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Breakthrough and Re-formed Markets

December 18th, 2002 · No Comments

Where B2B exchanges went wrong (News.com) talks about the differences between the two markets:

Breakthrough markets are every entrepreneur’s dream–a new, level playing field, created by technology, where the assumptions and strategies of existing players don’t help or can even prove to be a hindrance.

On the Net, eBay is one of the best examples of a breakthrough leader, Day and Fein say. Before eBay, there were few outlets for consumers to connect with other consumers to trade goods. Garage sales and flea markets are erratic and unreliable; eBay created a genuinely new marketplace with customer-centric features such as its “feedback” system for rating buyers and sellers.

In breakthrough markets, “a single-minded focus” is helpful, as is “the ability to continuously adapt while resisting the impulse to grow as quickly as possible.”

Re-formed markets use technology to adapt existing ways of doing business, rather than creating entirely new ways of doing business. Instead of creating genuinely new markets, the B2B exchanges were mainly about facilitating interactions and squeezing costs, but they didn’t change the basic structure and functioning of the existing markets.

So, new entrants in re-formed markets must look at existing leaders, not at other start-ups, as their true competition. “The odds favor the leading incumbents in markets being re-formed by the Internet and the first movers in breakthrough markets,” the study says.

Tags: Management

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