Article

Escaping the Red Queen Effect in Competitive Strategy:

University of Stellenbosch
European Management Journal 02/2005; 23(1):37-49. DOI: 10.1016/j.emj.2004.12.008
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ABSTRACT

Available at: http://svenvoelpel.jacobs-university.de/peer-reviewed-articles/
Most business models are based on traditional ways of strategy formulation and implementation, leading to incremental and not disruptive change in the nature of business and industry practices. The ‘red queen effect’ refers to the red queen’s advice in Lewis Carroll’s Through the Looking Glass in which she says, in order to stay in a (competitive) place you have to run very hard, whereas to get anywhere you have to run even harder. In today’s knowledge and mobile environments we know that businesses cannot survive by just running harder, but rather by running differently and ‘smarter’ than competitors. The article suggests a sense-testing tool for managers to enable disruptive innovation of business models through corporate examples and case study evidence.

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Available from: Sven C. Voelpel, Jul 19, 2015
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    • "Key components of the business model include the company's network of relationships, operations embodied in the company's business processes and resource base, and the finance and accounting concepts of the company. " • Material aspects: strategy & structure, network, operations, finance & accounting • Belief system: reputational rankings, industry recipe, boundary beliefs, products Voelpel et al. (2005, pp.261-262) " The particular business concept (or way of doing business) as reflected by the business's core value proposition(s) for customers; its configurated value network(s) to provide that value, consisting of own strategic capabilities as well as other (e.g.outsourced/allianced) value networks and capabilities; and its leadership and governance enabling capabilities to continually sustain and reinvent reinvent itself and satisfy the multiple objectives of its various stakeholders (including shareholders). " • Customer value propositions • Value network configuration • Sustainable returns for stakeholders Chesbrough (2007, p.12) " The business model performs two important functions: value creation and value capture. "
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    • "Business models are more generic than business strategies, where the aim is to gain competitive advantages by analysing market segments, defining value proposition for each segment, determining how to deliver the value to customers, and working out how business models delivering values can be protected from competitors' imitations (Teece, 2010). Reinventing business models requires companies to reconsider (1) customer behaviour and new value propositions, (2) technology, (3) business system infrastructure , and (4) economic feasibility and profitability (Voelpel et al., 2005). These types of changes can be incremental, radical or systemic (Bisgaard et al., 2012; Boons et al., 2013; Yip, 2004). "
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    • "Delayed participation comes from a failure to consider broader applications and from prevailing mental models that reject emerging technologies (Day & Schoemaker, 2000). New business model adoption is confronted with multiple barriers, one of the most significant being managers' cognitive barriers to change (Kim & Mauborgne, 2005; Voelpel, Leibold, Tekie & Von Krogh, 2005). Dewald and Bowen (2010) illustrate the importance of cognitive inertia in established firms, and how managers in corporate contexts are more conditioned to consolidate or exploit existing business models rather than create new markets. "

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