„If you’re not being disruptive consistently, someone else is going to beat you!“
Jay Farner, CEO of Quicken Loans
With this in mind, companies should frequently question their current business model even in times of business success and look for new (digital) business opportunities to expand or reinvent their business. With her presentation in the series “Praxis trifft Wissenschaft” (Practice meets Science), Dr. Laura Reder gave an insight into the challenges and opportunities for companies when developing business models. We present Part 1:
10 challenges and opportunities: new business models
1. new business models are necessary
80% of all companies expect Industrie 4.0 and related technological innovations to impact their business model.
2. practice is hesitant
However, a structured further development of business models rarely takes place in everyday business despite the majority expectations and the high relevance for the company’s success.
3. need for action despite aversion to expenditure
Good ideas cost time – in development, elaboration and implementation… but what is the alternative? Increasing digitalization and the widespread use of innovative technologies are leading to product and service innovations. Customers expect digital services. Developing and deploying new products and services to master complex processes and secure competitive advantage is essential.
4. competition puts pressure
Like the Internet before it, the digital transformation of the economy is bringing many new players to the market and they are relying on digital business models. But the familiar competition is not sleeping either. Companies that stick to traditional business models are putting themselves at risk. Products or services can become obsolete within a very short time, and the connection to the markets and the service provider network can be lost. For this reason, a willingness to change and invest is not only necessary, but also requires ongoing optimization and constant further development of the business model in the medium term.
5. opportunities through IOT technologies
Digitalization and Industry 4.0 are empowering the development of IoT (Internet of Things) technologies. IoT technologies allow the increasing “intelligence” of products and lead to a high potential for new service businesses. Automatic data transfer, live tracking of products or autonomous load carriers, for example, enable information transparency for customers and end-to-end traceability of product origin.
6. opportunities through digitized service processes
For a long time, the focus was on customer service, but it was hardly developed strategically. In many cases, there is more revenue and profit in service today than in traditional sales. The “fourth industrial revolution” enables cost-effective production in batch size 1 and the development toward intelligent systems and products allows digital services and thus new business models. More efficient communication with customers is becoming possible and information flows are being accelerated.
7. opportunities through platforms
Platforms can help companies coordinate cooperative relationships, exchange information in a structured and automated manner, gain knowledge from production data, jointly develop innovations with partners or distribute their products. The demand-driven renewal and improvement of products or services as well as a more efficient production of products and services are enabled. Companies can open up new markets and customer segments, offer new products and automate exchanges with suppliers and customers.
8. opportunities through data
With constant linking across the entire supply chain, a lot of data is available. You have the chance to better understand your customers’ requirements and meet them in a timely manner.
9. opportunities through blockchain
In the future, business transactions between companies will be possible directly and without intermediaries. Through Blockchain and Smart Contracts, contracts will be processed digitally – secure, encrypted, non-manipulable and automatic. The labor market will accelerate and payment processes will also become digital. Whether bitcoin will then be the preferred means of payment in the future or industry-specific means of payment such as LogCoin will be preferred remains to be seen.
10. fulfill prerequisites
Regardless of which path is right for your company and which technologies, concepts and strategies you rely on, your company must meet appropriate standards and have the necessary basic requirements for participation in the new markets. For example, only those companies that meet the technical requirements and quality standards will gain access to platforms.
Market penetration times are getting shorter and shorter. Cell phones took a full 13 years to reach a critical mass of users. In the case of the Internet, it took less than seven years. Digital transformation will penetrate the market even faster. That’s why you should prepare yourself and your company for the digitization of your business model.
Don’t miss Part 2 of the “Ten” series on the topic of business models – 10 steps: Developing Business Models.