Companies are constantly striving to evolve and adapt their business models. In the age of digitalization and globalization, business models and customer expectations are changing. And they are changing at an incredibly rapid pace. This is why it is essential to discover innovative business models and develop a competitive edge.
Many companies that did not even exist 10 years ago have completely changed market structures and broken down industry boundaries through digital business models. These disruptions are occurring in many industries.
A company's existing business model must be questioned and revised. One important task is to examine the digitalization of the business model.
What is a business model?
A business model is a set of relationships and components of an enterprise. Business Model - is understood as the interrelationships and components of an enterprise that are necessary to achieve a business purpose.
This model should be best described, documented or visually represented. The description of the business model is usually done in MS-Word, with additional calculations in MS-Excel. A visual representation is usually done in PowerPoint, usually with the help of the Business Model Canvas tool.
Traditional Business Models
1. Direct Selling
As the name suggests, direct selling involves selling products and services directly to the customer. Without middlemen, brokers and other intermediaries. Direct contact can result in higher margins, but also higher marketing and sales costs. Direct selling is most common in B2B and much less common in B2C.
Considerations for businesses: Does it make sense for us to sell directly to the customer?
Well-known examples of the direct selling business model include Amway, Vorwerk (Thermomix, Kobold), Tupperware, Weight Watchers.
2. Indirect Selling
3. Subscription Models
4. Franchising
5. Licensing
Digital Business Models
What is a Disruptive Business Model?
A disruptive business model is a business model innovation that undermines existing market conditions. A number of disruptive business models have emerged, particularly in the context of digitalization.
Business Model Examples
Examples of Disruptive Business Models
- The airbnb business model
- The Uber Business Model
- The Netflix Business Model
How do we approach business model development at ACRASIO?
Step 1: Business Model Analysis
In order to develop a model for our clients, we first analyze the existing business model, if available, and some other best practice business models. Tools we use include the Business Model Canvas, the Value Proposition Approach, and the Market Map.
Step 2: Business Model Development
Based on the analyzed business models and with the help of the knowledge about the own strengths and weaknesses as well as the possibilities of digitalization, a business model is developed.
Step 3: Describe the business model and present the business case
To make the model understandable to others, it is documented in addition to the visual representation on the canvas. This includes modeling, calculations, and mockups.
Step 4: Present the Business Case
If the new business model has successfully passed the first three steps, a detailed business case is created, including cost and revenue calculations.
Working on a new business model?
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What if Google were to enter your market?
Does the idea shock you? Or do you think, "Oh, well, that's not going to happen to us. Think about it and imagine how Google would approach your customers if it entered the market. Or take other disruptors like Uber, Amazon, Facebook or Apple that have disrupted many markets. What would they offer in your market? How would they present and package it? And at what price?
Even if it sounds unlikely, it is worth considering. And why is that? Because it can lead to new ideas and approaches that give you a competitive edge over your direct competitors. For this reason, best practices from outside the industry are often analyzed and their feasibility in one's own industry is questioned. By the way, thermostat maker Nest demonstrates below that the introductory question is not so far-fetched.
Critical questions about market entry by Google & Co.
Ask yourself and your peers:
- What could we change in our industry to act like Google?
- Should we offer a previously paid service for free?
- Could we launch a new, innovative service?
- What would happen if we massively changed the look and feel of our product offering?
A useful tool in this context is the Business Model Canvas, which makes it easy to play through the various considerations in a business model with colleagues.
In the future, ask yourself more often, "What would Google do?"
Digitization: Fancy thermostats and a threat on the horizon
Credit: Image source www.nest.com
Johannes Deltl, Partner at ACRASIO, reports: "In the fall of 2013, I asked a CEO of a medium-sized German company for his opinion on a new company called NEST, founded by a former Apple employee.
It was about fancy thermostats.
His answer:
We bought the product, took it apart, analyzed it, and don't think much of it. Our own products are far more technologically advanced. This company is not a threat to us."
In January 2014, NEST was purchased by Google for $3.2 billion. The high purchase price is justified when you consider Google's business model of learning as much as possible about its users. Information from thermostats can be used to gather a great deal of personal information about people's homes.Es ging dabei um schicke Thermostate.
UPDATE The company, which was previously only active in the US, is now becoming a real threat to European providers.
Google subsidiary Nest is coming to Europe
Control your home technology from your smartphone: Nest, the US company bought by Google for three billion dollars, is entering the European market with connected thermostats and smoke detectors.
Source: Berliner Morgenpost
Could you have predicted this market shift?
Playfully explore market changes
Strategic considerations and competitor activities are often discussed and worked out in strategy meetings and workshops. Based on a wealth of market data and insights from the past. Often there is little time left to discuss market changes. We offer a new interactive format, business games (Driving Strategy, Compete!, Gamechangers ...), which increase collaboration, foster creativity and better embed what has been learned and experienced together.
What is it like in your company?
Do you already deal with competition in a "playful" way? Are you using simulations?