Contents

Introduction

1. The Innovation Is in the Business Model

What Is a Business Model?

What Is an Innovation?

Characteristics of Business-Model Innovations

Who Wants to Be a Business-Model Innovator?

Summary

2. Discovering New Business Models

Redefine the Field—What Business Am I In?

Redefine Who Really Is the Customer

Redefine What You Are Really Offering This Customer

Redefine How You Play the Game in This Industry

Questioning Is Not Enough: Create a Positive Crisis

Creating Positive Crises

Two Caveats

Summary

3. Creativity Is Not Enough: From Discovering to Implementing New Business Models

Discovering New Customers

Offering New Value Propositions

Putting in Place New Value Chains

Protecting the Business Model by Scaling It Up Quickly

Common Behaviors Toward Technology

Summary

4. Using Dual Business Models to Compete: Is a Separate Unit Necessary?

What to Do About Conflicts

Is Separation Always the Solution?

Four Strategies for Managing Dual Business Models

No Single Best Way

Summary

5. Separation Is Not Enough: How to Achieve Ambidexterity

Achieving Ambidexterity

A Framework for Ambidexterity

Summary

6. Responding to Business-Model Innovation

Response One: Focus on My Business Model

Response Two: Ignore It—“This Is Not My Business”

Response Three: Disrupt the Disruptors

Response Four: Embrace the New Business Model and Play Two Games

Response Five: Migrate to the New Business Model but Scale It Up

When to Do What

Summary

7. When Would Established Firms Discover New Business Models?

Migrating from a Failing Business Model

New Market Entry in Established Markets

Scaling Up New Markets

Who Scales Up New Markets?

Summary

8. Rethinking Innovation in the Big Firm

Conflicting Skills and Attitudes

What to Do with Business-Model Innovation

Appendix A: Examples of a Few Less Well-Known Business-Model Innovators

Appendix B: How to Enhance Corporate Creativity

Appendix C: How to Measure Relatedness Between Two Markets

References

Acknowledgments

The Author

Index

Copyright © 2008 by John Wiley & Sons, Inc. All rights reserved.

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Library of Congress Cataloging-in-Publication Data

Markides, Constantinos.

Game-changing strategies : how to create new market space in established industries by breaking the rules/Constantinos C. Markides. — 1st ed.

p. cm.

Includes bibliographical references and index.

ISBN 978-0-470-27687-7 (cloth)

1. Creative ability in business. 2. Organizational change. 3. Corporations—Growth. I. Title.

HD53.M364 2008

658.4’012—dc22

2008009622

First Edition

To the memory of my friend and colleague,

Professor Paul Geroski

Introduction

Common sense as well as academic research argues that attacking bigger competitors will most likely lead to failure. For example, a series of studies undertaken at London Business School in the early 1990s examined how new market entrants in several U.K. industries fared against much bigger established competitors.1 Not surprisingly, the failure rate of new entrants was quite high—more than 85 percent of them failed within five years of entry. The established competitors had few difficulties repelling these smaller attackers: the studies found that the top-ranked firm in a particular industry had a probability of about 96 percent of surviving as No. 1—a near certainty.2 For the second-ranked firm the probability of survival was 91 percent, and for the third-ranked firm 80 percent. In fact, most of the turnover that occurred among the top five in an industry was due to mergers rather than smaller entrants outcompeting market leaders.

Yet, without disputing the statistics, we all know of examples of companies that attacked much bigger competitors with great success. In several instances, not only did the smaller firm survive, it managed to emerge as one of the leaders in the industry! IKEA did it in the furniture retail business, Canon in copiers, Bright Horizons in the child care and early education market, MinuteClinic in the general health care industry, Starbucks in coffee, Amazon in bookselling, K-Mart in retailing, Southwest, easyJet, and Ryanair in the airline industry, Red Bull in the carbonated soft drinks industry, Lulu in publishing, Enterprise in the car rental market, Netflix and Lovefilm in the DVD rental market, Honda in motorcycles, Wit Capital in investment banking, Skype in telephony, Priceline in the travel agent market, Casella in the wine market, Metro International in newspapers, and Home Depot in the home improvement market. The list could go on!

The Secret of Success: A New Business Model

What explains the success of these outliers and what can we all learn from their experiences? After studying more than seventy such firms, I believe that the answer to this question is simple enough: successful attackers do not try to be better than their bigger rivals. Rather, they actively adopt a different strategy (or business model) and aim to compete by changing the rules of the game in the industry. Over and over, what I have observed is that significant shifts in market share and company fortunes took place not by trying to play the game better than the competition but by playing a different game—in a sense, by avoiding head-on competition. The box lists a number of such business-model innovators from a variety of industries—both high-tech and low-tech, growing and mature.

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Lesen Sie weiter in der vollständigen Ausgabe!

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Lesen Sie weiter in der vollständigen Ausgabe!