Emerging Technologies Essay

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SUMMER 2010 V O L . 5 1 N O. 4 Constantinos C. Markides and Daniel Oyon What to Do Against Disruptive Business Models (When and How to Play Two Games at Once) Please note that gray areas reflect artwork that has been intentionally removed. The substantive content of the article appears as originally published. REPRINT NUMBER 51413 B U S I N E S S M O D E L I N N O VAT I O N What to Do Against Disruptive Business Models (When and How to PlayTwo Games at Once) Fighting against a disruptive business model by rolling out a second business model is one option for companies to consider. But to make that work, you need to avoid the trap of getting stuck in the middle. BY CONSTANTINOS C. MARKIDES AND DANIEL OYON THE LEADING QUESTION Should companies adopt a second business model in their main market? FINDINGS Responding to a disruption by adopting a second business model in the same market can be an effective strategy. Your second business model should be different from your existing one and different from that of the disrupter. Keep the two separate enough to avoid conflicts, but leverage potential synergies. INCREASINGLY, ESTABLISHED companies in industries as diverse as airlines, media and banking are seeing their markets invaded by new and disruptive business models. The success of invaders such as easyJet, Netflix and ING Direct in capturing market share has encouraged established corporations to respond by adopting the new business models alongside their established ones. Yet, despite the best of intentions and the investment of significant resources, most companies are unsuccessful in their efforts to compete with two business models at once. According to Michael Porter and other strategy theorists, managing two different business models in the same industry at the same time is challenging because the two models (and their

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