By M. Isi Eromosele

Globalization and technology innovation are giving rise to an unprecedented level of competition while creating extraordinary opportunities for companies to differentiate themselves. In today’s globally, intensively interconnected business environment, a major challenge faced by business organizations is how to maximize shareholder value and sustain growth, while at the same time creating economic value for all.

An organization’s business applications and technology infrastructure form the foundation upon which a company can implement innovative, market differentiating business processes. For many companies, growth depends on innovation. While product, service and operational innovations are important, innovation must also be applied to a company’s core – the way it does business and drives revenue.

Business model innovations are vital to creating new and differentiating values for companies. Companies that can substantially change how they add value to their own or other industries can differentiate themselves and gain competitive advantage. 

Business Model Innovation

With intensified competition, rising customer expectations and globalization affecting the way companies do business, fundamental business changes are necessary. Business model innovation is the answer. The way a company does business is an important differentiator because such innovations cannot be imitated or commoditized the way product and services innovations can be copied. The competitive advantage continuous business innovations offer results in more long-term durability.

Business model innovation is a way to preempt competitive threats from industry and non-industry competitors. Companies should strive to be the ones driving change within their industries, instead of being a follower. Business model innovation is really a natural evolution, since change is inevitable, since a business model will eventually run its course.

Competitive Strategy Evolution

Over the past several years, competitive strategy has been evolving from one that is a zero-sum game where one competitor gains an advantage at the expense of another, to one that is collaborative, where joint effort creates more economic values for all involved.

In competing for global markets, traditional competitive strategy stressed positioning in well-defined matured markets, striving to build market share. The new competitive strategy calls for pre-positioning in emerging markets and co-developing these markets with others, including competitors. With this new paradigm, companies compete not to maximize market share, but to maximize value.

Business leaders are now realizing that a company cannot drive industry and market altering changes alone. Many companies, including major industry titans are forging strategic alliances, combining their expertise with the specialized knowledge of carefully chosen partners.

In competing for market share with new products, traditional competitive strategy employ a closed business model by which companies compete by spending incredible amount of funds on research and development. Today, an increasing number of companies are adopting the open business model by which they share expertise with their peers or competitors, jointly developing products.

Within their companies, business leaders are affecting major organizational changes, eliminating divisional boundaries and leveraging shared services across the enterprise. They are pursing new business opportunities, new competencies and new alliances, creating values not only for their companies, but for their industries as well.

These companies are implementing innovations proactively, resulting in business designs that truly differentiating. This enables them to be better equipped to efficiently respond to market changes and internal operational demands. Additionally, forging collaborative partnerships are enabling them to lower their operating costs, while providing opportunities for increased revenue generation.