What to Do Against Disruptive Business Models (When and How to Play Two Games at Once) Harvard Case Solution & Analysis

Established companies in industries as diverse as airlines, media and banking have seen their markets invaded by new disruptive business models. Beginners can not only steal customers from established firms, but also by attracting new customers to the market. As a result, new companies have to decide how to keep existing customers, taking advantage of the new ones. One option is to use existing business models to satisfy both markets. Another is to develop a new business model specifically for the new market. This is not an easy decision, because the output of a new market can be risky. But if the company decides to do so, he must decide what business model to adopt, and then make sure that new business models coexist peacefully next to the existing business model. Based on 65 studies of companies that have decided to enter the markets of developed destructive business models (including Nestl, Edward Jones, Waitrose, Reuters, and Tesco), the authors say that established firms need to develop new business models that are different from the existing business models and different from the business model of the destroyer. However, development of these business models is not only difficult in itself, but also raises issues of how to operate two different and conflicting business models in the same company. The authors argue that the usual recipe for creating a separate entity for the new business model is not enough. The company must achieve a fine balance: creating enough separation between the two business models in order to avoid conflicts, but not so as to take advantage of the synergy between them. To achieve this balance, the company needs to create a balanced organizational environment. "Hide
by Constantinos C. Markides and Daniel Oyon Source: MIT Sloan Management Review 10 pages. Publication Date: July 1, 2010. Prod. #: SMR358-PDF-ENG

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