Most people think of disrupting markets with some radical new technology, or a radical new application. They strive to discover the "latest new thing" and often overlook the "greatest new value" which is what truly disrupts markets. Don't get us wrong here, often the "latest new thing" can be at the core of creating the greatest new value, but it is the increase in overall value that it provides that is so compelling that it changes the rules of the market and defines the White Space that can be captured and exploited. As we've said before, all markets have potential white spaces where there are unmet needs or unfulfilled value to be provided.

In his blog post at  OnStartups.com Brad Coffee talks about "Combatting the Innovator's Dilemma" using a process of running projects through an alpha, beta and v.1 stages to reach acceptance (http://bit.ly/nrPFxY). Although I applaud this kind of  internal “project development” process and it's structure, it’s hardly revolutionary. It is, in fact, a process of competing for resources within a company that has existed for well over a decade in one form or another.  The examples proffered  (A VAR Program and a Services Marketplace) are hardly disruptive innovations. Rather, this is a very good example of how multiple projects within a company can compete for acceptance and funding.

What is lost here is the distinction between REAL DISRUPTIVE INNOVATION and incremental innovation, which the described  process doesn't address at all.  In order to accomplish truly disruptive innovation, one has to look at the increase in value (Delta-V) that the "innovation" offers over current solutions and whether it's sufficiently large to justify the switching cost AND provide sufficient additional compelling new value to disrupt the current market's value equation.

The only way to achieve this disruptive new value equation is by identifying the fundamental value enablers - new technologies and/or processes or new applications of existing technologies and processes, new value chains, and new business models - that enable the creation of dislocating new value equations. This process can only be accomplished by having a clear picture of the current value equation, its enablers and the job that the customer is trying to accomplish with it. Without this foundation all that you are practicing is either incremental innovation, or innovation for its own sake.

This is the same problem that exists with lean startup methodology, where the goal is to begin by defining a minimum viable product (MVP) and then iterate until you "find" the whole product required to satisfy the customer. If the MVP does not focus from the get-go on creating that Delta-V in value that is compelling enough to be dislocating, than the best that you can hope for is to stumble over it while iterating, or create another incremental improvement  from the start-ups and current solutions that have gone before.

The current fascination with getting the product out the door fast and then iterating can be compared to "A Random Walk Down Wall Street" which basically posits that if you jump in and invest and iterate your investment strategy, it's possible to hit big returns, but only because you were lucky enough to stumble over the randomness pattern of the markets along the way. I don't think that it's either wise or beneficial to our economy to have so many wanderers pivoting to and fro while destroying capital and jobs.

White Spaces within markets always present the opportunity for incremental improvement in value delivered as well as the opportunity for discontinuous change. Depending on the amount and type of new value added to the existing solutions in the market, one can either incrementally improve the product value delivered or create a step function in value that creates truly discontinuous change. Which you choose is a matter of market needs, strategic intent and available resources, but not being aware of the white spaces and the potential for discontinuous change leaves you vulnerable to new market entrants and existing competitors who choose the discontinuous change strategy.

By making white space analysis a regular part of your strategic review process, you can avoid the potential to be blindsided by competitors and new market entrants who identify white space opportunities within your current markets and move to capture them before you can respond. Oftentimes incremental value improvement is sufficient to preempt a wholesale disruptive challenge within a market, and if not, to sound a clear warning that disruptive change will be the only  viable solution. However, not being aware of white spaces forming within your markets is a clear recipe for being preempted, often with disastrous results for the incumbent(s)

Chris Anderson's curation of the TED conference has been spectacular. Simply by making TED Talks available online he's created value that previously was restricted to only those who could attend. Now we can all profit, in the best of ways, from the value TED creates by exposing new and creative thinking from the best minds on the planet.

The key concept behind White Space Strategy is new value creation. By creating new compelling value we can create and/or redefine markets. As it turns out, a great video from RSA makes the case that value creation is also what motivation is all about - and the information is presented in such an inspiring way, that the presentation itself creates new value. This is a must see video.... see for yourself.  ..... MOTIVATION

The new emphasis on lean start-ups both creates and captures new white space opportunities. The customer-centric rapid iteration process that has become a part of the lean start-up methodology is and ideal way to accurately discover and define the new value that customers want to fill a current white space. WHen a lean start-up discovers and delivers this new value it creates a new set of market rules that define the white space and capture it. At the same time, the lean start-up approach's drive to deliver only the core value that's required to meet the current customer expectations can also lead to "undershooting" the true market requirements for a new CVE (Compelling Value Equation) and therefore leave the startup vulnerable to a whole new raft of start-ups that take a wider view of the required CVE.

With the rapid rise of social media and the concurrent increase in the power of the consumer, a very important area of value creation has emerged as a key differentiator - namely customer experience. With the wealth of products and value propositions emerging in markets today, user experience is becoming a value creation White Space that can spell the difference between rapid acceptance and total failure.

Today's user experience involves not only the product-user interaction, but the product-user-social media interaction as well. Let's take a minute to look at all the elements of today's user experience:

• Recognition of Need
• Search and Evaluation
• Purchase
• Taking Delivery
• Set Up
• Learning

• Use
• Maintenance and Support

Every one of these steps can be impacted by not only the product itself, but the entire environment in which it takes place, of which social media had become an integral part.

• Recognition of Need - From Twitter to Facebook recommendations to friends needs are often discovered in social media interchanges
• Search and Evaluation - The plethora of recommendation sites, plus social media recommendations all contribute to search and evaluation
• Purchase - Even the purchase process can be directly influenced by social media. Comments on retail outlets can influence a buyers choice if both where and how to buy.
• Delivery/Performance - Stories of horrible experiences with delivery and set up have plagued many manufacturers for years. Now that the social web makes it even easier to spread the word, the problem is instantly multiplied. United Airlines very quickly discovered this after the viral spread of the "broken guitar" video.
• Set Up - Similar stories of not being able to set up a device, finding the documentation unusable, or missing parts spread just as virally on the web and can completely compromise a product in minutes or hours at most.
• Learning - Social media can be both a help or a hindrance for learning experiences. On the plus side, the wisdom of the crowd can be tapped to provide free support for new users. On the negative side, if the materials provided with the product is insufficient, again, the negative word will travel fast.
• Use - Again, social media makes soliciting successful use cases on the web much easier than ever before. And again, it can be a double-edged sword. Problems with use can spread like wildfire.
• Maintenance and Support - Here's an area where the negatives outweigh the positives. Poor maintenance spreads like wildfire on the social web.

Mint.com is an exceptional Web 2.5 success story as documented by a great article in Slate on Friday. In a scant 2 years since their launch they grew to over 1.5 million users, and their free money management software became Quicken.com's key rival. Last week they were acquired by Intuit in a $170 million all cash deal. How did they do it? Slate attributes their success to what they call Web 2.5 - companies built on Web 1.0 and 2.0 infrastructure. However, a little closer look shows that applying the fundamental principles of a White Space Strategy are what really led to Mint.com's success.

Mint capitalized on multiple key market creation enablers to create new value and establish it's own unique market space for a free, thrift focused and easy to use money management application. First, Mint capitalized on the emerging market space created by the recession and a new focus by consumers on thrift. The external environment created an emerging and unmet demand for new value in the form of a free, cloud-based, personal finance tool. Here, a quick "market extents" analysis that identified the differences between edge-case quicken.com users and non-user near-customers could easily identify a value gap that needed to be filled - free, easy to use, thrift focused personal money management.

Second, Mint redefined the business model in the market by creating an agile and lean model that capitalized on enabling technologies and services in the cloud to run their business. In order to be a free service and offer compelling new value, Mint had to take advantage of new business model elements. Instead of huge ad campaigns, MInt used free social media and piggybacked on "popular new communications technology" - Facebook, Twitter and blogging. Their largest marketing expenditures lie in purchased search engine terms and moderate sums spent on analytics. They run their web site on Wordpress, use Google Analytics to track it and Zoomerang to conduct surveys - all free services that enable their new, low cost business model.

Finally, Mint redefined the value chain to create new value in its emphasis on thrift and adding value to the user experience through helpful hints, alerts and identifying opportunities for their users to save.

Yes, Mint's success was built on the infrastructure of Web 1.0 and 2.0 but it was even more built on fundamental white space principles - Enabling technologies, business models and value chains focused on real, relevant market needs for new, previously non-existant value to create new market spaces.

(Disclaimer: For those who may misunderstand, Mint.com is not a White Space Strategy client, but an excellent example of the application of White Space Strategy principles. We chose to use Mint.com as an example of how White Space Strategy principles can be applied and apologize for any misunderstanding.)