You’ve heard of barriers to entry, but it’s barriers to exit that determine the strength of your business model, according to Rita Gunther McGrath, a professor at Columbia Business School.
What’s an exit barrier? Simply put, it’s the combination of factors preventing customers from leaving. “In general, business models that create exit barriers, for which there are switching costs -; which are not transactional and which to some extent lock customers in -; tend to be more attractive than those in which the opposite conditions apply,” writes McGrath in her article “Finding Opportunities in Business Model Innovation” in the European Financial Review.
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