Guest blogger: Thomas C. Lawton, PhD FRSA, Professor of Strategy and International Management at The Open University Business School.
The purpose of our Business Perspectives event in London on 21st September is to integrate research, consulting and practice in a discussion about the interface of data, digital and business models. Questions raised will include: what is a business model and how can managers innovate existing business models to create new market opportunities? How have digital technologies transformed business models? How can big data drive a growth-oriented business model? We are fortunate to have three excellent business speakers, representing insights and experiences from large corporations (BT Group), mid-sized companies (Hillgate Travel), and consultancy (Added Value/Kantar). I will add my thoughts, based on 20 years of research, writing and advisory work.
Whilst the tone of the day will be critical but upbeat and positive, it is worth reflecting in advance on the challenges and in some ways, existential threats that exist to disruptive and often asset-light business models. Let’s take two examples: Airbnb and Uber. Investors have valued Airbnb at $30 billion and Uber at close to $70 billion. But as I write, I am in Germany’s capital, Berlin, a city that has regulated to prevent entire homes being rented through Airbnb and that banned Uber, ostensibly on consumer safety grounds. As we know, lobbying by black cab drivers meant that London came close to restricting Uber’s business model when Boris Johnson was mayor. Sadiq Khan may yet impose Berlin-style restriction on Airbnb, as research indicates up to half of Airbnb rentals in London are offered by professional landlords, limiting further the number of long term rental properties available in a city with an already chronic shortage of housing.
My point is that it is easy to be carried away by the hype and hubris surrounding new, digital, data-driven business models. What the market and some consumers value may not be valued by all and if a company does not factor in wider stakeholder engagement, it risks unravelling the very fabric of its business model. In my research, I call this an imbalance or misalignment between a company’s market and non-market strategy. The non-market refers to the political, regulatory, social and environmental contexts in which a company operates. Airbnb rushed to grow its global footprint and sign up more and more hosts without considering the impact its nightly rental business model would have on neighbours and communities. Uber focused, understandably, on customer satisfaction but neglected to make a case to political and regulatory authorities about the positive impact its business model would have on urban congestion and pollution through, for example, its ride sharing option.
For companies to maintain growth, an aligned strategy, reflecting both market and non-market engagement, is critical to the integrity and success of business models and must occur at all levels, from city to state.
We can continue this conversation during and after Wednesday’s event. I look forward to meeting you there.
If you would like to attend our masterclass ‘Strategy Matters in Turbulent Times: Think Big Data. Think Business Models’, please visit The Open University Business School website for further information and details on how to book.