Tuesday, June 5, 2018

Three Aspects of Clarifying Digital Business Model

 Going digital is the journey to continue exploring the new business model for lifting the company to the next level of the growth cycle. 

The emerging digital trends bring significant opportunities for organizations to pursue business growth through methodical examinations of alternative business models. With emerging digital technology trend and abundant information, the new digital business model can be discovered if organizations ride learning curve rapidly and explore the art of possibility courageously. Here are three aspects of how to explore the alternative business model and unlock organizational performance and potential?

Just following trends in your own sector is a sure way to lose: Business model is neither equal to strategy nor technology only. It is a description of the way in which an enterprise intends to leverage the emerging technologies or uprising trends to make money. In essence, it means to explore the alternative way to grow the business. Trends are just a means to an end for successfully innovating business model and making the profit. The starting point for a business model differs based on the objectives and nature of an organization. Business management must clarify many fundamental questions such as: What are your vision and mission? What is your strategic advantage? Who are the potential customers? What need is met for the customer? How well can you leverage the emerging technology trends? Why would someone prefer to buy from you? Which role will your business play in providing the offering? What percentage of that market do you expect to capture over what period of time? Etc. It is about how fast organizations can ride learning curve, foresee and apply emerging trends, that’s where you win the competitive advantage. There is the tension between old and new business model. To avoid obsolescence, the business model needs to allow space for innovation and explore the varying possibilities.

A business model's strength as a planning tool is that it focuses attention on how all the elements of the system fit into a working whole: The essence of a business model is some source of value that represents a competitive advantage. A well-defined business model is an analytical model that lists all of the sources of value, cost, risk, and contains the formulas to interconnect them. It builds an entire frame of elements that describe the intents and constraints of a business or organization. There is the mapping relationship between the business model (value model) and capability model, between capability model and process model. The quality capability model allows business leaders to establish important business goals relevant to the capability and identify goal dependencies to establish a high mature enterprise. Business model reinvention needs to be based on the core business competency either through providing value-added products/services/solutions to current customers or exploring the new customer need. In today’s digital dynamic and technical environments where Information and Technology are being used more and more around the globe for revenue-generating initiatives, the business model generates predictions for how to make the profit and improve customer satisfaction.

A business model must be testable both from a standpoint of the "story" (the value scenario) and the numbers: A well-defined business model shouldn’t be too abstract, it needs to contain everything having to do with how the business generates money, and there are both the story perspective and measurement number perspective. Because the challenging part of the business model is that you must be careful of what cost optimization/restructuring/performance measures need to be considered while trying to model a particular scenario. When the organization experiments the new business model or develop the new business entity that creates the revenue stream, it usually presents three challenges: First, emerging businesses usually lack hard data. This is particularly true when their latest technologies or cutting-edge products are widely diffused in the marketplace. Second: Innovative leaders are in demand to lead an emerging business because often, many leaders are trapped by conventional thinking, but the new business requires innovation and innovation requires fresh ideas. Third: There is the tension between old and new systems, keeping optimizing the existing systems and processes is always important to improve the business responsiveness and performance.

Digital disruptions are inevitable, and digital transformation is unstoppable. Organizations shouldn’t just respond to them in a reactive way. Digitalization is the journey to continue exploring the new business model for lifting the company to the next level of the growth cycle. To effectively respond to the digital dynamics, companies must begin thinking about ways with strategic planning to broaden their ecosystems and revenue streams while becoming more responsive, innovative and scalable.


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