What are the successful business models of today?

There are two main things that a business must do to succeed: create sufficient value and defend its position.

Creating value can be trickier than most people think. It’s not trivial to create a product that people will appreciate. Harder to create a product that people will pay for, and even harder to deliver that product at a lower cost per unit than what people are willing to pay for it. If a product cannot be produced and delivered at a profit, value has not been created.

Defending a business’s position is even more difficult than creating value. But is also more crucial to success, as a business that cannot defend its position will see its profits eroded over time by competition. Many unsustainable ways position will be defend (e.g. by engaging in price wars). But the effective ones all center around creating a product that defends its own position. Examples of different ways a product can defend itself:

Different types

• High barriers to entry. If a product costs billions of dollars to create (e.g. a communications network). Few other companies will have access to the capital required to create a competitor product.
• Network effects. A product whose value depends on having a large base of users (e.g. Facebook, Airbnb) is less likely to be disrupted by a newcomer who lacks that base.
• Complex technology. Products whose technology is difficult to replicate (e.g. Amazon Go) will naturally face less competition.

This book actually gives a great overview of business defensibility, which, while less flashy and “cool” than product. It is arguably more important in the long run.

Note also that all of these things are difficult.

In fact, It is necessary in order to be an important condition for a business’s success. As said success is measured in comparison to other businesses. Creating a successful business must by definition be difficult.