Lecture 7 Business Model Competition

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Lecture 7Business Model Competition
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COMPETING BUSINESS MODELs
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Four Levels

• Level 0 Strategy The Oblivious
• Level 1 Strategy The Beginners
• Level 2 Strategy The Masters
• Level 3 Strategy The Invincible

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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

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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?

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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

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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.

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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

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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).

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6. Does your business model provide built-in
protection from competition?

• Design
• Identity
• Special Relationships
• Family
• Learning
• Special employees
• Reputation
• Trade Secrets

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7. Is your business model based on a game
changing cost structure?

• Longtail
• Freemium
• Disintermediation
• Computer Based Peer Production
• Skype
• Flickr
• Amazon
• Wikipedia