Traditional business moats, like economies of scale, network effects, and brand, are no longer as effective due to rapid technological advancement and changing consumer behaviour. Instead, companies should focus on building ‘New Moats’ that offer sustainable competitive advantages. These include embeddedness, where the product becomes an integral part of a customer’s business operations; scale economies shared, where benefits are passed onto the customer; and network bridging, which involves building connections between different networks.
Data network effects, where the product improves as more data is collected, are also crucial. However, they can be challenging to achieve due to data commoditisation, the need for fresh data, and the fact that more data doesn’t always mean better results.
Lastly, companies must consider counter-positioning, which involves adopting a new business model that incumbents can’t replicate without damaging their existing operations. To succeed in the modern business landscape, companies must innovate and adapt, focusing on creating these new moats.
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