Peak profit is a good news/bad news sort of thing. It’s good news when other metrics, like revenue, customer satisfaction, and employee engagement, are also at their peak. It’s bad news when it signals that you’re in the endgame of disruption. But how can you tell which situation you’re in?

Most students of Creative Destruction or Disruptive innovation will tell you it’s a “bad news” situation if peak profit is preceded by the launch of a radical new technology. They’re partly right.

But it’s not the technology that should scare you. It’s the new business model it unleashes.

What is a business model?

“Business model,” like so many other words popularized during innovation’s heyday, is a buzzword that everyone uses and no one defines in the same way.

A business model is how an organization creates, captures, and delivers value.

That’s it. It’s that simple.

What’s not simple is how to represent all the types of business models, how they work, and what elements make them work. That’s why the Business Model Canvas became so popular. It made visible an interrelated system of decisions that was once assumed, or worse, unknown.

Changing any one element of a business model typically requires changes to other elements, resulting in a new business model.

 is also why it’s so hard for existing companies to change their business models or even copy successful new ones.

As a result, companies don’t change their business models unless they’re forced to. Usually by a new technology.

When does disruption actually occur?

When a new technology bursts into the market, it’s an event. The new tech is suddenly everywhere: on the news, in stores, dominating our conversations.  It becomes a “where were you when” moment. Where were you when you first logged on to the internet (Miami University’s computer lab, fall 1995)? Used a smartphone (Natick, 2007)? Prompted ChatGPT (Watertown, winter 2022)?

What isn’t an event, but is far more disruptive, is the business model that emerges from the new technology:

While new business models are appearing more quickly after the debut of new technologies, it still takes years for the new business models to “prove” themselves in the marketplace. That’s why it’s so easy to dismiss them even if, like Borders and Blockbuster, you see them emerging.

Why should I worry about it now?

As Hemingway wrote, “How did you go bankrupt? Two ways: Gradually, then suddenly.”

I’m sure executives at Borders and Blockbuster never thought they would be able to speak from experience when quoting that line. I’m also sure there are at least a dozen CEOs right now, reaping the rewards of record revenue and profits, thinking the same thing.

After all, AI and LLMs felt disruptive in 2022 but by 2026, companies have harnessed the technology’s power to cut costs, increase efficiency, and maximize profit.

But in just the last 90 days, people have started to openly discuss the need for new business models:

• SaaS: From seat/feature pricing to outcomes
• Marketing agencies, law firms, and consulting: From charging by the hour to value delivered
• Network operators: From usage-based (volume) to per-connection pricing

 How much time do you have?

The disruptive technology is here. The new business models it’s driving are appearing. Peak profits and revenue aren’t far behind. The question you need to ask is how long will it take for  “gradually, then suddenly” to hit your business?

Special shoutout to my friends at Jedi On the Fly for their research support via their Jedi Signals intelligence platform