Lecture 7 - FImproving Business Models
Lecture 7
Business Model Competition
COMPETING BUSINESS
MODELS
Four Levels
• Level 0 Strategy – The Oblivious
• Level 1 Strategy – The Beginners:
• Level 2 Strategy – The Masters:
• Level 3 Strategy – The Invincible:
Level 0 Strategy – The Oblivious:
• Focus on products/value propositions ALONE rather than the value proposition AND the business model.
– Better Mousetrap Fallacy
– Focus only on
• Problem Solution Fit
• Product Market Fit
• Do not recognize that it is possible to compete on business models
Level 1 Strategy – The Beginners:
• Recognition that Value Proposition is ONE component of a business model
• Product and technology are not enough
• Use the Business Model Canvas as a checklist.
– Which customers are targeted?
– How reaching them?
– How acquiring them?
– How earning money from them?
– What resources are needed?
– What activities are needed?
– What partners are needed?
– What are the costs?
Level 2 Strategy – The Masters:
• Outcompete others with a superior business model
• Every one of the business model building blocks reinforce each other
– (e.g. Nintendo Wii, Nespresso, Dell).
• Overall story of competitive landscape
Level 3 Strategy – The
Invincibles:
• Continuously disrupt themselves while their business models are still successful (e.g. Apple, Amazon.com)
• Better is the enemy of the good
• New ideas are developed while existing models are successful
• Success is the enemy of future success
– Patagonia.
Four Levels
• Level 0 Strategy – The Oblivious
– Value Proposition
• Level 1 Strategy – The Beginners:
– Business Model Blocks
• Level 2 Strategy – The Masters:
– Competition with overall Business Model
• Level 3 Strategy – The Invincible:
– Continuous Improvement of Model
– Competition with self
• Patagonia
High Performing Strategies
• Disrupti the existing market (e.g. Dell).
• Create a hard-to-copy competitive advantage (e.g. Apple appstore ecosystem).
• Establish game-changing cost basis and/or profitability structures (e.g.
Nintendo Wii)
• Create entirely new markets (e.g.
Nespresso).
6. Does your business model provide built-in protection from competition?
• Design
• Identity
• Special Relationships
• Family
• Learning
• Special employees
• Reputation
• Trade Secrets
7. Is your business model based on a game changing cost structure?
• Longtail
• Freemium
• Disintermediation
• Computer Based Peer Production
• Skype
• Flickr
• Amazon
• Wikipedia
