It’s believed that business as usual may no longer be good enough. Here’s why you should consider evolving the way your company operates.
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All businesses are transitional. That’s the view of Professor Robert Wolcott, a senior academic at the Kellogg School of Management at Northwestern University in the USA. “Business models can’t stay the same,” he believes. “We just can’t predict precisely when or how that transition needs to take place.”
In Harvard Business Review, Wolcott notes that businesses can’t keep doing what worked for years at the expense of the future. He says that experimenting with potential transitional business models now so that your company is ready to evolve when the time is right, is indispensable. “You can’t lead the way if you’re waiting for someone else to take the lead,” Wolcott says.
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Nervous to change the way you do business? Don’t be. Netflix founder and CEO Reed Hastings says:“Don’t be afraid to change the model.”He made the decision to split DVD rentals from Internet streaming services in 2009 and today Netflix is streamed in over 100 million homes.
Future-focused business models are needed
Companies that leverage established business models might survive in the short- to medium-term. But, businesses that don’t look at new ways of generating revenue could lose in the long run.
The Association of Chartered Certified Accountants (ACCA), a global body that represents accounting professionals, believes this is why evolving business models are important when it comes to achieving growth. “From technology to demography, the global economy is entering a new era. Re-appraisal of value proposition, value creation and value capture can open up new opportunities for companies to thrive,” the ACCA says.
The firm unpacks six business models in its report, some of which have already given rise to billion-dollar businesses. Other models have allowed companies to become household names around the world.
Here are three of the business models that could help companies grow in the years to come:
1. The platform-based business model
Platform-based business models are those that cater to two-sided or multi-sided markets according to the ACCA. They work because they take advantage of digitally-enabled marketplaces to directly match buyers and sellers – or even content providers with content seekers.
The platform owner typically receives a fee from the platform users on both sides. Netflix is arguably the global winner here enabling film studios and filmmakers to gain direct access to media-consuming customers.
2. Mass customisation business model
In the past, the ACCA says large supply chains were required to bring a product together and deliver it to a customer’s doorstep. However, they say in today’s ‘on-demand’ world companies should look at replacing ‘in-stock’ items with ‘digital designs’ that are hosted in the Cloud.
These designs can be sent to customers as they request them and then a tailored product can be produced for the customer. Swiss watchmaker, Swatch leads here, allowing customers to pick watch designs that can be tailored to their tastes.
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3. Modern barter business model
The exchange of goods or services between people and businesses isn’t new. But, Mark Williams, managing director of trading platform Bartercard UK says: “Gone are the days when you swapped a sheep for a goat.”
New technology allows businesses to barter across a diverse range of sectors, as well as across borders, and receive substantial value back in return, he notes.
Think of it this way, if you’re an office furniture business and have some stock left over, it can be hard to find a taker for the last few chairs and desks. ACCA adds that barter business models offer the potential to free up a company’s cashflow, even out the peaks and troughs of demand, and extract more value out of goods or services that companies might be struggling to sell.
Business experts say that no business can stay the same. Smarter processes, re-invigorated systems, new markets and digital technologies pave the wave for heightened competitiveness. If company leaders don’t consider experimenting with new ways of generating revenue, more progressive companies might be calling your customers their customers.