apply-source-disruption

Apply Source Disruption

Identify the specific resource, relationship, or capability that fuels the opponent's competitive strength, and attack that source directly — rather than competing against their products, prices, or market position.

Why This Is Best Practice

Origin: Stratagem #19 of the Thirty-Six Stratagems: "Remove the firewood from under the pot" (釜底抽薪). The image is precise: you cannot quickly cool a boiling pot by blowing on it from above — but you can extinguish the fire beneath it. In military strategy: do not fight the army head-on; cut off their supply lines, food, and reinforcements. The army's strength depends on its supply — attack the supply, and the strength collapses without a direct fight.

Adopted by: Source disruption is the mechanism behind the most decisive competitive moves in modern business. Intel's relationship with PC OEMs was Microsoft's firewood — Gates secured OEM licensing before the hardware market was commoditised, cutting off competitors' access to the distribution source. Google's control of mobile search defaults was Apple's and Samsung's firewood for advertising revenue — Google paid billions annually to maintain that position because losing it would have disrupted the source of Google's competitive strength. Amazon's exclusive supplier agreements with early Kindle content publishers disrupted the source of Barnes & Noble's e-book advantage. Porter's value chain analysis identifies "linkages" that sustain competitive advantage — source disruption attacks the most critical linkage.

Impact: Competing against a competitor's products is expensive, slow, and uncertain — it requires matching or exceeding capability that the competitor has had years to develop. Competing against the source of those products is faster and often cheaper: a key supplier relationship, a patent license, a talent cluster, or a regulatory approval may be more accessible than the competitor's surface strength suggests. When the source is disrupted, the competitive strength degrades without a direct product fight.

Why best: Most competitive strategy focuses on matching the competitor's visible output — features, price, brand. Source disruption focuses on the input that makes that output possible. Disrupting the input can neutralise years of product development investment in a single move — the pot's boiling is irrelevant once the fire is out.

Sources: Thirty-Six Stratagems #19 (Sawyer trans. 1994); Porter, Competitive Advantage (1985) — value chain and competitive linkages; Christensen, The Innovator's Dilemma (1997)

Steps

Step 1: Map the competitor's critical dependencies

Every competitive position depends on sources of input that are not visible in the product or service. Map the opponent's dependency stack:

Dependency category	Examples	Questions to ask
Talent	Key engineers, designers, scientists who create the product	Who built what the competitor is known for? Can they be recruited?
Supply	Component suppliers, API providers, platform relationships	What would happen to the product if supply was interrupted or degraded?
Technology	Patents, licenses, proprietary infrastructure, third-party APIs	Does the competitor's product depend on a technology they do not fully control?
Distribution	Channel partners, platform access, retail relationships, OEM licensing	How does the competitor reach its customers? Can that path be blocked or redirected?
Capital	Funding sources, credit facilities, revenue concentration	Is a significant share of revenue from one customer or source?
Regulatory	Approvals, certifications, exemptions	Does the competitor's product depend on a regulatory interpretation that is being reconsidered?
Data	Training data, market data, customer behaviour data	Does the competitor's product depend on access to data they do not fully control?

Step 2: Identify which dependency is most critical and most accessible

Rank dependencies by two dimensions:

• Criticality: If this dependency is disrupted, how significantly does the competitor's capability degrade?
• Accessibility: How difficult is it for you to reach and disrupt this dependency?

The target is the dependency with the highest criticality and highest accessibility combination. A dependency that is critical but inaccessible (the competitor's proprietary algorithm) is not a useful target; a dependency that is accessible but non-critical produces disruption without impact.

Step 3: Target the dependency before the competitor can substitute

Source disruption has a timing window: between when you initiate the attack and when the competitor can build an alternative source. That window varies by dependency type:

Dependency type	Substitution time
Key talent (individual)	Fast if others exist in the market; slow if unique
Supplier relationship	6–24 months to qualify alternatives
Patent / license	Fast if design-around exists; slow if fundamental
Regulatory approval	Months to years to re-obtain
Data (accumulated)	Often irreplaceable; years to recreate
Platform relationship	Depends on exclusivity and alternatives

Move before the competitor can substitute. Once the substitution is underway, the disruption's impact diminishes as the competitor diversifies.

Step 4: Execute the disruption specifically and completely

The disruption must be specific enough to actually degrade the source, not just inconvenience the competitor:

• Talent disruption: Recruit the specific individuals whose departure creates a skill or knowledge gap, not just anyone from the competitor's organisation
• Supply disruption: Sign exclusive agreements with the supplier, or become the preferred partner that occupies the supplier's production capacity
• Patent disruption: Challenge the specific patent claims that underlie the competitor's product differentiation, or develop and publish prior art that invalidates them
• Distribution disruption: Sign exclusive or preferred agreements with the distribution channel the competitor depends on
• Regulatory disruption: Challenge the interpretation that benefits the competitor, or support the regulatory change that removes their exemption

Partial disruption that does not actually degrade the competitor's capability is a cost with no benefit.

Step 5: Verify the disruption holds — prevent the competitor from rebuilding the source

The competitor will attempt to rebuild the disrupted source once they understand what has happened. Sustain the disruption:

• If the talent is recruited: ensure they are well-positioned at your organisation so they do not return
• If the supply relationship is captured: maintain the supplier relationship as a strategic priority, not a procurement exercise
• If the patent is challenged: prosecute through the full legal process; do not settle for a cross-license that restores the competitor's position
• If the distribution is locked up: invest in the distribution partner's success so they prefer to maintain the exclusive relationship

Rules

• Identify the critical dependency, not the convenient one. The most accessible disruption target is not always the most critical. Disrupting a non-critical dependency wastes resources and signals your strategy without impact.
• Move before the competitor can substitute. Source disruption's window is the time between your action and the competitor's substitution. Once they have rebuilt the source, the disruption is over.
• Verify the disruption actually degrades capability. A disruption that inconveniences the competitor without degrading their product or market position is a cost to you with no strategic benefit. Test the impact of the disruption before declaring success.
• Do not over-index on a single source disruption. Sophisticated competitors have redundant sources. Map and address the primary dependencies; do not assume one disruption will be decisive.
• Distinguish legitimate source disruption from tortious interference. Competing for talent, supply relationships, and distribution is legally standard competitive practice. Deliberately inducing a party to breach an existing contract, manufacturing false information to damage a competitor's relationships, or unlawfully interfering with business relationships is tortious interference — legally and reputationally damaging.

Examples

GPU supply in AI infrastructure (NVIDIA as source of training compute): As large language model training became the primary AI workload in 2022–2024, NVIDIA's H100 and A100 GPUs became the critical source dependency for AI capabilities. Every major AI lab's competitive capability depended on access to NVIDIA's supply. Cloud providers that secured GPU allocation commitments — and AI startups that structured long-term reserved capacity — gained competitive capabilities that those without allocation could not match. OpenAI's early relationship with Microsoft Azure, which provided GPU priority access, is one version of source disruption in reverse: securing your own access to the critical source before the market tightens.

Talent acquisition from a competitor's ML team: DeepMind's acquisition by Google in 2014 removed the most concentrated ML research capability outside of academia from the competitive landscape for any startup that might have hired from it. Google's source disruption: recruit or acquire the specific concentration of talent whose work defines state-of-the-art capability. Competitors who waited found that the leading ML researchers were no longer accessible as individual hires. Similar patterns: Apple's hiring of key display engineers from Samsung, which degraded Samsung's display differentiation; Uber's hiring of CMU robotics researchers in 2015, which generated extensive controversy but was an attempted source disruption of academic-to-startup talent flow in autonomous vehicles.

Open-source commoditisation of a proprietary component (patent / technology source): Amazon's development and release of the Firecracker virtualisation technology (2018, open-sourced) commoditised the virtualisation layer that competitors used as a differentiation source. By releasing it open-source, Amazon made a capability free and available to all — including themselves — while removing it as a sustainable differentiation source for competitors who had invested in proprietary virtualisation. The firewood (proprietary virtualisation differentiation) was removed from under the pot (competitors' enterprise VM pricing) by making the technology a commodity.

Common Mistakes

Attacking a non-critical dependency: Disrupting a supplier who provides 5% of the competitor's input when their core capability is internally developed produces no meaningful competitive impact. Identify the critical dependency by asking: if this source were disrupted completely, how significantly would their competitive capability degrade?

Moving too slowly: The competitor will notice the attack on their dependency and move to substitute. The window between your move and their substitution is the operational advantage. Delaying execution allows the competitor to pre-empt the disruption.

Assuming one disruption is decisive: Strong competitors have redundant dependencies and will rebuild disrupted sources. Map secondary dependencies in advance; be prepared to disrupt multiple sources or to sustain the primary disruption as the competitor rebuilds.

Confusing disruption with competition: Competing against the competitor's talent by offering better compensation is legitimate competition for a source. Colluding with other companies to not hire from the competitor, or making false claims to the talent to induce their departure, is legally problematic. The distinction matters.

Neglecting the disruption's sustainability: A disruption that you initiate but cannot sustain — a talent hire that leaves your organisation within a year, a supply agreement that expires without renewal, a regulatory challenge that is settled on unfavourable terms — restores the competitor's source and may leave them more resilient than before.