Julian Birkinshaw

Two worldviews — market positioning and the resource-based view — have dominated how we think about competitive advantage for 40 years.

But the rapid growth of business ecosystems in recent years challenges this thinking. Most of these ecosystem orchestrators, like Google, Alibaba, and Uber, don’t make the things they sell; they exist to link others together, and this makes the old positioning-based logic less relevant. And, of course, they don’t have many assets, either. They create value through relationships and networks, not through physical goods or infrastructure, so arguments built around asset ownership are equally challenging. These firms are also looking to grow the market — by increasing the flow of people and goods — rather than to capture as much of the existing market as possible.

In other words, they don’t care much for the moat-based logic of competitive advantage. I think a more apt metaphor for these firms may be the logic of the turnstile: They want to get as many players involved in their ecosystem as possible, and to get them interacting according to rules they have shaped. Of course, there are many ways these companies make money — committees, membership fees, advertising sales, and so on — but the key point with all these business models is that they work better when the ecosystem is larger. That’s why the turnstile metaphor is useful.

Like this content? Why not share it?
Share on FacebookTweet about this on TwitterShare on LinkedInBuffer this pagePin on PinterestShare on Redditshare on TumblrShare on StumbleUpon

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.