Mark Johnson on the power of new Internet-driven business models

Seizing the White Space

In Seizing the White Space: Business Model Innovation for Growth and Renewal published by Harvard Business Press (2010), Mark Johnson discusses several new Internet-driven business models that have “brought many old-guard industries to their knees.” Here are three examples:

Encyclopedia Britannica, first challenged by Encarta by a combination of Wikipedia (contributed content) and Google (search engine to verify and improve quality of content).

The travel agency industry, disrupted by online competitors (e.g. Expedia and Travelocity), aggregators (e.g. Kayak and Travelzoo), and advice sites (e.g. Trip Advisor)

Most conspicuously, the newspaper industry, comprised of companies that saw the Internet as a threat rather than a source of opportunities for growth. “The devised no new customer value propositions. They conceived of no new revenue models (or other ways to change their profit formula). Instead, they merely took the look and feel of the newspaper and put it online, stretching thin the resources and processes of their existing model.” Newspaper companies have also been diminished by Google News, Drudge Report, and the Huffington Post (segmented and democratized news content and commentary) as well as by Craigslist and Recycler (classified ads) and Yelp and Chowhound (local food and entertainment expertise). Substantial numbers of readers and advertising dollars have been lost.

Here three of Johnson’s most important points:

1. A “white space” is “unchartered territory or an underserved market” in which new and different opportunities reveal themselves to those who recognize them.

2. Technology does not create profitable disruption; rather, profitable disruption is created by those who use technology most effectively.

3. Entering white spaces with new technologies requires a new business model, one that will facilitate, support, and sustain initiatives that are not defined or addressed by a company’s current business model.

In certain respects, Johnson offers development in greater depth and refinement with broader scope of W. Chan Kim and Renée Mauborgne’s “Blue Ocean Strategy,” introduced in an HBR article (October 2004) and then expanded in a book (2005).