The Periodic Table of Business Strategy

Building and analyzing strategy one element at a time

More than ten years in the making, I’m proud to introduce the Periodic Table of Business Strategy. In a single infographic, I’ve combined the key elements of business models, strategies, and competitive advantages to simplify analysis and decision making.

Keep reading to learn more:

• What is the periodic table?

• Key definitions

• Specific examples for companies you’re familiar with

• Zoom in on the details and how elements group together

• How to use the periodic table in analyzing a company or industry

What is it?

The periodic table uses a single chart to summarize all of the options a company has when crafting a well-rounded strategy. 54 boxes, or elements, represent these options. A well-rounded business strategy involves a combination of three or more specific elements that are often confused and conflated. The elements can be categorized as:

1. Business Model (29 elements in orange)

2. Competitive Advantage (6 elements in blue)

3. Strategy (19 elements in green)

For example, I often hear people discussing new business models (“network effects”), when they are really discussing strategy. It’s also common to discuss a company’s strategic differentiating factors (“great customer service”) as though they are defensible competitive advantages.

This may sound like it’s just a debate about definitions, but it’s easier for leaders to make important strategic decisions when everyone is working from a shared understanding. To that end, clear definitions are provided below for all three categories, which are made up of a specific list of elements that a company can choose from.

Key definitions

29 business models probably sounds like a lot, so below I’ll show you how they are organized into logical groups. Every company needs a business model, which is defined this way:

Business models describe how a company is structured and its methods for maximizing revenues and profits.

While a business model is a required element, competitive advantages are not. It’s possible to run a business with no defensible competitive advantage (referred to in the table as [Oe] Operational Efficiency), and many businesses do this every day. I define competitive advantage this way:

Competitive advantage is a true, sustainable, and fundamental advantage that cannot be replicated or easily overcome by a competitor.

Like competitive advantages, companies do not actually have to have a defined strategy. In many cases, companies fall into regular patterns that might look like a strategy, but they tend to be unintentional (in the table, this is the strategy of [Co] Cooperation). Strategy is defined this way:

Business strategy describes how the company will engage competitors, identify and segment customers, and respond to the actual market environment.

How they work together

The business model is fundamental to the business, and required: how will the company make money. But the business model can exist without regard to customers, competitors, or the market, which is where strategy comes in. Strategy addresses how the company goes to market, addresses the competition, and meets customer needs. The strategy may also focus on creating or defending a competitive advantage specific to the company, which is also likely to drive the choice of business model.

Examples

Let’s jump into some examples to show how a company’s broad strategy can be described using the periodic table.

• While Amazon has many businesses, it’s probably most well known for its online store. The company grew as a [Lo] Low Cost Retailer offering seeming unlimited [Sa] Selection & Availability, and established a firm competitive advantage through [Es] Economies of Scale.

• Netflix has built a solid [Su] Subscription business, focused on [Sa] Selection & Availability of movies and television shows. But the company does not currently have a competitive advantage [Oe] with nothing to prevent other streaming competitors from entering the market.

• Twitter is an evolving case with an established ad model that puts it squarely in the [Lv] Virtual Landlord business model. It benefits greatly from user habits, creating a (now faltering) [D] Demand advantage, which was built up over time as the network of users grew as a result of its [Ne] Network Effects strategy.

• Microsoft Bing also employs the [Lv] Virtual Landlord model with its search advertising model, but the business has no specific competitive advantage [Oe]. Similarly there has historically been no strategy to eat away at Google’s lead in search, essentially [Co] cooperating to split market share. (The obvious caveat is that New Bing suggests Microsoft may try to leverage generative AI to change its strategic approach.)

• Stitch Fix is a company that sought to disrupt the apparel industry with a different business model, providing regular [Su] Subscription boxes to customers [C] Customized to their specific preferences. The company has developed algorithms to aid human stylists to personalize individual boxes, but they have not yet turned that into a defensible competitive advantage (or profits). As such, I would still categorize them in the [Oe] element with no true advantage.

At a high level, you can see how the periodic table can be used as a tool for understanding a company’s strategy, but there are several layers deeper we can go. Keep reading to learn more of the details behind the periodic table including how it’s organized and how it can be used to analyze specific companies and industries.