28 June 2013

Business Models and the Singularity

Business Models and the Singularity | Digital Tonto: "Diminishing Returns to Scale - Besides technological progress, there is another factor in the shortening life spans of business models: the diminishing advantages of scale. It used to be that big companies could protect their business models by exploiting their size and incumbency. They had the infrastructure, the client lists and the marketing budgets to crush new competitors. To a large extent, that’s not true anymore. Infrastructure can cheaply leased (e.g. through cloud services) and the Web is making it easier for small companies to find customers. Digital technologies are also enabling cooperation between small firms to compete with larger ones. That’s the essence of the new semantic economy. We’ve become accustomed to start-ups like Facebook and Instagram becoming billion dollar companies within a few years while established firms like GM and Kodak come crashing down in the same timeframe. Past performance of a business model is no longer a guarantee of future success."

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