The Idea in Brief The Idea in Brief There has never been as much
interest in business models as there is today; seven out of 10
companies are trying to create innovative business models, and
98% are modifying existing ones, according to a recent survey.
However, most companies still create and evaluate business
models in isolation, without considering the implications of how
they will interact with rivals’ business models. This narrow
view dooms many to failure. Moreover, companies often don’t
realize that business models can be designed so that they
generate virtuous cycles—similar to the powerful effects high-
tech firms such as Facebook, eBay, and Microsoft enjoy. These
cycles, when aligned with company goals, reinforce competitive
advantage. By making the right choices, companies can strengthen
their business models’ virtuous cycles, weaken those of rivals,
and even use the cycles to turn competitors into complementary
players. This is neither strategy nor tactics; it’s using
business models to gain compet