Business Model Transformation
Transformations within industries are often associated with adoption of a new technology. This is not the whole truth. New technologies have a major impact but it is a new business model that can transform industries and link a new technology to an emerging market need.
Six keys for Success
A more personalized product or service: New models often offer better tailored products or services than the dominant models to customers’ individual and immediate needs.
A closed-loop process: Many models replace a linear consumption process (in which products are made, used, and then disposed of) with a closed loop, in which used products are recycled leading to reduced costs.
Asset sharing: Many innovations succeed because they enable the sharing of costly assets—Airbnb allows home owners to share them with travellers and Uber shares assets with car owners. The sharing typically happens by means of two-sided online marketplaces that unlock value for both sides. It reduces entry barriers to industries and companies can merely act as an intermediary.
Usage-based pricing: Charging customers when they use the product or service rather than make them buy it has benefits for the company because the number of customers is likely to grow.
A more collaborative ecosystem: Some innovations are successful because a new technology improves collaboration with supply chain partners and helps allocate business risks more appropriately, making cost reductions possible.
An agile and adaptive organization: Innovators sometimes use technology to move away from traditional hierarchical models to make quicker and market needed decisions. The result is often greater value for the customer at less cost to the company.
Each feature is tied to long-term trends in both technology and demand. Business models with transformative potential tend to have three or more of the six features. The following picture explains how technology and market needs come together:
In general, successful transformation requires an integrated approach that links business strategy to transformation ambition, and transformation ambition to executional discipline. This in combination with new technology.
Sources (taken on 12.05.2018):
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