The Digital Transformation Playbook: Rethink Your Business for the Digital Age

Multiple Incumbents
The third variable to consider is multiple incumbents. A single disruptive 
business model can actually disrupt more than one incumbent. By multiple 
incumbents, I don’t mean similar companies in the same industry (e.g., the 
iPhone disrupting Motorola along with Nokia) but entirely different indus-
tries or classes of companies that are each challenged by the same new dis-
ruptive business model. The iPhone posed a disruptive threat not just to 
mobile phone companies (like Nokia) but also to desktop software compa-
nies (as Microsoft discovered that Windows was no longer the world’s domi-
nant operating system) and online advertising companies (as Google had 
to move rapidly to stay relevant as computing moved to the small screen).
Another interesting case of disrupting multiple incumbents can be seen 
in the meteoric rise of online messaging apps, such as WhatsApp, WeChat, 
LINE, and Viber (each of which has grown initially in somewhat different 
global markets). Their full range of features may vary, but at their core, each 
service has attracted hundreds of millions of customers with the ability to 
send mobile messages for free over Internet connections rather than being 
charged per message by the mobile phone’s service provider.
Obviously, one incumbent industry that is being disrupted by this busi-
ness model is telecommunications—companies like Vodafone and América 
Móvil. For years, text messages had been a large source of revenue for these 
companies. By one estimate, services like WhatsApp cost the phone com-
panies over $30 billion in texting fees in a single year.
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But telecommunications is not the only incumbent industry threat-
ened by the free messaging apps. When Facebook chose to buy the largest 
one, WhatsApp, for 10 percent of its own stock (a $22 billion price), it was 
not because WhatsApp promised to generate huge new revenues for the 
social network. It was purely a defensive strategy against a new app that 

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was on track to attract 1 billion customers of its own. If consumers spent 
more and more of their mobile screen time in apps like this one, they would 
spend less time in the world of Facebook-driven socializing.
There may be another, even less likely industry that is being disrupted in