Blue Ocean Strategy has been tremendously influential as a framework for thinking about business, the blue ocean signifying the open waters of uncontested markets to pursue. The 2005 book by W. Chan Kim and Renée Mauborgne, professors at INSEAD, highlighted intriguing examples such as Cirque du Soleil’s subversion of the classic circus and Casella Wines’ successful courting of a nontraditional consumer base with its adventurous Yellow Tail brand.
Now Chan and Mauborgne have a new book called Beyond Disruption, where they contest the common idea that disrupting established players is a preferred path to achieving business success. They instead champion what they call “nondisruptive creation,” businesses built outside of the boundaries of existing companies. Eyeglasses, Viagra, e-sports, and microfinance are examples of such an approach, where their inventors created new market value without needing to weaken any incumbents to succeed.
“There are no losers, and no market player is made worse off,” write Chan and Mauborgne. “Growth fueled by nondisruptive creation occurs without incurring any industrial and social disruption and pain, thus helping to bridge the gap between economic and social good.” (p. 19)
Classic “disruptive creators” that business books usually extoll, on the other hand, weaken or wipe out incumbents and the existing market. Examples include Netflix, Amazon, Uber, the first commercial airlines, and the iPhone. The result can be positive for society, as consumers get better value for their money and “society’s resources are allocated where, in economic terms, they are better used,” write Chan and Mauborgne. But this “win-lose approach” often leads to “a loss of existing jobs and often rounds of layoffs, lowered wages and hurt communities, and knowledge, skills, and plant and equipment often rendered significantly reduced in value, if not made obsolete.” (p. 37)
The argument for nondisruptive creation has additional relevance today amid the turbulent outlook for jobs and businesses with the broader application of artificial intelligence. “The challenge is how to reduce the negative human impact of the technological revolution without losing its benefits,” write Chan and Mauborgne. “To do that, we need to match supply-side readiness with demand-side jobs—which brings us right back to the central growth driver we’ve been discussing from the very start of this book: market-creating innovation.” (p. 95)
How do you pursue nondisruptive creation? For starters, Chan and Mauborgne suggest that you need the right mindset:
- Ask “Why not?” and “What if?” The authors suggest leading with “agency,” your own ability to shape the situation, rather than “structure,” the situation as it is. They cite the example of Mick Ebeling, a Los Angeles entrepreneur who read a story in TIME about a boy in South Sudan who lost his arms to a bomb. Ebeling was so moved that he put aside all of the complications involved in getting involved in a crisis on another continent, learning to 3D print mechanical arms and personally bringing the supplies needed to do so to the boy’s community.
- Focus on creating value for customers first. Many entrepreneurs start with the technology available, rather than the problem being solved. “Nondisruptive creators think value innovation first, and then technology,” write Chan and Mauborgne. “What is the compelling leap in value you deliver?” (p. 127)
- Look beyond our cultural obsession with the lone, creative entrepreneur. “When you are creating what’s never been created before, you aren’t sure what it will take,” Ebeling told the authors. “You need all minds on deck, so we have everyone’s brains and voices in the game.” (p. 132)
Beyond that, “we found that companies and individuals can take two primary avenues to create a nondisruptive market,” write Chan and Mauborgne. “One is to address an existing but unexplored issue or problem, and the other is to address a newly emerging issue or problem outside the boundaries of existing industries.” (p. 138.) Grameen Bank’s pioneering microfinance offerings, for example, addressed the existing problem of poverty in Bangladesh. China’s Tongwei Group tackled the emerging demand for green energy in areas with little available land by placing solar panels above fish farms.
Chan and Mauborgne suggest approaching opportunities by trying to understand why the opportunity hasn’t already been addressed by existing players, something they call “assumption-implication analysis.” “The question to answer here is: What industry should theoretically address this issue, and why hasn’t it done so?” write the authors (p. 155.) When the founders of Prodigy Finance, which provides education loans for advanced degrees abroad, asked this question, they were able to address the factors deterring traditional banks—around credit-risk assessment and perceived flight risk for that student population—to build a successful business.
“Don’t ask what the business model and technology should be to realize your nondisruptive creation; ask what they could be to turn this into a thriving opportunity,” write Chan and Mauborgne. “Why? Because ‘should’ is daunting. It’s constraining. It freezes our minds and tends to paralyze our creative imagination by driving us to find the answer. And when the answer is not immediately evident, as is usually the case, we start to give up.” (p. 186)
What are some areas ripe for nondisruptive creation? Chan and Mauborgne suggest macro trends of aging populations, rapid urbanization, demand for clean energy and digital privacy, rising waste production, and the commercial exploration of space are among the areas with potential.
To be sure:
- It’s unclear how useful the authors’ frameworks for pursuing nondisruptive creation would be as a practical guidebook if you were trying to start a new business. But, if nothing else, they could potentially make it easier for entrepreneurs to pursue and find support for less traditional approaches.
- “Blue ocean” innovation and nondisruptive creation are similar concepts, with the nuance being that blue ocean strategy generates a mix of disruptive and nondisruptive growth.
- “Thinking that we can create and grow without disrupting or destroying others stands on the ground of hope that creation can be positive-sum rather than a destructive, fear-based win-lose game.” (p. 50)
- “The popular press may make it seem that disruptive moves by nimble and clever startups frequently outsmart dull and conventional incumbents, but the truth is that incumbents often prevail.” (p. 55)
- “When faced with disrupting their existing business, people are naturally inclined to use their direct and indirect influence to undermine their own company’s disruptive move, even if that undercuts the company’s long-term future.” (p. 65)
- “The number of jobs that will be lost and created is not predetermined. That number will ultimately depend on the actions we take (or don’t take) and the policies we apply (or don’t apply) to to meet this challenge. It is up to us to create the future of work and growth that we want.” (p. 99)
- “Not all people are equally creative. But most are creative enough.” (p. 131)
- “View criticism not as a dagger but as a way to stress-test your idea, learn, and strengthen your path forward.” (p. 171)
The bottom line is that Beyond Disruption provides encouragement and instruction for pursuing business opportunities that create new markets and jobs. Filled with examples from real-life companies, it’s a helpful counter to the glorification of the dismantling of incumbent players that often brings societal and individual pain.
Both disruptive and nondisruptive approaches are seemingly important and inevitable, but it’s useful to have a book championing the latter, especially amid the pending disruption to work as the use of AI upends jobs.
The handbook for this new era of business doesn’t exist. We’re all drafting our own as we go along—and now we’d like to start doing so together. You can sign up here to receive this briefing by email.