4 strategies to digitize your business model
It’s no secret that consumer behavior and technology shifts are changing the way business is done in today’s marketplace. Many traditional and incumbent organizations are facing competition like they’ve never experienced before due to the democratization of industry and the lowering of barriers to entry. The resulting solution is the evolution of the business model - finding new ways to create value for our consumers while generating revenue. The business models of the future will require new strategies but will also be enabled by technology.
This ushers in a new world of digitally driven business models - those businesses that leverage technology to create a more seamless experience and delivery of products or services. In their book, “What’s your digital business model?” Weill and Woerner illustrate a framework to define how a digital business model can support the growth of your traditional organization.
This model puts the consumer at the center of the business experience, creating a single, cross channel relationship with your customer. We’re seeing a tremendous amount of behavioral shifts in this space from consumers, making this a necessity, regardless of your business. The main strategy for this model is to always put the consumer first and make the relationship as seamless and connected as possible.
The supplier model gives a business the opportunity to continue add value to their products or services. These are incremental actions a business takes to differentiate their brand or product in the marketplace. One example of this is when Tide collaborated with Amazon to create the dash button for quick re-order. The strategy here is to find new ways to add value to a current business unit or product that differentiates the company in new ways.
In the transformation of industry, we are seeing a lot of companies become the entry point to a service. Think Amazon for shopping or Uber for transportation. They don’t necessarily own the products and services they are offering, but they are providing a single point of contact for the consumer to access those products and services. This strategy is one of the toughest for an incumbent business to implement. There has to be a high level of unbiased trust, engagement and value for the consumer to make that shift. A great example of a company making this transformation is Walmart with the Jet.com platform.
The ability to integrate with partners through a supply chain has always been a successful business model for many companies (i.e. shampoo in hotels, specific vehicle models as rental cars). But in the digital world it takes it up a notch. In this model, companies create APIs that can plug into other organizations ecosystem. The example that Weill & Woerner give is PayPal - having the ability to integrate across many e-commerce platforms. As more traditional organizations begin to add digital experiences to their offering, this could be a great strategy to explore to scale.
Regardless of the form the business model takes, the fact is that digital will be a driving force of its implementation and success.
How’s your business model transforming? Let’s talk about it.