Business Model Innovation and the Red Queen Effect

February 17th, 2009 by Patrick Stähler

The blog is about business model innovation or innovation in strategy, some name it strategic innovation. The point is very simple. Most companies try to differentiate themselves from their competitors by better products or improved processes leading to a better cost structure. The problem is that their competitors do the same thing at the same time so after a firework of new products the situation is pretty much the same. You moved forward but your competitor also moved forward. If you do not move you fall behind.

This effect is also called the Red Queen effect. The term is taken from the Red Queen’s race in Lewis Carroll’s Through the Looking-Glass. The Red Queen said, “It takes all the running you can do, to keep in the same place.” That is the typical situation most companies find themselves in. You move, you move but you gain no competitive advantage.

Business model innovation is about building a new business model with which you can differentiate yourself within your business model you use.

The blog is based on more than 10 years of research and thinking about the topic. More than 12 years ago I started writing my Ph.D. thesis on business models in the digital age and one of the most striking facts was that the New Media “Internet” did not only allow the optimization of existing processes but also the creation of new business models that challenged the incumbents. Typical examples were Dell or eBay.

But not only had the internet made business model innovation possible. In almost any industry you find example where one company redefined the industry structure or even dissolved the borders of what an industry is. Look at IKEA or any budget airline like EasyJet.

So, here you find in the future my thoughts and ideas on business model innovations. For all of you that understand German you find my Ph.D. thesis online at Goggle Books or some extracts on http://www.business-model-innovation.com.

Best regards

Patrick Stähler

3 Responses to “Business Model Innovation and the Red Queen Effect”

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  3. Dell and Perot: The end of a business model (innovation) | Business Model Innovation Says:

    […] their lesson and are as or more efficient as Dell. Dell is now in the midst of a red ocean and in a red queen race. Dell cuts costs in its core business but it will not escape the fierce competition in the […]

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