Should You Co-Opt Your Competitor’s Business Model?

Business model, changeAs host of the Twitter chat, #KaizenBiz,  I am often on the lookout for interesting topics for us to take apart and discuss. So the headline for this HBR post, “Embrace the Business Model That Threatens You” caught my eye. What could this mean? What are the pros and cons of this?

Business model

According to BusinessDictionary.com,

Description of means and methods a firm employs to earn the revenue projected in its plans. It views the business as a system and answers the question, ‘How are we going to make money to survive and grow?’

The definition is not really complicated. It is the variations that are devised that are fascinating.

The details make the difference

Just last week, we took a look at the ideas about the future of social entrepreneurship which uses various business models as differentiators. But even conventional businesses of all sizes present their own different models as well. At the most basic level, most of us are familiar with models that might use charging a fee for time, selling products and combinations of these.

A time of great change

In the HBR post, Embrace the Business Model That Threatens You”, Leonard Fuld uses a number of companies who have begun borrowing from competitors and creating hybrid business models. As examples, Amazon introduced lockers for the brick and mortar experience some customers prefer and Netflix has produced original programming to accompany its usual catalogue of television series, documentaries and movies.

Companies, big and small, are aware that this is a time of great change. It has been noted in previous KaizenBiz conversations that technology is driving a lot of change for organizations. With the recent introduction of Google Glasses plus the omnipresent tablets and smartphones, customer engagement with brands can be much more immediate and fickle. Just the simple practice of going to a store to shop has morphed into seeing and touching a product…and then ordering it online. Retailers either have to come up with some other means of converting foot traffic into paying customers or  meeting them online. And that is just retail.

Uncertainty is a player in corporate decisions

Seasoned business owners and executives have told me anecdotally about a perception that the environment and the “rules” are different since the economic downturn in 2008. Uncertainty, or predicting the future, has always played a part in organizational decision-making. Alexander Osterwalder (in this great overview post from Doug Williams) is saying that all companies are doomed if they continue to operate as they always have. Yet we see with JC Penney (a US retailer) that following a business model that attempts to disrupt the marketplace can be disastrous for a company. It might be a safer or prudent move to borrow from a competitor rather than putting all of your resources into a model like the one used by JC Penney.

Anticipating the future

Setting the stage for the future is what your business model is attempting to do. It could get complicated if you design it that way but it is simply “we create revenue by selling X and this is how we sell X.” Grant McCracken writes, “…the future is never defined, organized, boundaried, or anchored. Really, it’s all just hints and whispers. Fragile melody, no refrain.” Hybridization of your business model or simply borrowing this tactic and that tactic from your competitors might set the stage for a business with no set direction or one that is self-reflective and using current best practices about how to engage with its marketplace.

Add your thoughts to this conversation here and on Twitter on May 31st at 5pm GMT/12pm ET/9am (please use hashtag #KaizenBiz)

How accurate is the perception that disruption in business models is due to external factors?

What are the different variables in the business environment that you would want to consider when designing your business model?

 How would you describe business models who borrow aspects of competitor’s models?

When would disrupting a current business model be the wrong choice for a company?

When would a merger make more sense than simply incorporating your competitor’s business model into your own?

What are the ramifications of “being in the moment” with your business model as you anticipate & respond to your marketplace?

About the author:  Elli St.George Godfrey, founder of Ability Success Growth, small business coach and executive coach, is the host of KaizenBiz. I’m passionate about business becoming a more human-centered place so I host this chat to connect business ideas and develop people.This passion shows up in my work with my clients. Whether you are expanding locally or internationally, Ability Success Growth guides established small business owners and executives to unlock the CEO within during times of transition and growth.

image credit: alphaspirit on iStockphoto

 

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