Don Tapscott: Business Models for Five Industries in Crisis

In our 2006 book Wikinomics, Anthony D. Williams and I looked at dozens of companies that have used the Internet to transform their business models and achieve tremendous success.

However, in the five years since the book’s publication, we’ve noticed something striking: the rate of business model innovation has not accelerated. Yes, some individual companies have achieved competitive advantage by exploiting the web and networked business models. But overall the gains have been modest.

We’re beginning to understand the reason. Increasingly it’s becoming difficult or even impossible for companies to achieve breakthrough success without changing their entire industry’s modus operandi. From many examples let’s look at five:

1. Pharmaceuticals Can’t Fix What Ails Them One by One

Pharmaceutical companies are about to drop off what’s called “the patent cliff”. They will lose 25-40 percent of their revenue in the next 2 years as the patents for many blockbuster drugs expire. There is little individual companies can do to recover from this crisis and instead need an industry wide solution.