Wednesday, March 24, 2010

Edges vs. Fringes

John Hagel, John Seely Brown, and Lang Davison have an intriguing blog post over at Harvard Publishing. They make a crucial distinction between fringes and edges. Fringes exist on the periphery of mainstream society, and they are unlikely to ever grow to transform the core. Edges also exist on periphery, but they have the potential to transform and supplant the core in various industries. Hagel, Brown, and Davison try to identify some characteristics that distinguish fringes from edges. Naturally, companies would love to know what activity at the periphery has the potential to become a large mainstream market opportunity.

While I think these thought leaders offer some intriguing ideas, I found myself still unsure whether their insights can enable better decision-making. For instance, they argue that scalability distinguishes edges from fringes. They discuss scale in terms of both supply and demand. Here's what they say at one point. "Scalability also matters on the demand side. Is there a sufficiently big addressable market?" What's wrong with that statement. Nothing, really... except that the trouble with most disruptive innovations remains that, ex ante, one often finds it extremely difficult to size the market opportunity. In short, I think we often can only assess the true size of a market opportunity well after innovative businesses have begun to grow. What we need are better ways to actually make the distinction between edges and fringes in the very early stages. The authors have made some progress, but there's much work to be done on that point.

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