Business Models – the future of competition

 

Novel business models have always been a part of the arsenal for cut through and differentiation. Today, however, innovation beyond the product or service offering is a necessity for business survival. Competition is increasingly based on the features of the whole business model, including how the product or service is delivered to the customer, the customer engagement and add-on services.

Disruption is often the result of business model innovation. Disruptors use new business models to address markets that are poorly served by large, traditional businesses. Uber is frequently the example, but within New Zealand we have businesses such as My Food Bag and Teddit which are challenging traditional approaches.

There are many tools to help companies to innovate their business model and businesses should be using these as part of their strategic planning. Some of the best known are; The Business Model Canvas, The St Gallen Business Model Navigator, and Ten Types of Innovation. The starting point is to be focused on a specific market segment and answer the questions ‘who is the customer’ and ‘what do they value?’ The next step is to look at the various ways that the business can build and deliver a compelling value proposition for the customer. For this you need customers who really love your product – without that, you have a problem. Most importantly, the business model tools can help answer the question ‘how will we make money?’

Traditionally startups are motivated by spotting a gap in the market or seeing customers with needs not being fully addressed. Today it is just as likely that the startup will have adopted a new business model as a result of spotting early trends in the market, emerging customer needs, proposed new regulations or the potential to disrupt incumbents.

It is not so easy for incumbents, who may be large traditional businesses, to innovate their business model. They frequently are in their comfort zone and profitable. They typically follow the predominant logic of their industry, find it hard to adopt new ideas from outside and struggle to innovate.

A seminar at ecentre recently demonstrated several tools used to help companies to examine their business model and explore ways they could innovate. Participating companies were able to apply the tools to their company with some interesting results. If you would like to know more about how to develop a more sustainable and profitable business model then contact ecentre at [email protected].