With the digital shift, now more than ever, clients are in the driver’s seat. In order to evolve with their needs, a business must be able to innovate.
Clients can access an almost limitless product and service offering, with fierce competition leading to lower prices. The ever-changing business landscape and innumerable uncertainties underscore the need for businesses of all sizes to position themselves to ensure their longevity and development.
- Do you find that your value proposal isn’t sufficiently distinctive for you to stand out from the competition?
- Do you feel that your customers’ expectations have changed in recent years and they want to do business differently?
- Does your business no longer bring in enough income to meet your growth needs?
- Is technology transforming how your industry does things?
If the answer to any of these questions is “yes”, it’s time for your business to take a close look at its business model to stay competitive.
Adapt or die: How your business model can impact your growth
The fast pace of technological innovations forces businesses to position themselves to deal with the changes, which may have significant short- or medium-term impacts on their industry. It’s clear that the key to success today is no longer a guarantee of success tomorrow. Businesses increasingly need to question their business model.
An Economist Intelligence Unit (EIU) study indicates that 54% of entrepreneurs consider innovation through new business models rather than new products or services as the way to gain a competitive advantage in the future. Why? Because it’s more difficult for competitors to imitate an entire innovation system than just a product or process.
It’s obvious that business sectors are transforming their business models. Examples abound:
- Airbnb in the hotel industry;
- Spotify in the music industry;
- Alibaba in distribution;
- PayPal with financial transactions, etc.
Even more traditional industries, such as professional services, must review their business models, as we have seen with Raymond Chabot Grant Thornton. The firm recently deployed its e-accounting platform Operiō to meet the needs of its new-generation clientele.
Competition may not necessarily be found where it was expected in the past. The intermediaries have changed, bringing new opportunities to reach customers. You have to ask yourself: how can your business model help you maintain or even find new sources of income in a constantly changing marketplace?
Changing your business model
Let’s start by defining a business model. There are various definitions, but most agree that it describes how a business will create, deliver and capture added value for its customer base and generate income.
The first question to ask is how you can create value for your customers and then, how you can organize your business to deliver that value, whether it’s through your business processes, resources, value chain, business partners, etc. There are multiple possibilities for business model innovation: expanding your service offering with new upstream or downstream activities, adding a complementary product to your offering, creating value to ensure loyalty, etc.
A number of factors must be considered for a successful, innovative transformation of your business model.
Know your customer
Business model innovation is based, first and foremost, on your knowledge of your customers, their needs, their expectations and, especially, the value they are looking for in a product or service like yours.
Your model should not be based on what you think. You may have a biased view because of your industry perceptions or history. Take the time to consult your customers to get an accurate and up-to-date picture. Plan and conduct customer surveys or hold discussion groups.
Ensure strategic monitoring
New ideas are not the only source for new business models, you can often draw inspiration from models in other industries that could be applied to yours.
Take the time to analyze similar sectors to understand business model best practices and validate their relevance for your business. Consider benchmarking your market to identify the most appropriate business models for your business, or analyze your competition to evaluate positioning opportunities or business models that could set you apart.
Work in synergy
A new business model has repercussions throughout your business’s ecosystem. All functions (human resources, operations, marketing, finance, etc.) will be called upon and will have to evolve at various levels to ensure the new model’s value creation.
Business model innovation requires working with multidisciplinary teams, representing all of the business’s stakeholders. Consider organizing brainstorming workshops led by experts to build consensus. This will foster a common vision of the project and define individual roles in the initiative.
Manage change appropriately
As mentioned, implementing a new business model can lead to extensive changes due to the numerous operational projects to be implemented (IT, artificial intelligence, process optimization, etc.). It’s important to be committed and to manage the change to ensure employee, customer and business partner buy-in. The operational projects must be properly structured in order to implement them efficiently.
Are You Ready to Innovate? Our Experts Can Help!
A business model innovation initiative must be supported by knowledgeable, experienced experts who can help you undertake a strategic reflection of your business’s fundamental makeup to offer a distinctive value proposal that provides a unique and durable competitive edge … until the next transformation!
Our business strategy and organizational performance teams can help you structure your transformation project and provide support to properly manage the change underlying the new business model.
Did you know?
There are scientific research and experimental development investment tax credits available. The scope of these programs may have been curtailed in recent budgets, but they are still one of the most generous sources of financial assistance in the country. In some cases, combined Canada/Quebec credits can be as much as 70% of expenses.