The term business model may seem like a very simple notion. However, the phrase has evolved drastically over time. Today, enterprises are doing all they can to keep up with the ever-advancing technological world, by adapting and editing their business models accordingly. Although this might look easy to the eye, it is actually quite complex and many companies can’t keep up resulting in their inevitable downfall.
Have you noticed that some of today’s most successful businesses are those who have redesigned their business model, disrupted their industry, and produced the type of value that customers are looking for in the digital age?
How can we define a business model?
The word “business model” refers to a company’s profit strategy. It specifies the items or services that the company intends to sell, as well as its target market and any estimated costs. Business models are important for both new and established businesses. They help developing companies attract investment, recruit talent, and motivate management and staff. Established businesses should regularly update their business plans or they’ll fail to anticipate trends and challenges ahead. Investors use business plans to analyse firms that they are interested in.
What types of business models are there?
Technology has changed the way businesses operate. Interconnectivity, globalization, and a digital, tech-driven world have all enabled forward-thinking thinkers to reconsider traditional models in industries ranging from travel to retail. There are as many types of business models as there are types of business.
The platform business model is an example of an age-old company model that has been altered by technology. In its most basic form, this concept puts buyers and sellers together in a single location. This paradigm has existed for decades, if not centuries, in the form of an in-person marketplace, auction house, or retail mall. However, thanks to digital technology, these platforms are no longer bound by time or geography. Innovative business owners have been able to leverage this sort of approach to develop massive digital networks that enable participation and cooperation all around the world thanks to technological advancements. Some of today’s most successful businesses, such as Facebook, WhatsApp, Airbnb and Google are all examples of reinvented platform business models.
Another example of a technology-inspired business plan is the global business model. These models rely on the quick speed of globalization and interconnectedness to succeed. Focusing on creating and selling internationally in a short period of time. The clothing brands Mango and Desigual, are strong examples of successful models that sell to tiny target groups internationally in order to obtain economies of scale, which is only achievable in a globalized society.
Example of an innovative business model:
As an example of a company that has taken an old business model and redesigned it, Uber is at the top of the list. Uber was able to seize a piece of a pre-existing market by employing a disruptive, tech-based paradigm by looking at how a present business model—taxis—could be enhanced.
You might be interested in: Part VIII – Bonus model 3: Cloud Restaurants
Uber is in continuous expansion through reiterations of their initial model. For example, there is now Uber Eats for food delivery; Uber Health providing rides for patients and healthcare workers and even Uber Freight which offers shipping services. Uber has done exceedingly well at adapting its business model in order to remain relevant and successful.
To sum up, innovation is a critical component of every company strategy in today’s fast-paced digital environment. Executives and CEOs are accountable for trying, learning, and continually upgrading to remain ahead of the competition. It is clear that having a flexible business model is key to the longevity and success of any company.