44 MIT SLOAN MANAGEMENT REVIEW SPRING 2020 SLOANREVIEW.MIT.EDU
DISRUPTION 2020: PLANNING YOUR STRATEGY
But if all of these conditions are not clear — and
desirable — an entrepreneur can choose alternative
paths. One option is to become a value chain entre-
preneur, partnering with existing market leaders. A
startup can do this by slotting itself into the value
chain and either becoming a customer of those in-
cumbents or a supplier to them. Peapod chose to be,
in effect, Stop & Shop’s customer. But it was not an
arm’s-length relationship. The companies formed
agreements that allowed Peapod to more smoothly
run its online service and give customers access
to existing supermarket products and prices.
Taiwan-based electronics manufacturer Foxconn
Technology has built its business on being a supplier
of components and assembled products for Apple,
Samsung, and others. Foxconn is not consumer-
facing; instead, it works closely with designers to
ensure it can deliver high-quality products efficiently.How to Choose
Any entrepreneur with insight on how to exploit a
new technological opportunity has many choices
with respect to which strategy to use to bring that
insight to market. Entrepreneurs can exploit tech-
nological opportunities via different paths,
depending on their decisions about the four crucial
strategic choices. But that’s not to say that such
choices are always clear-cut. In fact, inevitably there
will be considerable uncertainty regarding which
strategy is best and, indeed, whether there is one
strategy that will turn out to be the best.
Given this, how can an entrepreneur decide
whether disruption is the most appropriate path?
To expose the set of assumptions that might drive
the success of a posited disruptive strategy, I would
suggest that entrepreneurs put themselves through
an adversarial process. First, they should outline the
technology, customer, and organizational choices
they would need to make in order to build a new
business that could take on existing market leaders.
In so doing, they need to ask themselves: Under what
conditions will this path create value for identified
customers? And under what conditions might an in-
cumbent’s competitive response be muted or
delayed? An incumbent who is slow to respond is
ideal for a would-be disrupter; an incumbent with a
deep resource base and a quick reaction to a new
threat can obliterate a would-be disrupter swiftly.Having outlined a disruptive business plan, you
should set that aside and draw up an alternative
value chain plan. Is there a different path to success?
Ask yourself: How can your company cooperate
with existing market leaders to bring a technologi-
cal opportunity to market? How would your
company go about adding value to customers in the
existing value chain or system? How can your com-
pany add to existing technologies — perhaps in a
modular way? And can you build connections in
the organization that would make it the preferred
partner to incumbent businesses? You will need a
clear statement of how your product adds value in
existing value chains and under what conditions
you will have sufficient bargaining power to cap-
ture some of that value.
The end result of this exercise is not one but two
business plans — one of a disrupter and one not.
You will then be in a position to choose.
What will guide that choice? In some situations,
the choice may be easy. For instance, the entrepre-
neur may not be able to access the resources to
undertake one of the plans. Or a plan may lack coher-
ence — there may be no path from a targeted set of
beachhead customers to generating market feedback
and exploiting a more dynamic technological oppor-
tunity. In these cases, a plan can be easily discarded.
In other situations, perhaps mainly when there
are valuable technological opportunities either way,
both plans will look good, and the choice will come
down to other factors. A financier may be attracted
to one more than the other. Or the entrepreneur may
have preexisting relationships with partners in the
value chain that make one path more natural. Or the
entrepreneur may simply identify with one path
more than the other. Think of entrepreneurs such as
Richard Branson who wanted to shake up markets:
Even if they could have chosen other paths, they did
not. That said, most entrepreneurs would be better
off laying out their choices before making them.Prepare to Pivot
Is disruption a binary choice? Does an entrepre-
neur need to know up front whether to pursue that
path? In reality, the choice will probably have a
dynamic component: If a strategy is found to be
lacking, the entrepreneur can potentially switch
paths. A shift in strategy from disruption to value