How New Business Models Emerge

by Jay Deragon on 10/13/2011

Technology is fueling emerging markets previously unforeseen. These new markets are not being created from old business models rather new models that leverage technology and existing assets. Subsequently these new models are creating new value not previously recognized by older models.

The new models are in the middle and on the edge. On the edge being at the fringes of markets being served by the older models and buyers looking for  value at competitive prices and greatly improved experiences.  New markets in the middle represent those wanting neither the most expensive or the cheapest rather value in the middle.

A Harvard Business Article states:  Established companies entering emerging markets should take a page from the strategy of start-ups, for which all markets are new: Instead of looking for additional outlets for existing offerings, they should identify unmet needs—“the jobs to be done” in our terminology—that can be fulfilled at a profit. Emerging markets teem with such jobs. Even the basic needs of their large populations may not yet have been met. In fact, the challenge lies less in finding jobs than in settling on the ones most appropriate for your company to tackle.

Many companies have already been lured by the promise of profits from selling low-end products and services in high volume to the very poor in emerging markets. And high-end products and services are widely available in these markets for the very few who can afford them: You can buy a Mercedes or a washing machine, or stay at a nice hotel, almost anywhere in the world. Our experience suggests a far more promising place to begin: between these two extremes, in the vast middle market. Consumers there are defined not so much by any particular income band as by a common circumstance: Their needs are being met very poorly by existing low-end solutions, because they cannot afford even the cheapest of the high-end alternatives. Companies that devise new business models and offerings to better meet those consumers’ needs affordably will discover enormous opportunities for growth.

Create The Middle And Go To The Fringe

When we started Social Flights our mission was to leverage existing assets (private jets) and create a model that doesn’t compete with Southwest airlines while at the same time provide and alternative that is significantly cheaper than chartering a private jet, the middle. Additionally we sought to serve a market on the fringes. These markets represented communities all over the USA that were under served by the commercial airlines services yet ripe for direct air transportation services from the community directly to destination points chosen by the community not the airlines.


 How did we discover the opportunity for developing a new market? We looked at the middle and on the fringes then built a model to serve both.


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