The most effective way to disrupt established players is to attack their most profitable business practices. Counter-positioning isn't about competing head-to-head, it's about creating a business model that forces incumbents to choose between copying you and protecting their existing revenue streams. When done right, they can't do both.
This strategy explains why Netflix killed Blockbuster, why Square disrupted traditional payment processors, and why challenger banks are winning market share from traditional institutions. The pattern is consistent: find what competitors can't afford to give up, then give it away or do it better.
Why incumbents freeze
Established companies struggle with counter-positioning because their greatest strengths become their biggest weaknesses. Three factors create this paralysis:
Short-term profit pressure: Public companies face quarterly earnings expectations. Abandoning profitable practices for long-term positioning often conflicts with immediate shareholder demands.
Entrenched thinking: Success creates mental models that resist change. When your transfer fees generate millions in revenue, eliminating them feels like business suicide.
Principal-agent problems: Professional managers optimize for personal career safety rather than company transformation. Disrupting your own cash cow is risky, protecting it feels safer.
The disruption playbook
Target the profit engine: Successful counter-positioning identifies what incumbents rely on most for revenue, then offers that same value through a different model.
Netflix understood that Blockbuster's late fees generated massive profits but created customer pain. Their subscription model eliminated late fees entirely, forcing Blockbuster to choose between their cash cow and customer satisfaction.
Square gave away card readers and simplified software when traditional processors charged hundreds for hardware and complex monthly fees. Payments companies couldn't match this without destroying their existing revenue model.
Techcombank eliminated transfer fees in Vietnam's banking market. While other banks generated substantial revenue from these fees, Techcombank sacrificed short-term income for market share growth. Traditional banks eventually followed, but too slowly.
Move fast before adaptation: Counter-positioning works because incumbents need time to restructure their business models. This window allows disruptors to build market position and customer loyalty.
Pattern recognition
The most successful counter-positioning attacks share common characteristics:
Customer pain becomes competitive advantage: Every cash cow creates customer friction. Late fees annoy movie renters. Transfer fees frustrate bank customers. Complex payment setups burden small businesses.
Structural inability to respond: Incumbents aren't just slow to respond, they're often unable to respond without fundamental business model changes.
Word-of-mouth acceleration: When your model genuinely improves customer experience, organic growth amplifies your market penetration before competitors can react.
Implementation strategy
For disruptors: Research where established players extract the most profit while creating customer pain. Build your model around eliminating that friction, even if it means sacrificing immediate revenue.
Dyson attacked the disposable vacuum bag industry by creating bagless technology. Vanguard eliminated high mutual fund fees through index investing. Robinhood removed trading commissions when established brokers relied on them.
For incumbents: Create independent teams specifically tasked with cannibalizing your existing business. Don't integrate these efforts with existing operations, their incentives will always favor protecting current revenue.
Leadership requirement: Counter-positioning typically requires founder-CEOs or leaders with significant influence. Professional managers rarely have the authority or motivation to "shoot themselves in the foot" proactively.
The timing advantage
Counter-positioning works best in industries where incumbents are "addicted" to specific revenue streams. Look for markets where established players have become dependent on practices that create customer friction.
Traditional industries with embedded profit mechanisms, regulatory protections, or complex legacy systems often provide the best opportunities. The key is moving fast enough to establish market position before incumbents can restructure.
As markets mature and customer expectations evolve, counter-positioning becomes more powerful. Customers increasingly choose convenience and value over brand recognition. Digital tools make it easier for smaller players to deliver superior experiences.
The lesson is clear: If you don't cannibalize your own business model, someone else will. The companies that survive disruption are those willing to abandon profitable practices before competitors force them to.
Note: Counter-positioning analysis draws from Hamilton Helmer's "7 Powers" framework and Clayton Christensen's "Innovator's Dilemma," combined with case studies from financial services, technology, and retail disruption patterns.
