Digital platform businesses are making the traditional competitive advantages and strategic principles obsolete

Digital platform businesses are making the traditional competitive advantages and strategic principles obsolete. One of them concerns the company growth – managers are trying to increase their companies’ assets and manpower as fast as possible in order to dominate the market and use economies of scale to their advantage. 

Is this kind of behavior still wise? These days we are witnessing the rise of digital platforms with an access to the resource pool (companies and individuals with proprietary know-how or inimitable assets) capable of growing much faster than these platforms or any other company itself, thus creating more value through the network effect for all sides connected to the platform: buyers, producers, advertisers, etc. 

Take for example Uber or Airbnb. These companies were able not to invest in buying vehicles or building hotels, and still grow and increase their market value much faster compared to their rivals using more traditional business models - taxi service and hotel companies. 

New forms and rules of competition are upon us. Managers in all industries need to analyze them more carefully, relearn almost everything they know about strategy, and start making changes accordingly!