For companies to survive in this age, they need to have absolute clarity about the value they deliver to customers, the value to the business and to society. To provide that value, they need to think and implement new ways of doing business, need to develop better products and services, definitely need to have the best people on board and continuously enhance their systems and processes to create a great Customer Experience and foster Business Sustainability. These is not a destination; it is a journey!
To walk the journey and be successful on the way, some supporting trends and potential challenges should be kept in mind:
SUPPORTING TRENDS:
- Sustainability competencies: Many companies now have the skills needed to move to the next level of sustainability. In recent years they have substantially increased internal sustainability management competencies or have brought them from outside.
- Unconventional collaboration – An innovation driver: Cross-sector collaboration promises to become a supportive factor for companies implementing new sustainable business models.
- Digital revolution – Disruptive opportunities: The digital revolution will further accelerate market disruptions. Transformation technologies like Internet of Things, digitalization, Artificial Intelligence, blockchain and automation are game changers in many industries. They also provide opportunities for more precision, transparency, and connectivity, potentially leading to more inclusive, socially, and environmentally impactful business models.
- Circular economy, sufficiency, science-based targets as guiding concepts: These concepts have been around for years, but they have recently been gaining increasing traction. In some sectors, business model innovation will be key to unlocking the potential they offer.
POTENTIAL CHALLENGES:
- Managing Business Model Innovation: Top management buy-in is necessary to create new business models, which could compete with current business models (cannibalism); and to prioritize investment in new business models in relation to financing existing activities (opportunity costs).
- Benefits from business model innovation are uncertain: However carefully the effects of new business models are forecasted. It is often hard to be certain if it will eventually pay off financially or meet its sustainability goals.
- Testing and implementing new business models: Companies need to test new business models in an efficient and effective manner so they can understand the benefits and potential drawbacks early in the process. This requires the right testing set-up and definition of criteria for success (Key Performance Indicators – KPI), adapted to the respective testing stage. It is also important to note that new business models are introduced in many different circumstances, and finding the right solution is not always straightforward. Should it live alongside the existing business model? For how long? Does it need the same legal structure or an independent one?
- Business model innovation and changes in the ecosystem: Every business is embedded in a broader system. While every innovation will be tested in iterated in collaboration with multiple stakeholders, it is the subsequent responses of a company’s suppliers, customers, partners, and competitors that will either enable or constraint the new business model.
Business model innovation is not about better products or services but changing the way of doing business.
A business model is a blueprint of how a company creates and captures value. It provides answers to questions like:
- Who is the target customer?
- What is offered to the customer?
- How is the value proposition created and delivered to the customer?
- Why is the business profitable?
If you were able to answer in a positive way to most of the question, you already have or at least you are in the right direction to apply business model innovation in your company. If not, it is not too late. It is time to start to build your sustainable company.
We can EMPOWER you to FULFILL what you need to THRIVE in the new digital economy by executing the greatest business model innovation while strengthening your capabilities toward sustainability.
We are here to help!
