A Business Model View of Strategy

While the business model has become a popular term in management, it has often been criticized for lacking theoretical rigor or simply rebranding existing strategic concepts. This paper argues that the business model is not a redundant concept but a powerful, complementary lens for strategy. By shifting the focus from high-level market positioning or internal resource bundles to the specific interdependencies among a firm's activities, researchers and managers can gain deeper insights into how competitive advantage is built and sustained.

The authors define a business model as an activity system that bridges value creation and value capture. The core contribution of this perspective is treating these activity interdependencies as an independent variable. While traditional schools of thought—such as the Resource-Based View (RBV) and Market Positioning—acknowledge that activities matter, they often treat them as a secondary outcome of higher-level strategic choices. By contrast, the business model view places the design of these interconnected activities at the very start of the strategy development process.

To demonstrate the practical utility of this lens, the authors introduce the 3Cs test. This framework helps explain why a firm might maintain a competitive advantage even when its business model is easily imitated. If an incumbent attempts to copy a new business model, they may face:

• Cannibalization conflicts: The new model undermines the incumbent's existing, profitable legacy business.
• Compatibility conflicts: The new activities are incompatible with the incumbent's other business units, damaging brand identity or operational efficiency.
• Combined conflicts: The presence of both cannibalization and compatibility issues creates a significant barrier to effective imitation, regardless of resource availability.