Strategic Options to Respond to Disruptive Business Models - Role of Strategic Leaders

Abstract

Business model innovation with creation of new business models, changing dimensions of business eco-system and changes in value proposition to gain a sustainable competitive advantage through automation-extension and transformation. This is leading to ‘disruptive innovation’. Such disruptive innovation is bringing about substantial change in a market and industry eco-system and evolving the interactions among industry participants. The study aims to assess the impact of disruptive innovation on customer value curve and also assess the strategic options to respond to Disruptive business models based on organisational lifecycle analysis and value-effort assessment framework. The value-effort assessment framework has been restructured as the value-endeavour assessment framework to measure the feasibility of each strategic option across the two axis. Value of each strategic option is measured in terms of return, revenue, output or outcome and endeavour is measured in terms of input, time, labour, resources and opportunity cost of each strategic option. Two grids have been formed based on these two frameworks and a graphical representation of the impact of disruptive innovation on customer value curve has been undertaken in this study. Strategic leaders need to embrace unprecedented changes and the ongoing emergence of new business models and culminate a culture of collaboration, innovation and excellence. The study highlights the importance of change management and tactics to be embraced by strategic leaders to respond to disruptive innovations.

Keywords: Business Model Innovation, Disruptive Innovation, Life Cycle Analysis, Value-Effort Assessment Framework, Disruptive Business Model

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