Monopolies Are Worse Than We Thought – Yes, But What a Great Opportunity
Of late, there is significant market concentration. This is the result of an economic stagnation for a prolonged period of time. Companies, to survive and maintain profitability, strengthen their positions by fortifying their territory by leveraging mergers, acquisitions and technology. This fortification has caused a significant market concentration and even companies to be monopolistic.
In Noah Smith’s Bloomberg article on 02/15/2017 “Monopolies Are Worse Than We Thought”, he provides a great explanation of the increase of monopolies that are reducing competition. Mr. Smith identifies many causes that may have contributed to this concentration including regulation, anti-trust law enforcement and increased usage of technology that has inhibited growth. In his article, the most fascinating aspect of his list is one cause to the monopolistic activity is also part of the solution. He references that technology itself has played a big contributor to the growing market concentration but fails to recognize that innovative technology could be the great opportunity to solve the issue of market concentration and monopolistic oriented companies.
When markets go stagnate or fail to improve performance for customers, the hand of meeting the need moves to innovators. Large markets over time build barriers to entry based solely on high levels of required capital or perceived complexity. These barriers are aspects which have provided great opportunities for modernization. Innovators that have identified this softness leverage technology to redefine a business model into a new modernized core business model with updated technology.
This is the great opportunity, to build a new business and even disrupt the monopolistic market. The definition of a new core business model is a new way to uniquely meet customers’ needs in a profitable way. Leveraging technology in a stagnate market is the opportunity to break the old ways and create a new way to serve customers. Innovators leverage new business models to improve performance to serve customers in a better way than the monopolistic market has provided. We have seen this in the past with innovative companies like Netflix, Uber and Fedex. These companies, for their time, disrupted their industry by harnessing a new core business model created by leveraging updated operational models and innovative technology.
In a sense, this monopolistic environment is a great opportunity and actually exciting situation for the customer. Past innovators have created new operations that have been able to serve customers in a totally new way. So much so that the monopolistic market actual change to where the old companies thought they had a total hold actually went bankrupt. So, where there is a convergence and market concentration there is a great opportunity for those special innovators that have the vision and can leverage technology to do something great for the customer.
You can read about these types of disruptions in more detail in the Insight White Paper “Disruption – A New Core Business Model”. The insight paper highlights many organizations that have disrupted their market with new core business models leveraging innovations and technology.
David A. Duryea has more than 30 years’ experience in the Business / IT industry and specializes in Strategy and Business Model Innovation. He is an author, speaker, forensic expert, implementer and innovator in business and IT enablement.
Core Business Model concepts from the second edition of the book “Do The Right Thing In Business Improvement Including Process and Technology” by David A. Duryea.