What is the business case for a disruptive business model / technology ?

Imagine being commissioned by Chad Hurley to work on a project for “Online video sharing” or by Steve Jobs to work on a project to deliver “Digital Music Player with a cool interface”. What business case or strategy would they have shared ? There was no existing market for their inventions before they introduced it. They could share with us their vision as shaped by the trends , the changing customer behaviour and the enabling technologies , but they would have been hard to pin down on what they thought the business benefits case might look like. In fact, Youtube did not even have a revenue model till a year after its launch

What does this mean for the well-intentioned analyst who believe their job is to protect the customer’s stakeholder value by coaching them against investing in such projects ?

The truth is that it is not always possible to judge disruptive technologies or business models using traditional tools of analysis. In fact, Clayton Christensen, the Harvard Professor who coined the term “disruptive innovation” advises us of the following

“In highly uncertain situations that typify disruptive innovations, following the typical strategy-making process just doesn’t work. In these uncertain situations, some companies believe they need to fly by the seat of their pants. However, companies can follow a rigorous process by using an emergent strategy supported by a discovery-driven planning process that enables them to adjust their strategy when they encounter unanticipated opportunities, problems and successes.”

As a business analyst the role is more about supporting this emergent strategy development process and not just a resource allocation filter. Admittedly this requires a significant mind-shift. Michael Hugos gives us a very important mantra – Be strategically focussed and tactically agile to meet the needs of a customer in an dynamic business environment. Delivering business value is as much about offering flexibility for the business to change direction as it is about delivering incremental revenues or saving costs.

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2 Responses

  1. I have a few thoughts about this…

    One of the things about these experimental, discovery processes is that you really can’t predict which ones will lead somewhere. Which is fine at the level of the economy, or an industry, where there’s a process of natural selection, and the great innovations thrive, while lots of other ideas fall by the wayside.

    At the level of someone making an investment decison, whether it’s about investing their company’s money, or investing their own time in a pet project, if you make a big bet and lose, there can be very serious consequences for you if you get it wrong.

    At the same time, if you’re telling yourself, “this is only a small experiment, and we’ll keep reviewing it to see how well it’s working”, that may not generate the commitment and drive which is needed to actually get it to work.

    Which is why VCs look for people who themselves totally believe in what they’re doing, even though the VCs themselves know that any given business is a high-risk proposition, and only a few of their investments will really take off.

    Somewhat unrelated, but interesting to me – do business analysts really get to deal with these kinds of strategic issues?

  2. Thanks for your comments and you are right. It does reaffirm what I said above.

    The point I am trying to address to my fellow business analysts is that we are not always in the position to address the business benefits case. It is hard to define benefits for a startup or a new innovative practice or product. Given this, the value to be delivered should not be defined in monetary terms alone, but in the form of flexibility to the entrepreneur.

    And yes, to answer your question, a business analyst should shoulder more responsibility than just defining the requirements. They have to be the conscience of the stakeholders to ensure consistency with the organizational strategy and ensuring that business value is delivered.

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