Business models do not provide a competitive advantage, key components do!


In their recent article, Amazon Constantly Audits its Business Model (Harvard Business Review, November 15, 2013), Karan Girotra and Serguei Netessine of INSEAD, seem to argue that Amazon’s business model gives them a competitive advantage instead of its IT infrastructure. Amazon is a technology company so it leads to confusion to infer it is a logistics company. Certainly, their logistics operations are impressive but it is not from there that they derive their competitive advantage.

On the contrary, as their technology infrastructure has matured, Amazon has made it available to others – big and small – thereby accelerating their return on investment. This view is consistent with the ROKC model in two ways:

  1. By focusing on the key component – IT – Amazon finds new and innovative ways of maximizing shareholder returns and stakeholder satisfaction.
  2. The evolution in Amazon’s business model, as described by Girotra and Netessine, shows the company needed to adapt its business model in order to maximize those returns.

Although their analysis is very interesting it is, from the ROKC point of view, off the mark.