that compete through controlling proprietary productive assets for scale advantage 3-leveraging network resources to deliver customer value helps to reduce up-front capital costs, limits fixed asset investment, and diffuses risk among a larger pool of participants. Mobilizing third-party resources rather than owning assets can also create significant economic value for the network operator.
By not owning assets, network orchestrators can focus resources on creating and operating a network that works to deliver more value to the customer-whether that means speed, choice, price, or convenience-than incumbents’ traditional, accepted offerings. For example, a new unit of lodging can be added to a home-share network for little more than the cost of a background check as compared to the cost (and large increment) of building a new hotel facility. Products and services from unlocked assets tend to be more affordable because the network operators have fewer direct costs, and because new supply can be deployed with minimal incremental cost. The diversity of supply can also lead to offerings that span a wider price range, with potentially a large number of offerings with significant price advantages. Often, as has generally been the case with ridesharing and home-sharing networks, customers also experience greater choice, as the newly available adjacent supply tends to be fragmented and not standardized. For customers, that often translates into better availability of the product or service, even in periods of high demand. The effect of unlocking underused assets is to make supply more elastic. For example, a customer searching for accommodations on Airbnb over the weekend of the Super Bowl might be able to choose from $65/night guest bedrooms, $650/night apartments, and $6500/night homes, all in neighborhoods not served by hotels. 1 Companies like Uber, Airbnb, and others using new models based on widespread connectivity have quickly created new customer value by deploying assets from adjacent markets to serve their customers.Īcting as network orchestrators, 2 companies like these provide access to the assets of fragmented suppliers-assets that were not previously in the market-to better meet volatile demand and satisfy customer preferences. Twenty years ago, it would have been difficult to imagine that, relatively soon, the world’s largest for-hire vehicle company would own no vehicles, the largest accommodation company would own no hotels, and the world’s largest international phone company would own little infrastructure. Here, we take a deep dive into one of these nine patterns of disruption: unlock assets from adjacent markets. In doing so, we identified nine distinct patterns of disruption: recognizable configurations of marketplace conditions and new entrants’ approaches that can pose a disruptive threat to incumbents.
In the report Patterns of disruption: Anticipating disruptive strategies in a world of unicorns, black swans, and exponentials, we explored, from an established incumbent’s point of view, the factors that turn a new technology or new approach into something cataclysmic to the marketplace-and to incumbents’ businesses. Without the capital burden of owning the assets in their networks, they can onboard incremental adjacent assets at minimal marginal cost and achieve critical mass quickly. Many fast-scaling new entrants are becoming indispensable to customers by focusing on customer service and network value to meet diverse needs rather than on asset ownership.
#Brian chesky airbnb jony ive theverge full#
Read the full Patterns of disruption reportĪcross diverse industries, a new breed of companies is turning to underused assets from adjacent markets to expand the range of prices and offerings in established markets.
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