Macro Principles - Wednesday, February 18, 2009 17:49 - Comments

Consuprise 2: Combine consumer and entreprise markets to multiply network effects

How can web start-ups use the enterprise market to make inroads in the consumer market(s) they target? By playing at the edge, and using the enterprise market to strategically dominate competitors in the consumer market eventually targeted. The revenue streams created in the process (detailed in a previous post) are a nice externality but not the main goal.

Edges are powerful sources of business innovation because they are places of potential and friction, where traditional products and practices are no longer adequate to address unmet needs or unexploited potential. Much tinkering and experimentation occurs on the edge, as well as heated debate about the most promising options to address emerging needs, intensified by the diverse backgrounds, skill sets, and perspectives of participants gathering on the edge. By playing a part in this experimentation, companies participate in rich flows of new knowledge, flows that are the primary sources of innovation.

As John Hagel is pointing out, this is not a common nor risk-free strategy, but the potential value is significant. More importantly, in first-mover markets, it can be the difference between the profitable leader and the insignificant followers.

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