Gaining Competitive Advantage With Your Business Model

BusModelAs I have written about before, companies can gain advantage from their business model. Consider some popular examples:

Amazon.com: It starting as a bookstore and now is a global online “department store” that delivers. As competitors look to keep up, Amazon  keeps upping the ante. They have gone from delivery, to 2-day delivery to same day delivery. I noted in an earlier post that one of my friends got delivery from them while waiting for a Staples store to open. This business model combined with huge growth potential has allowed them to use “Wall Street” as their source of capital without needing to show short-term results. Meanwhile they keep upending retail.

Costco: They, along with their previous competitor and merger partner Price Club, expanded the membership model pioneered by retailers like FedCo, and made it a profitable, scalable business. Today, Costco generates enough profit from their membership fees that they can operate at a break-even margin and meet Wall Street expectations. This allows them to pay their employees better (gaining better people and better social media vibe), charge their customers less, and execute a business that makes sense.

Uber/Lyft: These ride sharing services are rapidly replacing taxis. They are more reliable, cleaner and less expensive than many (most) cabs. On my last visit to the Financial District in New York City there was not a cab in sight to take me to the airport, but there were 5 Uber cars within a block of my location.

Airbnb: Displacing hotels and traditional “B and B” for many travelers.

And you read about more every day. One of the things all of these and other business model innovators have in common is that they almost never do something incumbents could not have done had they chosen to.

What would your customer or future customers like from you? Is your business model getting in the way of providing the customer what they need, want and demand? When are you going to do something about it? Borders waited too long and they are gone. Cab companies are in dire straights. What’s your plan?

Mitch

P.S. We offer a free white paper on business model innovation if you’d like to read more.

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