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

Disruptive Business Model Map
Customer
Radically displace value?
Barrier to imitation?
Two-part test
Incumbent
Challenger
Value proposition
Generatives
Differential
Value network
Components
Differential
Figure 7.1
The Disruptive Business Model Map.

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Step 2: Incumbent
The second question of the Business Model Disruption Map is, Who is the 
incumbent?
You may choose either a category of related businesses (e.g., video 
rental retail chains) or a leading example of the category (e.g., Blockbuster) 
in order to make the analysis more concrete as you compare the business 
models of the challenger and the incumbent.
The other key point here is that, as we have seen, a challenger may 
pose a disruptive threat to more than one incumbent. Especially if you are 
the challenger, you should try to identify multiple incumbents who may 
be threatened by your new business model. Whenever you do identify 
more than one possible incumbent, you should complete the map mul-
tiple times—once per incumbent. You may well find that your new business 
model poses a disruptive threat to one incumbent industry but that another 
incumbent can accommodate the success of your model or can co-opt and 
imitate it.
Step 3: Customer
The third question of the Business Model Disruption Map is, Who is the 
target customer?
This is the customer being served by the challenger. In some cases, it 
may be a direct customer of the incumbent, but it also could be another 
key business constituency (e.g., a challenger could disrupt an incumbent 
by stealing away all its employees). It is critical to state who the challenger’s 
target is before you move on to the next stage to consider the value proposi-
tion being offered to that target customer.
Once again, it is possible that a challenger could aim to usurp the 
incumbent’s relationship with more than one type of customer. In this 
case, you should also complete the map multiple times—once per cus-
tomer type.
Step 4: Value Proposition
The next question of the Business Model Disruption Map is, What is the 
value offered by the challenger to the target customer?

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It is very important to answer this question from the point of view of 
the customer: What benefits do they stand to gain?
Remember, the aim here is not to describe the product or service 
offered by the challenger (that should have been done in step 1). Nor it is 
to describe how the challenger will get customers to pay it (the revenue 
model will come in step 6, as part of the value network). The focus here is 
exclusively on the benefit to the customer: What value could they gain from 
the challenger’s offer?
You can refer back to the list of value proposition generatives earlier in 
this chapter to consider some of the many ways that digital business models 
provide value for customers.
Step 5: Value Proposition Differential
After you have described the challenger’s value proposition, the next ques-
tion is, How does the challenger’s value proposition differ from that of the 
incumbent?
The point here is to identify those elements of the challenger’s value 
proposition that are unique and different—this is the value proposition 
differential.
There is certain to be some overlap between the values offered by 
incumbent and challenger (e.g., Craigslist and newspapers both offer users 
the same core benefit of being able to advertise personal items for sale to 
a large local audience looking for them). You do not need to include those 
commonalities here.
For some challengers, such as Craigslist, the differences in value propo-
sition may all be positive—that is, they are ways that the challenger offers 
additional customer value. In other cases, the value proposition differential 
may include benefits but also deficits, which you should indicate as such—
for example, for e-books as a challenger to print, you might indicate “less 
easy to read in direct sunlight.”