MIT Sloan Management Review Article on Building a Winning Business Model Portfolio

Across many industries, companies are using innovative business models as a basis for competitive advantage. In recent years, for example, we have seen upstarts such as Uber Technologies Inc. and Airbnb Inc. use multisided business models to leverage ordinary resources against established competitors that rely on unique resources.2 Increasingly, organizations are adopting two or more business models at once.3 Multiple business models provide companies with a diversification vehicle that enables them to tap into resources and capabilities that aren’t available through other means. By definition, a company diversifies into a business model portfolio when it engages in at least two ways of creating and/or monetizing value.

To illustrate how business model diversification can work, consider Netflix Inc. Netflix deployed two distinct business models (DVDs by mail and online streaming) to challenge Blockbuster and other movie rental incumbents.

About the Author

Paolo Aversa is an associate professor of strategy and Stefan Haefliger a professor of strategic management and innovation at City University of London’s Cass Business School. Danielle Giuliana Reza, a former research assistant at Cass, is a product manager at Samsung Electronics (U.K.) Ltd.

Learn more about MIT SMR.