MIT Sloan Management Review

BUSINESS MODEL INNOVATION
What to Do Against
Disruptive Business
Models (When and How
to Play Two Games at Once)

Fighting against a disruptive business model by rolling out a second business model is one option for companies to consider. But to make that work, you need to avoid the trap of getting stuck in the middle. BY CONSTANTINOS C. MARKIDES AND DANIEL OYON

THE LEADING QUESTION

Should companies adopt a second business model in their main market?

FINDINGS Responding to a disruption by adopting a second business model in the same market can be an effective strategy. Your second business model should be different from your existing one and different from that of the disrupter. Keep the two separate enough to avoid conflicts, but leverage potential synergies.

INCREASINGLY, ESTABLISHED companies in industries as diverse as airlines, media and banking are seeing their markets invaded by new and disruptive business models. The success of invaders such as easyJet, Netflix and ING Direct in capturing market share has encouraged established corporations to respond by adopting the new business models alongside their established ones. Yet, despite the best of intentions and the investment of significant resources, most companies are unsuccessful in their efforts to compete with two business models at once.

According to Michael Porter and other strategy theorists, managing two different business models in the same industry at the same time is challenging because the two models (and their underlying value chains) can conflict with each other. 1 For example, airlines selling tickets through the Internet to fight back against their low-cost competitors risk alienating existing distributors (the travel agents). Similarly,

established newspaper companies that offer “free” newspapers to respond to new entrants risk cannibalizing their existing customer base. By attempting to compete with themselves, Porter argued, companies risk