In this topic 12 sections
- 36Create value together and decide how it is shared
- 37Choose an ecosystem role and govern the partnership
- 38Match supply-chain partnerships to the promise
- 39Why established organisations struggle with disruption
- 40Compare responses before choosing one
- 41Link technology to a credible model change
- 42Sustainability: several routes to business-model change
- 43Test environmental and social results
- 44Design for the specific emerging-market conditions
- 45Respond to hypercompetition deliberately
- 46Turn an option into a recommendation
- 47Sources and further reading
Create value together and decide how it is shared
Value creation concerns the benefit generated through the combined contributions of an organisation, its suppliers and customers. Value capture concerns the share each participant retains. A useful contribution does not automatically produce a strong bargaining position if another participant can provide it just as well.
Brandenburger and Stuart's value-based approach uses added value to examine the difference a participant makes to the network. Under the model's conditions, that added value limits the amount the participant can capture. This is a conditional analytical result, not a guaranteed price or profit forecast. Alternatives available to buyers and suppliers matter alongside the organisation's own capabilities.
Concept sources: Brandenburger and Stuart: Value-based Business Strategy — Publisher abstract verifies added value, conditional capture limits and the importance of both supplier and buyer relationships.
Two practical questions follow. Competitive intent asks how investment makes the contribution more valuable or less replaceable. Persuasive intent asks why partners would agree to the proposed division of benefits. Demonstrated quality, reliable performance and credible alternatives may influence negotiations; persuasion cannot make an uneconomic arrangement sustainable.
Concept sources: Almeida Costa and Zemsky: The Choice of Value-Based Strategies under Rivalry — Supports the distinction between improving value creation and strengthening bargaining capabilities.
Choose an ecosystem role and govern the partnership
Partnerships provide access to capabilities beyond the firm's boundaries. A targeted agreement might address one project; an alliance may support a longer programme of cooperation. Actual responsibilities depend on the arrangement, not its label. Partners can cooperate in one activity while competing elsewhere.
An ecosystem strategy should identify the customer outcome, the contribution needed from each partner and why participation remains worthwhile. Being a complementor can be preferable to coordinating the entire system. Orchestration requires partner selection, onboarding and governance as well as an appealing offer.
| Partnership decision | Evidence to seek before commitment |
|---|---|
| Purpose and scope | A measurable outcome and a clear boundary for the joint work. |
| Complementary contributions | Resources or capabilities that improve the combined offer. |
| Incentives and economics | Benefits sufficient to keep each essential partner participating. |
| Decision rights | Agreed authority, escalation and responsibility for delivery. |
| Information and continuity | Arrangements for data access, performance review and an orderly exit. |
Concept sources: London Business School: From partnerships to experience ecosystems — Supports partner value, role choice and governance. The checklist is an original application, not the source's diagram.
In a regional cluster, related firms, specialist suppliers and institutions are concentrated geographically. Nearby expertise and complementary activities may improve productivity and innovation. This differs from an alliance: proximity can create useful connections without a single negotiated agreement governing the whole cluster.
Concept sources: Harvard Business School, Institute for Strategy and Competitiveness: Cluster Studies — Cluster definition and research on regional linkages.
Match supply-chain partnerships to the promise
Supply-chain design should support the customer promise. Low cost, rapid fulfilment and adaptability are related but different objectives. A shared information system helps only if participants act on accurate information.
| Emphasis | Main objective | Management implication |
|---|---|---|
| Lean | Remove non-value-adding work, waste and unnecessary inventory. | Improve flow and process consistency; do not confuse lean with eliminating every buffer. |
| Fast | Shorten the time from demand to fulfilment. | Measure lead time and remove delays between partners. |
| Agile | Adjust to changes in volume, mix or requirements. | Maintain suitable flexibility, visibility and response capacity. |
Concept sources: ASCM Wisconsin: Lean Versus Agile Supply Chains — Lean, responsiveness and agility distinctions. Original comparison, with “fast” used to emphasise time.
Different segments may need different approaches. Predictable base demand may support standardised replenishment, while uncertain specialist orders require flexibility. Tools such as electronic data interchange, scanning, RFID tags, point-of-sale feeds and electronic payments can shorten information delays. Their strategic contribution is better coordination, not the mere presence of technology.
Why established organisations struggle with disruption
Existing success can make a new model difficult to fund. Resource-allocation criteria and managerial incentives often favour initiatives that serve current customers, produce visible returns quickly and fit familiar margins. A small new opportunity may be rejected before senior leaders even review it.
The response is to examine the decision process as well as the innovation itself. Specify which assumptions need testing, what early evidence is meaningful and how funding will be released as uncertainty falls. This protects experimentation from inappropriate mature-business targets without removing accountability.
Concept sources: Harvard Business School Online: Understanding the Resource Allocation Process — Supports the influence of evaluation criteria, managerial filtering and time horizons.
The required change may involve resources, processes or priorities. Buying new resources can work when the existing model is compatible. Different work methods may need a cross-functional team. A model that conflicts with established priorities may need greater organisational separation. Separation has costs too: coordination, access to expertise and integration decisions remain important.
Concept sources: Christensen Institute: Business models and the levels of change — Supports the resources/processes/priorities distinction. The original infographic is not reproduced.
Do not infer that every new technology is disruptive or that every incumbent should abandon its customers. Compare the entrant's target market, economics and improvement path with the organisation's actual exposure. A disciplined response can protect today's service while testing tomorrow's model.
Compare responses before choosing one
The following is a decision aid, not a universal sequence. Options can be combined across different activities or used at different times.
| Response | Appropriate question | Main caution |
|---|---|---|
| Defend or block | Can a legitimate advantage or enforceable right protect the offer? | Defensive action does not remove changing customer needs. |
| Harvest / milk | Can a declining activity release cash while commitments are met? | Distinguish managed decline from neglect. |
| Invest in the new model | Should the firm build, partner or acquire capabilities? | Investment price and integration can destroy the expected benefit. |
| Disrupt the current business | Can a new offer replace the firm's existing model successfully? | Plan for cannibalisation and conflicting incentives. |
| Retreat to a niche | Is a smaller segment still attractive and defensible? | A niche must support its full cost. |
| Redefine the core | Can existing strengths serve a different customer need? | Similar resources do not guarantee market fit. |
| Exit | Would sale or closure preserve more value than continued operation? | Include timing, transition costs and stakeholder commitments. |
Concept sources: IMD: Strategies for Responding to digital disruption — Supports defensive/offensive response families, including harvest, retreat and self-disruption. This expanded comparison and its questions are an original study synthesis, not IMD's named four-strategy diagram.
Link technology to a credible model change
Kavadias, Ladas and Loch identify recurring features in transformative models. The features help frame questions; they do not guarantee success or require every organisation to adopt the same combination.
- Personalisation
- Does tailoring improve an outcome customers value?
- Closed-loop activity
- Can recovered products or materials support another useful cycle?
- Shared assets
- Can available capacity serve more users effectively?
- Usage-based charging
- Does payment better match the amount of service consumed?
- Collaborative delivery
- Can partners reduce friction across the combined offer?
- Adaptive organisation
- Can decisions change promptly when market evidence changes?
Concept sources: Cambridge Judge: Keys to business transformation — Supports the six features; original wording and card design. The study found an association, not a success formula.
Before recommending a feature, identify the trade-off. Usage-based charging may help adoption but make revenue more variable. Shared capacity may improve utilisation but increase scheduling conflicts. The model must work as a system, including operations and funding.
Sustainability: several routes to business-model change
Sustainability-oriented innovation can change delivery, collaboration, financing or purpose. These approaches overlap; none automatically proves a positive net impact.
| Approach | What it changes |
|---|---|
| Product-service system | Combines goods and services around a useful customer outcome. |
| Closed-loop production | Recovers outputs for further use; industrial symbiosis connects one firm's by-products to another's inputs. |
| Sharing economy | Makes underused assets accessible to additional users. |
| Open innovation | Allows knowledge to move across organisational boundaries. |
| Peer-to-peer innovation | Enables participants to develop and share solutions together. |
| Crowdfunding | Collects contributions from many funders; the funding terms can differ. |
| Social enterprise | Places a social or environmental mission within trading activity. |
| Gift economy | Organises contributions and exchange without a compulsory market price. |
| New manufacturing approaches | Uses methods such as digital or additive production to alter where and how goods are made. |
Concept sources: Gaziulusoy and Twomey: Emerging Approaches in Business Model Innovation Relevant to Sustainability and Low-carbon Transitions — Working paper, sections 3.1–3.9. The table is a concise original summary, not a reproduced figure.
These are different kinds of choice: crowdfunding is a financing method, while a product-service system changes delivery. They can coexist. A business could finance repair equipment through a crowd and use it to supply a maintenance service. Explain the connection instead of treating the labels as interchangeable.
Social enterprise, benefit corporation and Certified B Corp are not interchangeable terms. Social enterprise describes a mission-oriented approach to trading. Benefit corporation refers to a legal structure incorporating stakeholder considerations, where that form is available. Certified B Corp is a certification administered by B Lab. Holding a particular legal structure does not automatically confer the certification.
Concept sources: B Lab: Certified B Corp and benefit corporation — what is the difference? — Supports the distinction between certification and legal structure.
Test environmental and social results
Compare impacts over the whole life cycle. Recovery, cleaning, transport and replacement inputs may offset some savings. Rebound effects occur when savings or lower prices lead to additional consumption. A shared or repaired product does not necessarily displace a newly manufactured product one for one.
Use a clear comparison, such as the impact per year of reliable service under the existing and proposed models. Then test assumptions about utilisation, product life and customer behaviour. Include absolute impacts as well as efficiency measures; lower impact per transaction can coexist with higher total impact.
Concept sources: OECD: The environmental impacts of circular business models — Supports life-cycle assessment, displacement uncertainty and rebound effects. The measurement prompts are an original application.
Design for the specific emerging-market conditions
Start with the chosen segment's needs and barriers, rather than transferring a model unchanged. Relevant factors include infrastructure, payment patterns, distribution, institutions, skills and locally available resources. Conditions must be investigated, not assumed from a country's label.
| Evidence from the target segment | Model implication to test |
|---|---|
| Customers lack awareness or confidence | Demonstration, trusted support or a suitable local partner. |
| Large upfront payments exclude buyers | Smaller transactions or an affordable payment structure. |
| Access is difficult | Distribution and service arrangements that reach the user reliably. |
| Skills or operating support are missing | Training and support costed into delivery. |
| Intermediaries add both cost and useful services | Compare direct access with the functions that would need replacing. |
Concept sources: IFC and partner development-finance institutions: Inclusive Business Investing Guide — Sections 2 and 5 support investigation of awareness, affordability, accessibility and inclusive design. Original decision table.
Respond to hypercompetition deliberately
D'Aveni examines competition through price/quality, timing/knowledge, defended positions and financial resources. His New 7-S ideas concern competitive movement; they are different from the organisational alignment 7-S framework studied earlier.
| Idea | Study meaning |
|---|---|
| Stakeholder satisfaction | Create reasons for participants to support the offer. |
| Strategic soothsaying | Anticipate possible openings. |
| Speed | Act while an opportunity remains useful. |
| Surprise | Avoid wholly predictable moves. |
| Shifting rules | Change the basis of rivalry. |
| Signalling intent | Consider how announced intentions affect responses. |
| Simultaneous / sequential thrusts | Coordinate connected competitive initiatives. |
Concept sources: D'Aveni: Hypercompetition — Four arenas and New 7-S concepts; publisher description. Original table with shortened labels.
Use the framework to examine likely reactions, not to justify frantic launches. A move that earns less than its investment cost is not attractive merely because it surprises a rival. Test the next step against the organisation's funding, execution capacity and customer promise.
Turn an option into a recommendation
- Diagnose the pressure
- Compare response economics
- Identify partner and capability needs
- Run a bounded test
- Review evidence and commitments
- Scale, adjust or stop
Concept sources: IMD: Strategies for Responding to digital disruption — Supports comparing strategic responses. This evaluation flow is an original synthesis.
A recommendation should state the selected option, why it fits the facts, the strongest alternative, the important risk and the evidence needed before further commitment. For established firms, explain how current customers and cash generation will be managed during the transition. For new ventures, explain how the proposed network and model become viable before funds run out.
Sources and further reading
- Brandenburger and Stuart: Value-based Business Strategy: added value and conditional value-capture limits; publisher abstract.
- London Business School: From partnerships to experience ecosystems: partner propositions, role choice and governance.
- Harvard ISC: Cluster Studies: regional clusters and complementary activities.
- ASCM Wisconsin: Lean Versus Agile Supply Chains: supply-chain priorities.
- HBS Online: Understanding the Resource Allocation Process: organisational barriers to new initiatives.
- Christensen Institute: Business models and the levels of change: resources, processes and priorities.
- IMD: Strategies for Responding to digital disruption: defensive and offensive choices.
- Cambridge Judge: Keys to business transformation: technology-enabled model features.
- Gaziulusoy and Twomey: Emerging Approaches in Business Model Innovation: sustainability-related approaches, original working paper.
- B Lab: Certified B Corp and benefit corporation: distinction between certification and legal structure.
- OECD: Environmental impacts of circular business models: impact assessment and rebound effects.
- IFC and partners: Inclusive Business Investing Guide: investigating participation barriers and viable solutions.
- D'Aveni: Hypercompetition: competitive arenas and New 7-S.