What is your companies VBE model. And how long will your VBE model last?

In the 1970s there were different ways to analyse your companies business and one of them was called Porters five forces model. This was an evaluation tool by Michael Porter, which used an analysis framework to understand your companies business. The wikipedia link is given here. https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysis I have prepared a diagram of what a Porters five forces model represents.

Michael Porters Five forces Model

In the 1970s the assumption of being in an Industry was that your company was in a business which was defined by an Industry where many companies made business, this Industry would exist for a long period. As seen in the above diagram this assumption meant that the core Industry would exist.

However in todays Industries there is another factor at play called Paradigm Shift and the paradigm shift ensures that the whole Industry disappears. For example the whole Camera Roll Industry disappeared leading to Kodaks Bankruptcy or the Internet and cameras made sure the Fax machine Industry, the Telex Industry , the pager Industry disappeared overnight.

So technology companies need to be on the lookout for VBE model changes to their business. For example Intel finds it self in trouble over a decision in the Chip architecture they had made two decades ago. Intel at that time had gone for a CISC architecture for their chips which is short for Complex Instruction set Computer instead of RISC which is short for Reduced Instruction Set Computer. The CISC Architecture requires a larger power source to perform instead of a RISC architecture computer. Desktop Computers had a power source which was larger than Mobile devices which generally had a battery power source, and hence Intel chips were meant for Desktops and working computers while RISC architecture chips were used in Mobile devices, where power was a constraint. Over the years Mobile devices started becoming popular and the mobility paradigm started becoming important for users, and this resulted in Intels chips not being relevant to todays market. That is the reason why Intel finds itself in trouble.

This Paradigm shift has happened in many Industries as seen in the picture below.

As seen in the picture above because of Paradigm shifts which could be technology shifts or Business Model shifts or Ecosystem shifts, whole Industries have vanished. A prime example of an Industry vanishing is the Camera roll Industry which was dominated by Kodak and Fuji films of Japan and overnight as the technology shifted to digital cameras and the business model shifted from paper photographs to Online digital viewing, the Camera roll Industry vanished. Leading to the bankruptcy of Kodak. Similar Industry disappearances happened in the Fax machine and Pager and Telex Industries which disappeared overnight, since the value these devices offered was replaced by mobile phones and internet.

So the bottomline is that if you are in a technology dependent Industry like the cloud or telecommunications, your VBE model will change in the coming years and you need to be looking at your companies existing VBE model. Companies in the data area like Google or Facebook and Microsoft or in the area of telecommunications like Ericsson, Nokia and Huawei or alternate companies like Mavenir etc or companies in the Chip Industry like Intel or Nividia will see their VBE models change as a combination of the value their companies help generate in the Industry they are in. Keeping eyes open and understanding the changes are key to their existence in the future. I make a prediction that many companies in these spaces pointed above will not exist in the next 20 years.

The VBE model looks at your companies place in the Industry and helps you to analyse how this place will change and what steps you can take to counter the change. To understand what VBE models are have a look at this video link. https://youtu.be/2f5FXiRkAuc?si=VVcUS55tlpeDlMXF VBE models have been used for the last 200 years in dominating a market. Most recently by Apple when they bankrupted Nokia and Motorola with their VBE model in mobile phones. Apple used the VBE model very efficiently to enter the mobile space. https://youtu.be/sXiKeSmpLlQ?si=ieiHPHeR2gLtURHw