Business Model Transformation
Transforming your existing business model is often confused with large projects, which merely implement changes to existing processes. But before we delve into the complexities of business model transformation, we need to be clear on what that means.
A business model is simply a business’s plan for generating profits. The model identifies which products or services the business intends to sell, who their target market is, as well as taking all financial aspects into account. In simple terms, it is the business’s growth strategy. All business models will clearly define their customer’s challenges, the solution they provide, and what opportunities they can take advantage of.
Your business model dictates how you optimise your company’s structure in order to achieve your objectives. It doesn’t matter what industry you are in or the size of your business. If you don’t regularly update your model, you will find yourself in an unenviable position. Failing to anticipate or identify new trends and the challenges they bring.
Business Model Transformation
Business model transformation, just like business process transformation, can’t be implemented in isolation. As a business, you need to ensure that your digital transformation strategy is acutely aligned with your objectives.
A clear business model helps all stakeholders understand where the business is heading and how they plan on getting there. Companies now have the added pressure of ensuring their business models take advantage of all the new and exciting developments due to the rapid rise in digital transformation. Otherwise, they will be left behind with an antiquated model while their competition races ahead.
Rob Llewellyn, Chief Executive at CXO Transform, offers one of the better explanations, “Business model transformation won’t happen without innovation. But it needs the right type of innovation, because what typically comes to mind when someone says “innovation” is product innovation. Organisations get consumed with the excitement of creating new products and often little if any attention is given business model innovation.”
This type of transformation focuses more on how you are taking your product or service to market. Business model transformation should be a key focus area. Especially when you consider McKinsey’s research which shows that many businesses anticipate that by 2026 half of their revenue will come from products and services that have yet to be created.
It is now more crucial than ever to identify emerging technologies that will take your business into the future. Trying to improve past and current processes is no guarantee of success, especially when you are attempting to cater for the future, which based on the above research, is unknown.
Conclusion
Companies that will be successful in the future will have identified and implemented innovative technology that allows them to be both agile and flexible. Business models can no longer be viewed as static. They should be continuously evolving to keep with the one constant variable – change! Business process transformation is all about looking inwards and improving efficiencies. While business model transformation focuses on looking to the future, which is no easy task.