84 https://doi.org/10.1177/0008125618825139 California Management Review 2019, Vol. 61(2) 84–103 © The Regents of the University of California 2019 Article reuse guidelines: sagepub.com/journals-permissions DOI: 10.1177/0008125618825139 journals.sagepub.com/home/cmr Business Models Simple Rules for a Network Ef fciency Business Model: THE CASE OF VIZIO Sayan Chatterjee 1 and Kurt Matzler 2 SUMMARY Business models that unlock efficiency across entire networks are becoming increasingly common in the so-called sharing economy. However, the principles underlying these models can also be used in B2B settings. This article proposes some simple rules that managers can use in a systematic process to build similar disruptive business models. It illustrates these rules by deconstructing the go-to-market strategy that resulted in Vizio becoming the dominant flat panel TV vendor in the United States. KEYWORDS: business models, business model development, business model innovation, case study, competitive strategy, value chains T hree steps to designing innovative business models are where to play, how to win, and what to do. 1 The roots of the three steps lie in what Michael Porter calls the longitudinal problem. 2 Current strat- egy analysis suggests a winning strategy can only be delivered by possessing critical capabilities that cannot be easily copied by others. The much more difficult challenge is, given the initial conditions, managers need normative rules to choose the option that will most likely result in the critical capabilities. The longitudinal problem involves going down the chain of causality. 3 The three steps mentioned earlier are steps in this chain of causality. At the inception, “where to play” challenges managers to decide the attributes the firm wants its customers to have given the initial conditions. Clearly, the implied assumption is that the proposed attributes (such as reduced price) are different or missing from the offerings available at that point in time. The next step, “what to do” frames the challenge of designing the activity system (capabilities) that can deliver the proposed attributes. Porter suggests that at this step, managers need to 1 Case Western Reserve University, Cleveland, OH, USA 2 University of Innsbruck, Austria