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Changing Competitive Landscape Through Business Model Innovation: the New Imperative for Corporate Market Strategy

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Abstract

The article is dedicated to business model innovation (BMI) from the perspective of its role in today’s competition of large corporate entities. The work aims to make three contributions. First, by relying on strategy-focused and innovation management-focused BMI studies, and linking the two approaches, the author develops the “dynamic concept” of business models’ strategy dimension by bringing the two perspectives together. Second, the work examines how BMI can become a source of sustainable competitive advantage though all the main components of successful business models seem very visible and easy to copy. Third, by unpacking key elements of a business model, the paper discloses what BMI does really mean in terms of concrete changes and how these changes affect a competitive position of the firm.

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Notes

  1. It was not that long ago that this company was among the most respected long-standing members of “big business” community in the USA. Founded in 1880, for almost an entire century, Kodak was seen as one of the most innovative corporations in the world, renowned for its special devotion to advanced technologies and innovative marketing solutions. It is no coincidence that by 1976, the company already controlled 85 % of the US camera market and 90 % of the film market; right up to the 1990s, the Kodak brand was regularly included in the top five most expensive global brands.

  2. Forbes, August 20, 2013. [http://www.forbes.com/sites/avidan/2013/08/20/the-death-of-scale-is-kodaks-failure-an-omen-of-things-to-come-for-corporate-america/]

  3. This is noted by Raphael Amit (from Wharton School) and Christoff Zott (from IESE Business School) (Amit, Zott, 2012. P. 43), “Rather than growing by simply bringing innovative new hardware to the market, Apple transformed its business model to encompass an on-going relationship with its customers… In this way, Apple expanded the locus of its innovation from the product space to the business model.”

  4. ServiceSource 2014. Investor Relations// http://ir.servicesource.com/

  5. As observed in the specialist study of Nespresso’s business model (Matzler et al. 2013. p. 36), “the idea to sell coffee in capsules has now been copied many times but what is hard to copy is the entire system—the business model. This non-duplicable business model provides the foundation for sustained success.”

  6. According to a specialist assessment (Wallbank 2013, p. 3) comparing the current effectiveness of the Virgin Blue and Jetstar business models, “as a low-cost carrier, Jetstar is the realityof flying’s present and a vision of travel’s future.”

  7. Business 2010: Embracing the Challenge of Change. White Paper. N.Y.: Economist Intelligence Unit. 2005, p. 9.

  8. As this survey concludes, “business model innovation ranks last on the innovators agenda when it comes to the extent to which companies are willing to invest in this area, both now and in the near future” (Duppen, Inniss 2010, p. 24)

  9. “Like Xerox,” wrote Henry Chesbrough from Haas School of Business (Chesbrough 2010. p. 356), “companies have many more processes, and a much stronger shared sense of how to innovate technology, than they do about how to innovate business models.”

  10. In the USA, until 1870, livestock intended for meat processing crossed over from one of the main livestock centers in the Midwest to slaughterhouses on the East Coast, and was then resold to consumers in major cities of the region in the form of fresh prefabricated meat. Swift & Co adopted an entirely different approach: by placing slaughterhouses in the main livestock regions and supplying them with powerful refrigeration equipment, the company set about transporting frozen meat in specially equipped wagons by rail to major consumption centers. By drastically cutting costs, the company managed to radically drop prices and quickly gained the dominant position in the industry, with its competitors having no other choice but to adopt this model, which became the industry standard.

  11. http://wiki.badgerandblade.com/History_of_Shaving

  12. The Economist. September 21, 2013.// http://lb-stage.economist.com/news/business/21586557-chinese-internet-firm-finds-better-way-make-money-tencents-worth

  13. With the help of the Moscow Government McDonalds’ set up several farms near the city which secured funding to purchase modern equipment. A herd of meat cows was brought from Holland, as well as a specialist type of potato from the USA. The company then built a large complex to produce packed beef, semi-finished potato goods, dairy produce, and the company’s sauces and ketchups. It even managed to establish its own fleet of trucks to ensure that its restaurants were supplied according to a strict schedule.

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Acknowledgments

The article was prepared within the framework of the Basic Research Program at the National Research University Higher School of Economics (HSE) and supported within the framework of the subsidy granted to the HSE by the Government of the Russian Federation for the implementation of the Global Competitiveness Program.

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  1. National Research University Higher School of Economics, Institute for Statistical Studies and Economics of Knowledge, Moscow, Russian Federation

    Alexey Bereznoy

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Correspondence to Alexey Bereznoy.

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Bereznoy, A. Changing Competitive Landscape Through Business Model Innovation: the New Imperative for Corporate Market Strategy. J Knowl Econ 10, 1362–1383 (2019). https://doi.org/10.1007/s13132-015-0324-x

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