Level 0: The oblivious
This first level of business model strategy, the "Oblivious", describes companies that focus mainly on products, technologies, and related services and are often oblivious to the fact that they need the right business models to support and sustain them.
We've all seen or heard about companies with incredible value propositions that may even have lots of paying customers and are far better than competitive or substitute offerings. But ultimately, those value propositions and sometimes even the entire company, crash and burn. Usually the media puts a small group or a single individual in the limelight, blames them for the company's failure, and chalks it all up to poor execution. "How could a company with such a great value to customers fail?" they ask. Sure, execution is a big part of it, but what is usually omitted is the truth that in reality the business model itself was flawed. Even the best value propositions with strong product-market fit can still fail if it isn't paired with the right business model.
Level 1: The beginners
The next level of business model strategy, the "Beginners", describes companies that understand that products and technology are not enough and are just beginning to understand the importance of competing on business models. They know that they need to look at the entire business model and it's components but they use the Business Model Canvas more like a checklist of things to cover.
Level 2: The masters
This level describes companies that know it's not enough to just cover all of the components of a business model. Companies competing at this level have business models with a story in which every single piece of the business model reinforces the others and contributes to the story. A great example is the Nintendo Wii. Beyond the introduction of an innovative product in the gaming console market, it built a business model with lower costs, more customers, and superior profit margins. They outcompeted their competitors on the business model. An older example is Dell, which disrupted an entire PC market with its business model. Another excellent example is Nespresso. At the center of their business model is a machine that makes single portioned espresso. But what gets customers to pay 6-8 times more for coffee, outperforms its competitors, and produces insane profits is the configuration of their business model. These are true masters. But it gets even better.
Level 3: The invincibles
There are companies that compete on a Level 3 business model strategy. They don't just compete on a superior business model, but they already think of new business models while they are successful. These organizations build new business models proactively before a crisis or an industry or technology change forces them to. Sometimes they even self disrupt or canibilize their existing business model while they're still successful. These companies are very, very hard to beat...practically unstoppable. Examples are Apple and Amazon. They continuously innovate their business model despite their success. These are companies you could call "The Invincible".
You decide where you want to compete. Level 0 strategies focusing solely on product and value propositions is like competing on training wheels. Level 3 strategies are more like a Ducate Monster Motorcycle. Guess which one out competes the other.
