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"Competition is the keen cutting edge of business, always shaving away at costs."

Henry Ford

Competition

Today, the most difficult part of handling competition is understanding what competition looks like.

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In the past, competitors tended to be organizations similar in business model and offerings.

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The advent of the platform model, which basically connects demand and supply, fuelled by the ubiquity and reliability of the cloud is transforming the contours of the competitive landscape. And it is doing so in more dimensions than one.

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The rise of the network

With digital technologies influencing or changing every aspect of our lives, competitors no longer must come from the same industry.

Nor does a disruptive competitor have to be of the same size, scale and revenue as that of the current market leader.The rapid scalability and reach that the cloud offers, combined with the pervasive nature of internet connected mobile devices has resulted in the advent of the platform business model.In this model, a business simply needs to be able to facilitate interaction between users with complementary needs and offerings.

A platform business model is typically asset-light, unlike a traditional business. It can scale rapidly to address a market several times that of the traditional business model and address hitherto untouched customer segments, while decimating even established leaders in a winner-take-all market consolidation.  Almost all the multi-billion-dollar businesses that have emerged in the past few years have leveraged this model to great effect, including Uber, Airbnb, Google and Facebook.

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Changing contours

It is no longer possible to clearly label a digital business as belonging to a particular industry.

Facebook a social network or an advertising platform? Is Amazon a retailer, or a market place where it allows competitors, including its own, to sell on the same platform? On the other hand, asymmetric competitors can disrupt a business model without having any similar product or service. Uber can affect sales of automobile companies, if people decide it is cheaper to rent a car than to own one. YouTube can obliviate the need for a cable network.

Businesses which make revenue by being middlemen, such as retailers or book stores are being shut down by e-commerce platforms. Or, the digital platform can add a new intermediate layer that did not exist before, such as Google helping advertisers reach consumers.  App stores are earning revenue by providing a trusted platform for connecting customers and developers.

The open business model: how technology can help

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To survive the onslaught of digital disruptors, established businesses need to adopt open business models that allow value creation to happen outside of their business.

Technology can help in providing a digital business platform that can co-exist as well as compete with partners, while being able to deliver unique business value by capitalizing on its IP, brand or network effects.

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