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Case Study

Industry breakpoints and business model evolution

By Paul Strebel

9 pages

January 2023

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Reference: IMD-7-2434

Industry Breakpoints (described in 1992) are characterized by “A new offering to the market that is so much superior that it changes the rules of the competitive game, accompanied by a sharp shift in the industry’s growth rate and a dramatic realignment of market shares.” Breakpoints in the evolution of an industry involve either divergent competitive shifts in in the variety and customization of the value proposition. or convergent competitive shifts in the scope and organizational efficiency of the value delivery system. Divergent shifts typically start with a multitude of pioneering offerings, and may be followed in a later phase by offerings tailored to different customer segments, or integrated products and services tailored to individual customers, or offerings co-created with customers. Convergent shifts typically start with a new efficient high volume delivery system that competitors have to emulate to stay in the game, possibly followed in a later shift by process efficiency involving the whole organization, or modular efficiency with standardized supplier inputs, or ecosystem efficiency integrating customers, suppliers and partners into a common digital platform. The industry’s evolution towards greater customization and efficiency can be interrupted by Disruptive Innovation in technology (described in 1997) that creates radically new business models.

Learning Objective

Gaining awareness of industry breakpoints and the opportunities they create
Understanding how breakpoints occur when latent demand in the marketplace meets innovation by firms
Identifying the opportunities for increasing customization and an increasing scope of efficiency
Understanding the importance of complementing value proposition and value delivery capabilities
Gaining awareness of how specialization and technology can disrupt the pattern of business model evolution

Keywords

Disruption, Strategy, General Management, Divergence, Customization, Convergence, Efficiency, Specialization

Type

Published Sources

Available Languages

English

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