Turning Disruption into Opportunity: How to Release Trapped Value

WHAT HAPPENS when new and fast-improving technologies create opportunities to unleash untapped sources of revenue—some of them long trapped by market inefficiencies? As digital components become relentlessly better, cheaper and smaller, this is a question that every organization will need to answer.

That’s because technology is increasingly creating the tools your competitors — incumbents and entrepreneurs alike — are using to build new digital products and services that target and release latent demand and serve unmet needs. We call that potential revenue ‘trapped value’ — and if you don’t get to it before others, you may find not just your future growth disrupted, but your current business as well.

Trapped value to entrepreneurs is like honey to bears: It attracts new sources of capital investment and new entrants eager to experiment in your markets and collaborate with your customers, suppliers, and other stakeholders. But the good news for established organizations is that, in our experience, incumbents can do as good — and often better — a job of releasing trapped value as even the most disruptive Silicon Valley start-up. In this article we will describe how value gets trapped, and the four places to look for it.

Where Value Hides

For many companies, becoming the disruptor rather than the disrupted begins with a fundamental shift in attitude towards digital technologies. Rather than seeing them as bolted-on tools for developing a website or enhancing internal systems, you need to integrate them into both your product offerings and your internal operations. You need to design and redesign your interactions with stakeholders by putting new innovations and technologies at the forefront, becoming ‘digital first’.

Becoming digital first is only the first step, albeit for many companies a big and potentially costly one. Digital-first companies have a platform for continuous change: As the pace of disruption expands, they can use the platform to pivot faster than their competitors to whatever innovations come next, responding to rapidly changing customer needs and scaling both up and down as markets emerge, explode and contract.

As the gap between potential and actual value creation widens, the good that new technologies can do becomes hidden.

That kind of flexibility is essential as the digital revolution continues to accelerate. As explained by Moore’s law — the prediction by founder that core computing components would double in capacity, miniaturization and energy efficiency without increasing in cost — digital technologies have long improved at something approaching an exponential rate