I did some thinking this week and wanted to put into words a topic I've thought about again recently pertaining to many of the growth/challenger companies I’ve visited over the years.
When a new model is being pursued to serve an existing market, the problems that need to solved and the bottlenecks that manifest may be completely different than what incumbents experience.
A challenger company with a slightly different twist to its service/offering may, over time, magnify these differences so that in effect it is pursuing a completely different business than incumbents.
Subtle nuances that may be invisible to consumers (and hedge fund managers/analysts), may, underneath, reveal vastly different operating models between two companies that do the "same thing"
A challenger company with a multi-year head start will have attacked hundreds of bottlenecks that incumbents won't even be aware of if/when they realize they need to pursue a new strategy to stem market share losses.
Challenger companies may end up in place where even though they are doing the same thing as the incumbents (selling widgets to consumers), they are, in effect, pursuing an entirely different business model where prior industry experience is rendered useless.
This can turn into a position of extreme strength & lasting duration when no one else knows how to build the factory or even which muscles to use to get started.
When these challenger companies accelerate growth, more deeply penetrate incumbent market share and finally begin to fund their own operations then watch out - skepticism melts & admiration grows.
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