Many companies build their business models like massive castle walls: solid, proven, and designed for long-term returns. These walls can endure for years or even generations, but over time, cracks inevitably begin to form due to forces pulling in different directions.
These forces can include:
Market dynamics: The continuous evolution of consumer needs, preferences, and behaviors. As industries shift and new trends emerge, businesses may struggle to adapt to changing demands.
Technological advancements: Rapid innovation can disrupt established processes, render certain products or services obsolete, or present new opportunities that require companies to pivot.
Social changes: Shifts in societal values, such as growing environmental awareness or changing cultural norms, can influence consumer behavior, forcing companies to rethink their strategies.
Political and regulatory factors: Government policies, regulations, or geopolitical shifts can reshape the landscape in which companies operate, imposing new challenges or creating fresh opportunities for innovation.
These external and internal forces can gradually weaken the foundations of a business model, compelling organizations to evolve or risk becoming irrelevant.
For most established companies, these minor cracks are not seen as immediate threats—they are often ignored or quickly patched up to maintain the status quo. However, as an entrepreneurial innovator, you see something different. Boom! Cracks in the system might be viewed as minor flaws by the provider, but they represent shifting forces and opportunities waiting to be explored by you as an innovator.
The key to entrepreneurial innovation lies not only in spotting these cracks early but also in strategically leveraging them. A part of success is recognizing opportunities. The other, and more crucial part, is taking small, thoughtful steps to determine whether you can expand the crack with simple tools and turn it into a sustainable opportunity.
If you see a crack in a system, stick your finger in and figure out if its worth making it bigger :)
Why cracks happen
Cracks form when established business models can no longer keep up with changing customer needs or new market conditions. They appear when processes are inefficient, problems are overlooked, or companies hold on to outdated approaches.
For large companies, these cracks are often invisible because they are focused on protecting the stability of their existing business. Their priority is to preserve what’s already there, not to look for alternatives.This is where you come in — you act differently.
Compact skills update wanted without long study times? Book one of my bootcamps
How entrepreneurial innovators leverage cracks
Imagine you discover a crack in the wall. Established companies will patch it up (or delay doing so for as long as possible), but as an entrepreneur, you stick your finger in. You press against the crack and try to determine if you can widen the gap.
Here’s how the process works:
Spot the crack: The first step is to find a gap — an overlooked inefficiency or an unmet customer need. Jeremy Utley talks about regularly feeding a bug list with things you see every day that just don’t work. This is your starting point.
Place small, smart learning bets: Next, you start testing the crack. What happens if you open it further? Can it be expanded? Each small bet is an experiment that teaches you more about the opportunity.
Seize the opportunity: If the tests are successful, you apply leverage. Develop a business model that turns the crack into a real market opportunity. It’s not about brute force — it’s about precision. With small, targeted steps, you minimize risk, gain insights, and simultaneously create the opportunity to turn the crack into something big — until maybe the whole wall collapses.
The two sides of the coin
Entrepreneurial innovation requires both foresight and execution. Recognizing the crack requires a sharp eye and market insight. But that’s not enough.
The real work begins once you leverage the crack. It means taking risks with experiments, continuously learning, and refining your approach. It’s about embracing uncertainty and turning opportunities into tangible results.
Examples of cracks and leverage
Netflix spotted cracks in Blockbuster’s model, which relied on late fees and physical stores. Their first small step was mailing DVDs to customers. They leveraged this opportunity further with streaming, until the traditional model crumbled.
People don’t want to go pick up and return DVDs; they want to watch movies on demand, without worrying about late fees.
Uber identified inefficiencies in the traditional taxi business. They started with ride-hailing in local markets and scaled the model to a global platform.
People don’t want to wait for a taxi to show up at a fixed location; they want an easy, quick, and flexible way to get a ride from anywhere at any time.
Airbnb discovered cracks in the expensive hotel industry. Their leverage was unused living space, initially opened up for travelers. This led to a billion-dollar disruption in the tourism industry.
People don’t want to stay in expensive, impersonal hotels; they want a more affordable, personalized place to stay, with a local experience.
Using the crowbar to leverage opportunities
In every industry, there are cracks — small weaknesses in large, established systems. Most companies will ignore these cracks or quickly patch them up to protect their tried-and-true business models.But if youre an entrepreneur, these cracks are your invitation. Find them. Start by sticking your low-cost finger in quickly to assess if theyre worth exploring. If they are, secure more resources and grab your crowbar to gain leverage. Test with small steps to see if you can expand the opportunity. And when the time is right, apply leverage to create something entirely new.The future belongs not to those who patch the cracks, but to those who expand them.
Want to read more? Visit my blog or better subscribe to my newsletter.
P.S: Do you want to know more about how to make your innovation project successful and avoiding typical pitfalls?
Extend your team and knowledge on a temporary or permanent basis: Contact me for a conversation.
Transfer the knowledge: Book one of the innovation bootcamps
Get a keynote on this topic for your organization: Book a keynote now