In marketing publications, you can read that business models (BM) are key for the future; and that disruptive business models (e.g. the ones used by Uber or Airbnb) are changing the rules of the game. But few of us ask…what is a business model? Your company or organization is using one. But probably you don’t know because you don’t have it on paper. Or you cannot explain it to others.
In a few words, a business model is the way you interact with your customers and partners. It includes the kind of solutions you offer and the way you operate internally.
To identify your business model, you need to answer the following questions: What is your target segment? What do you offer to the customer? How is the value proposition created? How is revenue created?
Traditional business models like buying raw materials, producing and selling are no longer added-value to the customer. Customers’ needs and desires are changing faster than we think; and if you want to become a leader, you need to anticipate on their needs.
What is an innovative business model?
Innovative business models have always existed. They have been created by creative people who have found different answers to the questions above. By finding radical ways, they have disrupted the market. So, two decades ago, we talked about the business model of Google, Ryanair, Apple (with iTunes) or even Marktplaats. Nowadays, these business models are normal because they have been copied by others. Now we talk about the business models of Airbnb, Uber, Facebook, etc. The difference is that nowadays disruptive models are digital and are based on platforms other companies can profit from. One known example: In 2009, two years after the iPhone’s launch, developers had created around 150.000 applications and by 2014, that number had hit 1.2 million, and users had downloaded more than 75 billion apps. Today almost all mobile phones are ‘smart’. The development speed is amazing.
And what is the relationship of all this with your organization or business? How can your organization benefit from it? If we talk about the business model of Apple or Facebook it sounds too far from your business, but what about the business model of your customers? If your customers are big players at an international level, you probably started feeling the pressure from them to react faster or to propose different alternatives like leasing your product instead of selling; or they are requesting you to innovate because they want solutions from you and not just equipment.
Your customers want to keep producing faster, more flexible and more efficient. Some of them will be pleased if they can pay a monthly fee, and you can be in charge of keeping the “equipment” running without disturbing it. They expect additional services like controlling maintenance, repairing, renewing, replacement or disposing the equipment. This sounds like a lot of extra work, but it brings a lot of benefits to your company: you have more control of the machine you created, you can have more information to improve it or even create new designs. Have you thought about this? Is your company prepared to find different ways of satisfying customer needs?
Try to answer the questions above to discover your current business model and see if it is prepared to satisfy the changing needs of your customers. Or try to find different ways to answer these questions to make your customer happier (and make clever use of your resources, e.g. gain more)? There lies the power of an innovative business model.
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