Table Of ContentEnd
THE of
Competition
The Impact of the Network Economy
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End
THE of
Competition
The Impact of the Network Economy
Cor Molenaar
Erasmus University Rotterdam, The Netherlands
World Scientific
NEW JERSEY • LONDON • SINGAPORE • BEIJING • SHANGHAI • HONG KONG • TAIPEI • CHENNAI • TOKYO
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Published by
World Scientific Publishing Co. Pte. Ltd.
5 Toh Tuck Link, Singapore 596224
USA office: 27 Warren Street, Suite 401-402, Hackensack, NJ 07601
UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE
Library of Congress Cataloging-in-Publication Data
Names: Molenaar, Cor, author.
Title: The end of competition : the impact of the network economy /
Cor Molenaar, Erasmus University Rotterdam, The Netherlands.
Description: Singapore ; Hackensack, NJ : World Scientific Publishing Co. Pte. Ltd., [2020] |
Includes bibliographical references and index.
Identifiers: LCCN 2019053557 | ISBN 9789811212314 (hardcover) |
ISBN 9789811212321 (ebook)
Subjects: LCSH: Competition. | Business networks. | Business--Technological innovations.
Classification: LCC HB238 .M65 2020 | DDC 658.4/06--dc23
LC record available at https://lccn.loc.gov/2019053557
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.
Copyright © 2020 by World Scientific Publishing Co. Pte. Ltd.
All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means,
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For any available supplementary material, please visit
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Desk Editors: Balasubramanian/Karimah Samsudin
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Printed in Singapore
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6"x9" b3693 The End of Competition: The Impact of the Network Economy
Despite all the technology it always comes down to customers,
people of flesh and blood with their own emotions.
Co Konijn (2000)
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Preface
The frictions that we experience when doing business, and in fact also in
society, result from the impact of technology. There is a transition period
from ‘doing digital’ to ‘being digital’. This affects every aspect of our lives,
both private and professional. Merely observing the changes, reading
about conflicts of the old model in relation to the new model, is confusing.
The current developments and frictions require more in-depth examina-
tion. Insights into these developments will be necessary in order to achieve
success. Many more partnerships will develop; organisations will come
together and combine forces and borders will disappear. This will lead to
the changes from order entry to new digital business ecosystems, or rather
from ‘doing digital’ to ‘being digital’.
How is it that these new concepts can suddenly grow so quickly (net-
work effects)? And that the international growth is a question of months,
or even shorter, where previously it required decades or longer? And how
is it that new businesses can continue to exist despite massive losses? The
transition from a transaction-based model to a value model requires
modifications in the organisation, in the focus as well as in the strategy. We
suddenly see old terms being used such as ‘commodification’, a term that
was important for Karl Marx, which indicates that each transaction is a
value component. So why then are prices determined on the basis of an
exchange of products (transaction-oriented) and not on the basis of
vii
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viii Preface
budgets (value-oriented)? This change alone requires a new vision,
whereby old criteria and (marketing) instruments have to be modified on
the basis of a value exchange.
This also explains the discussions on returning articles from online
sales in this transition period. In the traditional model, the buyer was the
weaker party and had to be protected with legislation and guarantees.
However, with the new resources, technology forms the basis. Purchases
made through digital media may be returned within two weeks in Europe.
But why two weeks? Why can items that have clearly been used be returned,
and why do potential buyers order so many articles that they later send
back? Customers are abusing the new possibilities and the old legislation.
This is a change from ‘caveat emptor’ to ‘caveat venditor’. A shift of depend-
ency, from the customer to the supplier. I have actually not come across
these terms in the marketing literature. Blockchain can lead to modifica-
tions in this.
A study into buying motives and buying behaviour has led to new
insights that form the basis of the current changes. The necessity to buy
has disappeared and has been replaced by a choice in what is bought and
where. In the old, supply-based model it is all to do with comparative cost
advantages. The price as a weapon against the competition. This involved
protecting markets against new entrants, international suppliers and sub-
stitute products. Defence as the basis for success. These days this protective
approach is no longer workable; defence leads to shrinkage and eventual
disappearance. Also relevant these days are buying motives and motivating
customers to buy. It comes down to developing a vision of value exchange
instead of price. But what does a customer actually buy? The product, the
service, the imaginary value, the experience or the acceptance within an
intended group? Businesses have to delve deeper into these, often indi-
vidual, buying motives. New analysis systems based on artificial intelli-
gence are necessary, and lead to the formulation of algorithms. The future
competition will no longer be about comparative competitive advantages
but will involve customer loyalty and algorithms. These are new techno-
logical applications that will form the basis of doing business. And this
change process has only just begun.
Many companies are still busy optimising or digitalising the current
processes (doing digital), although this is based on an outdated, traditional
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Preface ix
model, with a supply chain, the sale of services and a customer journey.
New concepts, however, are rapidly conquering markets, such as Airbnb,
Uber, dating sites, booking.com, Deliveroo and many more. These involve
new revenue models, strong market positions and are based on collabora-
tion. Existing organisations can no longer compete with these. Complaints
and bans are only temporary solutions. Often the management is so
restricted by old regulations, outdated KPIs and a redundant pursuit of
profits that it is difficult, if not impossible, to adapt. So the question is,
what sort of future do these businesses have? Should they join existing
platforms, develop one’s own platform or become a niche player?
Customers do not let themselves be pushed anymore, and loyalty
systems that reward transactions no longer lead to the desired impulses.
A ‘net promoter score’ is too subjective to base any policy on it; data analy-
ses, on the other hand, are objective. But a customer also has to want to
feel loyal to a product, brand or supplier. An affinity. A positive feeling.
After all, isn’t there a positive feeling about the sponsor of your sports
club? Creating an affinity requires direct and personalised communica-
tion. And for this you need algorithms. Platforms will attract and create a
bond with visitors, but products and services have to motivate them.
The constant denial of these developments, the continual trivialising
of platforms, because they would lead to unfair competition (!) or acquire
a dominant market position (such as with Alibaba.com or Amazon.com)
is surely a sign of impotence? Not wanting to change and refusing to
respond to the wishes of consumers?
We are shifting from a supply-driven economy to a demand-driven
economy, you could say a Fourth Industrial Revolution. Taking part is no
longer a choice; it is a necessity. But how, when and with what technology
or partners? With which partners and in what concept (platform)? In this
book I explore the indicators of change, the motives for change and the
changes that are yet to come. Concrete plans provide clarity regarding the
steps that can be taken, and they indicate who is already going down that
road. It took a thorough theoretical analysis to determine the current
developments and to predict any future ones. In my book, The End of
Shops (2011), based on buying behaviour I predicted that many shops
would disappear due to their decreasing relevance with the new buying
behaviour. In 2017, I analysed the disruptive nature of platforms. These
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