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The Opportunity

About Scaling Edges: A pragmatic pathway to broad internal change

Market opportunities are appearing more rapidly than ever and present large upside potential… if you know where to look.

In 2005, dubbing someone a “gamer” was not an epithet to be taken lightly. At the time, the video game market consisted almost entirely of ‘hard-core’ players who purchased costly consoles or desktop programs and invested a great deal of time and money into the hobby. Today, it is not uncommon to find a 40 year old housewife who plays games every day via Facebook, and thanks to the advent of social and mobile gaming, the market landscape looks very different.

The rise of social gaming, an estimated $4 billion market expected to grow to over $11 billion by 2016, may appear to some as a fluke change in consumer preferences. However, a closer look reveals more foundational forces at work. The market was made viable by the emergence and spread of new digital platforms, namely social media and mobile applications, which gave companies access to a new set of customers and allowed for a completely new form of gaming to emerge.

In the video game market, it was not a major player, but rather a number of smaller companies that successfully capitalized on this lucrative market. One of those was a Seattle-based start-up called PopCap Games. Founded by John Vechey, Brian Fiete, and Jason Kapalka, PopCap aimed to bring great games to anywhere customers were gathering. And in the spirit of this philosophy, Vechey and his team continually quested for new ways to solve the ‘80% problem’: if 15% of the population is hardcore gamers, and another 5% play social games, how do we reach the remaining 80% of the population who aren’t playing games at all? In 2005, while competitors fought over the same hardcore gamers (the 15%), PopCap began exploring ways to gain access to the elusive 80%. By leveraging two adjacent platforms, Apple and Facebook, the small firm bested many of their larger competitors and solved the issue of discoverability for an entirely new brand of gamer.

But what lessons can a Fortune 500 executive take away from the success story of a start-up? These market opportunities are appearing more rapidly than ever and present large upside potential… if you know where to look. Social gaming is just one example of new, ‘edge’ markets being created from deep shifts reverberating throughout the economy. Driven by globalization and rapid advancements in digital technology, we collectively refer to these changes as ‘The Big Shift,’ and closely measure and quantify their effects in our annual report, The Shift Index. While we see these shifts at work every day, from the rapid growth rates of Internet adoption to increased consumer power, many large companies have yet capitalized on the market opportunities these shifts create.

If 15% of the population is hardcore gamers, and another 5% play social games, how do we reach the remaining 80% of the population who aren’t playing games at all?

These opportunities are by no means limited to Tech-centric industries. In Health Care, for example, social media adoption has given rise to new patient-driven health models such as quantified self-tracking, which are increasingly supplementing more traditional health services. In the Automotive sector, advancements in clean-tech automotive driven by declining costs in battery technology and battery swap infrastructure are beginning to manifest in practical yet cost-effective access to non-fossil fuel vehicles.

Today’s large companies, ill-suited to recognizing or reacting to these underlying changes, risk missing large market opportunities simply because they didn’t know where to look. As we will see, however, the issue is not just one of opportunity; the magnitude of these changes creates an imperative for firms to change in order to survive in a post-Big Shift world.

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