The Data Industry

CHAPTER 8OPERATING MODELS IN THE DATA INDUSTRY

Ideally, as should be clear from the preceding chapter, the business model is conceived to generate winner-take-all effects. But, although a large number of enterprises have continued to innovate their business models, and with some success, a truly innovative business model is hard to come by, and is not as easily defensible as it once was. Enterprises are always on the lookout for new forms of competitive advantages. The answer may be found in the “operating” model,¹ delineated by management guru Peter Drucker in his 1954 book The Practice of Management.

An operating model describes how to effectively combine such proprietary resources as human capital, financial capital, and material capital to keep up a continuous flow of profits. Unlike the business model, the operating model reflects the business philosophy, management style, and force field assessment of an enterprise, all of which vary depending on the enterprise. Competitive advantages are obtained through innovations in the operating model, as analyzed based on Porter's five forces. An enterprise's competitive advantage is a distinctiveness that is enduring and hard to copy directly, and so decides the profitability of the enterprise by affecting price, cost, and the necessary investment by the enterprise. In fact the combined rationalities of the operating models in the data industry are the major factor behind the development of the data industry.

8.1 GENERAL ANALYSIS ...