A winning digital business model requires a systematic, structured and end-to-end process that answers the way, what and how about the company’s future way of doing business. A business model is nothing more than a description of how a company generates value for its customers and itself.
That model has constantly changed over time in order to ensure its success and survival. To innovate the business model means generating a process of change. This innovation means create a competitive advantage by enabling a more comprehensive differentiation and greater influence on a company’s sales and costs rather than a products or process innovations. According to the University of St. Gallen, 90% of all business model innovations, are new combinations from parts of “old” or “other” business models. Innovation is most of the time, a combination of already existing ideas.
Changes do not necessary requires your business to change, the same, you don’t need to destroy your current business model. The best things to do, is to use innovation in order to evolve instead of revolutionizing your company. Despite many people feel this approach is not a real innovation, most of the opportunities comes from using the digital technology to evolve in your business model. This by rethinking the existing offering, economic models and digital assets.
One secret to maintain a successful business, is recognizing when it needs a fundamental change. Overall, there are some indicators suggesting companies is the right time for a business model to change:
- Declining industry margins;
- Over served customers;
- Inability to keep pace with changes in your industry;
- Degradation of the current and utilized technology.
Business model innovation is about rethinking your business around innovation and a clear customer need, then is about realigning your resources, processes and financial formula with the new value proposition. We have understood that business model innovation has the power to transform businesses, create new markets and boost companies to an important growth. Short-term competitive advantage is created by exploiting the existing business models while in the long term, all becomes more complicated. New sources of growth must be explored, and fresh answers must be found to achieve success. Overall, innovative business models must consider limited options and must be focused on the most promising solutions to exploit the demand. A delighted customer is the main goal of all business model, but in order to survive in the long term, companies have not just creating value for customers but capturing values. Know your options before innovating. The answer is: be innovative to achieve success.