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Strategy and business models: why winning companies need both

Michael Braun (University of Montana, Missoula, Montana, USA)
Scott Latham (University of Massachusetts, Lowell, Massachusetts, USA)
Benedetto Cannatelli (Università Cattolica del Sacro Cuore, Milano, Italy)

Journal of Business Strategy

ISSN: 0275-6668

Article publication date: 25 March 2019

Issue publication date: 3 September 2019

2475

Abstract

Purpose

This paper aims to highlight the importance of addressing both competitive strategy and business model for the long-term success of a company. The paper builds a prescriptive framework to help managers assess their companies’ positions based on the extent to which they attend to their strategies and business models simultaneously. In doing so, the paper offers four possible outcomes – idling, faceoff, breakdown and traction – providing examples to capture each scenario and managerial prescription.

Design/methodology/approach

The framework of this study is based on academic research in strategy and business model design, the authors’ scholarly work on innovation and their combined experiences and observations in the industry. The framework uses examples of well-known companies to make the case for why managers need to pay heed to both business models and strategies simultaneously to achieve long-term competitive profitability.

Findings

This study’s framework suggests that the delicate balance between strategy and business model design determines the long-term competitive advantage and profitability of a company. Focusing on strategy without paying heed to the business model can cause companies to lose sight of changing customer behaviors. Alternatively, managerial attention to business models at the exclusion of its strategy leaves the company vulnerable to competition. The framework points at the delicate strategy–business model balance required to manage winning companies.

Originality/value

Business models and strategies represent two separate yet inextricably linked domains under the purview of management. However, companies can be weakened because of an overemphasis on one at the expense of the other. This paper’s framework offers a simple yet effective guide to assist managers in assessing their organizations’ current positions while also providing direction toward addressing any shortcomings.

Keywords

Citation

Braun, M., Latham, S. and Cannatelli, B. (2019), "Strategy and business models: why winning companies need both", Journal of Business Strategy, Vol. 40 No. 5, pp. 39-45. https://doi.org/10.1108/JBS-01-2019-0005

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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