Industry breakpoints and business model evolution

Industry breakpoints were identified by IMD Professor Paul Strebel before the disruptive technology innovations described by Clayton Christensen. Breakpoints 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.” Divergent breakpoints often provide increasing customization: a multitude of pioneering offerings, offerings tailored to different customer segments, integrated products and services tailored to individual customers, and offerings co-created with customers. Convergent breakpoints often involve an increasing efficiency scope: initially an efficient system of volume delivery, process efficiency involving the whole organization, modular efficiency with standardized supplier inputs, and ecosystem efficiency integrating customers, suppliers and partners with a digital platform. Exploiting a new value proposition often requires a more efficient value delivery system and vice versa. Increasing customization can result in complex value propositions that create openings for specialized players to disrupt customization. New technology can create radically new business models that disrupt both customization and the scope of efficiency.