Rory McDonald

Kathleen M. Eisenhardt

<article-ideainbrief class="article-ideainbrief">
 <h4 class="ideainbrief-title">Idea in Brief</h4>
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  <h5>The Challenge</h5>
  <p>Executives struggle to formulate strategies and business models for newly emerged markets because the forces of competition there are constantly in flux. In such an environment, conventional strategic approaches just don’t work.</p>
  <h5>The Insight</h5>
  <p>Research shows that in brand-new markets, the most successful start-ups practice something we call <em>parallel play,</em> exploring and testing their world the way young children do.</p>
  <h5>The Concept in Practice</h5>
  <p>Early on, forget about differentiation. Instead, observe what others in the market are doing and borrow from them. Experiment relentlessly and then commit to a single template for creating value. But don’t go full speed ahead with it; leave your model purposely undetermined and wait until the market settles before optimizing it.</p>
 </div>
</article-ideainbrief><p>The past two decades have seen the birth of an unprecedented number of new-to-the-world markets. Technologies such as cloud services, warehouse robotics, and smartphones have redefined entire industries, making old business categories obsolete. A steady stream of emerging innovations—from commercial drones and autonomous trucks, to virtual and augmented reality, to plant-based meat substitutes—suggests the era of market creation will continue for the foreseeable future.</p>

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<p>Brand-new markets are like the wormholes of science fiction, where the usual rules of time and space do not apply. When a market has just been born, the forces of competition there are constantly in flux, it&#8217;s unclear who your customers really are, and conventional strategies just don&#8217;t make sense. How then can you navigate this constantly shifting terrain?</p>
<p>Over the past few years, two business school professors have interviewed entrepreneurs and corporate innovators in new fields such as genomics, augmented reality, and fintech. They discovered that the most successful ones practice something called &#8220;parallel play,&#8221; exploring and testing the world the way preschoolers do. Instead of trying to differentiate their businesses, they observe what others in the market are doing and borrow ideas. After relentless experimentation, they commit to a single template for creating value. But rather than quickly optimizing that template, they leave it partially undetermined and pause, watch, and wait. As they gather serendipitous insights and the market begins to settle, they refine their models bit by bit.</p>

The New-Market Conundrum

Brand-new markets are like the wormholes of science fiction, where the usual rules of time and space do not apply. When a market has just been born, the forces of competition there are constantly in flux, it’s unclear who your customers really are, and conventional strategies just don’t make sense. How then can you navigate this constantly shifting terrain? Over the past few years, two business school professors have interviewed entrepreneurs and corporate innovators in new fields such as genomics, augmented reality, and fintech. They discovered that the most successful ones practice something called “parallel play,” exploring and testing the world the way preschoolers do. Instead of trying to differentiate their businesses, they observe what others in the market are doing and borrow ideas. After relentless experimentation, they commit to a single template for creating value. But rather than quickly optimizing that template, they leave it partially undetermined and pause, watch, and wait. As they gather serendipitous insights and the market begins to settle, they refine their models bit by bit.

The New-Market Conundrum

Summary.

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