Odds are you don't know what a DN-01 is. And that's OK.
Think about my recent post on motorcycles. Even with gasoline prices down substantially, they are still about where they were a year ago – which is way higher than they were 5 years ago. So, the desire to obtain high gas mileage is still relavent. There are still people who would like the high gas mileage a motorcyle provides. So what do you suppose holds them back? Safety is an issue. But for many, it's "I don't know how to ride."
Very few Americans know how to drive a standard shift auto any longer. If you're under 30, the odds are that you've never even sat in a car with a clutch and a stick shift. And that's a problem if you go to buy a motorcycle, because they have standard transmissions. So, while learning to ride the motorcycle you not only have to learn how to manage a front brake and back brake, but how to work a clutch and shift a manual transmission. Now, that's a big hold up for a lot of people.
And that's where the DN-01 comes in (see link to DN-01 here). This new motorcycle from Honda (see chart here) has a transmission that doesn't need shifting. Formerly only possible on a small engine scooter, now Honda has a full-size motorcycle that can be ridden without thinking about shifting. If you think about that for a few minutes, you realize that opens the market to about 10x the previous number of possible customers. I've long extolled how Honda is a leader in using Disruptions and White Space to find new opportunities. Here again we see Honda taking the lead in finding a way to greatly expand the marketplace. Another example of White Space at work.
Compare this to Harley Davidson (see chart here). Most Harley motorcycles use the same technology they've used since the 1940s (albeit with minor modifications – but not a lot). Around the turn of the century Harley tried to update its customer base by launching a new motorcycle with an engine designed by Porsche of Germany. Even though it's been out since 2002, the V-Rod has not been a big seller (read about the V-Rod here). If you go into a Harley dealer and ask about this bike you'll likely be told "oh, the chick bike," in a derogatory way that only a Harley dealer could figure somehow talks down one of his own products. While this bike represented the next breakthrough in technology to move Harley forward, the company and its dealers have chosen to largely downplay it – and sales results keep falling.
Now compare Honda to Sony. Sony was long considered at the front edge of innovation. For years Sony was known for bringing forward solid state radios, solid state televisions, the walk man and the disk man. But in the late 1990s Akio Morita, long the company head, decided to retire. Throughout his career, Morita focused on new product development, testing and finding new markets for new technologies. But the Board replaced Mr. Morita with an MBA. Sony's new leader first reacted to stop all the wasted new product development at Sony in order to immediately raise profits. Then, he cut R&D and product development budgets in favor of acquisitions. Today, Sony is no longer the technology leader it once was.
Think about how Sony (see chart here) - which owned a recording studio as well as #1 position in consumer electronics – completely missed the MP3 music market. The new management's focus on profit, and Defending & Extending its past market position without investing in new development, left the company vulnerable to Apple and its Disruptive effort to change the music business. As a result, Sony's profits are now down 38% this year, and leading a recent drop in the entire Japanese stock market (see article here). Sony is worth less today than at any time since 1996!
Sony and Harley Davidson both Locked-in on what worked in the past. They tried to maintain sales on old products, and old product technologies. They tried to say that "brand" was what was important. That let new competitors come into their markets and find new customers, using new products. And that's exactly what Honda is doing. By Disrupting old notions about motorcycles (that they have manual transmissions, most recently) they create White Space for new products (and new businesses – like jet airplanes and robotics.) As an investor or employee, you're better off with the Disruptor than the D&E competitor every day.