Why You Need to Bet Against Yourself To Win The Future
How do you evolve your business model when AI makes it obsolete?
This week, I had two separate conversations with founders facing the same uncomfortable question: should they build the technology that would make their current business obsolete?
One entrepreneur, who leads an infrastructure asset management company, is aware that his core business is becoming commoditized as competitors enter the market. He could see the advantages of new technology, but wrestled with a counterintuitive challenge: how do you deliberately cannibalize yourself without destroying what’s working today?
This isn’t just about innovation. It’s about business model transformation, and most founders get it wrong because they confuse improving their business with replacing it.
The Two Faces of Innovation
When we talk about innovation, we’re usually conflating two fundamentally different activities.
Continuous innovation makes your current business model better. You’re improving speed, reducing costs, enhancing features. You’re serving existing customers more effectively within the same basic framework of how you create and capture value. This is essential work. It’s how you maintain competitive advantage and fund everything else you do.
Disruptive innovation changes how value gets created and captured entirely. Instead of making your existing model better, you’re replacing it with something fundamentally different. The skills, structures, and customers that made your current business successful often resist this kind of change because it threatens what’s working.
The confusion happens because both use the word “innovation.” But the real distinction is about whether your business model survives the change.
From Supporting to Predicting: AI’s Unique Disruption
Here’s what makes AI different from previous waves of technological change: it doesn’t just automate what we already do. It fundamentally flips the value equation.
Let’s use the example of the infrastructure company. Their current business model is built around supporting clients: inspect assets, assess condition, recommend maintenance, schedule repairs, manage contractors. They capture value through expert analysis and project execution. It’s reactive work responding to problems clients already know they have.
They’re looking at AI and seeing it as a way to automate their current work. Make inspections faster, improve analysis accuracy, optimize scheduling. That’s continuous innovation thinking. But AI’s real impact isn’t automation of their support services. It’s the transformation from supporting to predicting.
The AI-enabled business model doesn’t make periodic inspections more efficient. It makes them obsolete. Value moves to predictive systems that orchestrate sensor data, weather patterns, usage analytics, and maintenance scheduling in real-time. Instead of responding to asset conditions, you’re predicting failures before they happen, dynamically optimizing maintenance timing based on risk profiles, and continuously allocating resources across the entire infrastructure network.
Becoming the Linchpin
Here’s why this transformation matters strategically: when you shift from supporting to predicting, you change your structural position in the value creation ecosystem.
Support services are valuable but substitutable. Clients can switch providers, bring functions in-house, or defer the work when budgets tighten. You’re a vendor providing episodic value.
But prediction platforms become infrastructure. Once your continuous data flows and predictive alerts are embedded in how clients operate, you’re no longer providing a service. You’re providing the intelligence layer that makes their entire business more resilient.
This is about anti-fragility. Traditional support models make systems more robust. They help organizations recover from problems better. But prediction platforms make systems anti-fragile. They actually benefit from volatility and uncertainty because they continuously adapt to stress, learn from anomalies, and become stronger through exposure to variability.
For the infrastructure company, periodic inspections make the system more robust by catching problems. But predictive maintenance that continuously optimizes based on real-time conditions creates an anti-fragile system that adapts to unexpected stress and builds resilience through constant feedback loops.
Once you’re providing the intelligence layer that makes the entire ecosystem more adaptive and resilient, you become irreplaceable. You’ve moved from service provider to the critical node that enables everyone else’s ability to handle uncertainty. You’ve become the linchpin of value creation for your stakeholders.
This is exactly why the business model transformation matters. You can’t incrementally improve your way from a support model to a prediction platform. The skills, metrics, pricing, customer relationships, and value capture mechanisms are fundamentally different. You have to disrupt yourself to disrupt the value creation equation of your market.
Managing Three Futures Simultaneously
McKinsey’s Three Horizons model offers a useful framework for thinking about this challenge, because it forces you to operate in three different time zones at once.
Horizon 1 is your core business generating cash flow today. This is where continuous innovation lives. You can’t abandon this. It pays the bills and funds everything else. The trap is over-investing here at the expense of your future. You optimize yourself into irrelevance.
Horizon 2 represents emerging opportunities adjacent to your core. These are business model experiments that might become significant revenue sources in two to three years. This is often where disruptive innovations start as “side projects” before anyone realizes they’re the future.
Horizon 3 contains the genuinely new business models. Long-term bets that might transform your company in five to ten years. This is where “the business that puts you out of business” lives. These feel risky because they should. You’re betting against yourself.
The art of scaling through disruption is learning to fund and protect all three horizons simultaneously, even when they contradict each other.
For the infrastructure founder, his Horizon 1 business (expert-driven asset management services) is working. It’s profitable and customers value it. But he recognizes that AI is creating a Horizon 3 opportunity that doesn’t just improve what he does. It makes his entire business model obsolete by shifting value from support to prediction.
The Core Paradox
Admittedly, this transformation is genuinely difficult: you need to maintain your core while everything around it changes. But what exactly is your core?
Most founders confuse their current business model with their fundamental mission. They think their core is what they do: the specific product, the delivery mechanism, the revenue model. But your actual core is deeper than that. It’s what you’re fundamentally for, the problem you exist to solve.
The infrastructure company’s core isn’t conducting inspections or managing contractors. Their core is ensuring infrastructure reliability and optimizing asset performance. When you understand that, you realize that shifting from periodic expert services to continuous predictive intelligence doesn’t abandon the core. It fulfills it more completely.
Netflix understood this distinction. Their core wasn’t mailing DVDs. It was convenient access to entertainment. When streaming technology emerged, they could transform their entire business model while maintaining their fundamental value proposition. Blockbuster couldn’t see past their retail model, mistaking their distribution mechanism for their purpose.
Kodak’s famous failure wasn’t about missing digital cameras. I saw this when I spent a few weeks with their digital camera team in 1988. At the time, Kodak defined themselves as a film and chemical company, dismissing the digital revolution as a side business. This caused them to lose sight of their real mission (capturing memories) and they lost the opportunity to transform their business model.
The hard question every founder must answer: What’s truly core, and what’s just the current implementation?
The Resource Allocation Battle
The reason most companies fail at self-disruption isn’t lack of ideas. It’s the black-and-white reality of resource allocation.
Your Horizon 1 business is profitable, proven, and demanding. It has powerful advocates internally, clear metrics, and urgent needs. Your Horizon 3 experiments are speculative, unproven, and can always wait another quarter.
The often-cited 70-20-10 rule suggests investing 70% of resources in core business, 20% in adjacent opportunities, and 10% in transformative bets. It’s a starting point, but the real challenge isn’t the ratio. It’s creating the organizational structure that allows fundamentally different business models to coexist.
You need separate teams with different metrics and incentives. The people optimizing your current model should have different success criteria than those building your replacement. Otherwise, the profitable present always wins the resource battle against the uncertain future.
The infrastructure founder faces this exact tension. His current business is working. Teams are hitting numbers. Customers are happy. Why would he divert resources to build something that makes all of that obsolete?
Because someone will. The question is whether it’s him or a competitor, and, more importantly, whether he becomes the linchpin of the predictive ecosystem or just another displaced vendor when the transformation happens.
Making the Leap
The hardest question is timing. When do you jump from improving your current model to replacing it?
Wait for certainty and you’ve waited too long. By the time disruption is obvious, you’ve lost the advantages that come from moving early: the time to experiment, the resources from your still-healthy core business, the ability to fail and iterate while you’re still strong.
The signal isn’t perfection in your disruptive model. It’s evidence that your current model is approaching obsolescence faster than you can improve it. When incremental gains can’t keep pace with fundamental shifts in how value gets created, it’s time to transform.
When the value equation flips from supporting to predicting, you’re facing an existential choice about your position in the ecosystem. Do you become the intelligence layer that makes everyone else anti-fragile, or do you remain a service provider that gets commoditized when prediction becomes table stakes?
Living With Contradiction
The companies that successfully navigate disruption don’t resolve the tension between defending today and building tomorrow. They learn to manage it. They create structures that allow contradictory priorities to coexist. They fund the present while betting on the future. They protect their core mission while transforming their business model.
This is fundamentally about business model evolution, not just innovation. It requires the courage to disrupt yourself, the wisdom to know what’s truly core, and the discipline to invest in multiple horizons simultaneously.
Your job as a founder isn’t to choose between defending your business and disrupting it. It’s to do both, even when they contradict each other. Especially when they contradict each other.
The business that puts you out of business is coming. The only question is whether you’re building it or waiting for someone else to.
Davender’s passion is to guide innovative entrepreneurs in developing the clarity, commitment, confidence and courage to enter, engage and lead their markets in an unpredictable world by thinking strategically and acting tactically. Find out more at https://www.davender.com and https://linkedin.com/in/coachdavender .