Business modeling is the basic and key business system you need to design, test and validate, to keep companies viable.
A business model is a description of the way in which an enterprise intends to make a profit. It’s an entire frame of elements that describe the intents and constraints of a business or organization. Business model innovation is often a breakthrough. Tuning business models is all about foreseeing and applying the emerging trends, that’s where you win the competitive advantage. As a business leader, when you begin to develop a business model, you also have to be very clear about your organizational strength and how to explore different paths and take the alternative value creation approach.
Start with a process: Running a future driven and innovative digital organization is an adventure to explore the alternative business models and create a process to examine possible alternatives by addressing some critical questions such as: Who are your target customers? What need is met for the customer? Which offer will you provide them to address that need? Etc.
The robust processes and tools enable the organization to generate winning concepts on a consistent basis. The high-level strategic questions can produce a wide range of potential business models, but each of them needs to be examined further in more detail to ensure it makes sense strategically and technically. To craft a new business model, there are a series of decisions you need to make and each of the decisions could lead to a set of outcomes.
Taking an innovation spiral approach to do business model investigation and innovation suggests a loosely structured and circular process that allows companies to connect with the various points of the spiral in different ways and at different times, and ultimately reach an innovation breakthrough.
Business model innovation is one of the most desired types of innovations, and different types of innovations can be managed via tailored management processes. To improve the success rate of business model innovation, it’s important to keep optimizing innovation processes by breaking down those management barriers such as silos, inflexibility, linearity, or bureaucracy, etc, in order to nurture a business environment that catalyzes business model innovation and accelerates business performance.
Enforce intrapreneurship: Intrapreneurship has been seen as a great practice to explore business model innovation. Corporate entrepreneurship (Intrapreneurship) activities can improve organizational growth and profitability by willing to take risks and exploring new business models to create revenue streams. Especially in large and well-established organizations, if they identify a new value proposition that requires a change in business models or creation of the new business model, it’s strategically important to develop new ventures for improving organizational growth and profitability.
Every corporate venture comes with a business model innovation. Corporate Entrepreneurship improves company performance by increasing the firm’s pro-activeness and innovation competency. The entrepreneurial activities help companies develop new businesses that create revenue streams, and depending on the company’s competitive business environment, their impact will increase over time.
Develop business competencies: Create a new business model based on unique business competencies. Business model reinvention also needs to be based on the business’s core capabilities, either through providing new value-added services or products to current customers or exploring the new customer need.
There is the mapping relationship between the business model (value model) and capability model, between the capability model and process model. The business model designers should methodologically review a list of levers for business model components, and generate a list of potential business model options systematically, narrow choices based on their unique competencies in order to maximize the business value via newly developed business models.
A strong business model is hard to copy because it focuses attention on how all the critical business elements (internal and external) of the system fit into a working whole to make it differentiated in the marketplace. In a business environment that is driven by change, starting the business model based on the technologic vision and on the mega-trends is to be able to build the core competencies and the critical capabilities early enough to catch the emerging digital wave and keep the business ahead of the fierce competition.
With hyper-competition and the shortened business life cycle, to avoid fast obsolescence and gain long term business advantage, besides incremental improvement, the business model needs to allow space for innovation. Business Modeling is the basic and key system you need to design, test, and validate to keep companies viable. The emerging digital trends bring significant opportunities for companies across vertical sectors to pursue growth through the methodical examination and development of the alternative business model to reach the next level of the business growth cycle and achieve high-performance business results.