You’ve probably all seen this meme circulating on social media. Who drove your digital transformation - your CEO, your CTO or Covid19?

Over the last 9 months, most innovation teams have been focusing on shifting existing and finding new business models given changing consumer behaviours, safety regulations, broken supply chains and other disruptions caused by Covid19.

In preparation for our upcoming online event on Business Design, 7-11 December 2020, we collected insights from different industries on business model innovation in response to Covid19.

#1 Why Business Model Innovation Is Key

The pandemic has brought so much to a halt: travel, economic growth and pre-pandemic-style socializing, to name a few.

Yet, the restrictions in place to protect public health need not limit business leaders’ imaginations. In fact, this is a prime time for business model innovation and new approaches to value creation. Microsoft CEO Satya Nadella said as much this spring when he told investors, “we’ve seen two years’ worth of digital transformation in two months.” 

The company moved decisively through global panic: between March and June 2020 alone, it made five acquisitions to expand its cloud computing empire.

So, should some supply chains be shorter? Can effective training happen via videoconferencing? Will older customers embrace online banking as fully as millennials? The short answer seems to be yes, and that carries long-range ramifications for current business models and the assumptions that underpin them, says Christopher Zott (IESE).

Read more here

#2 A Shocking Statistic (?)



Even before Covid19 hit, 80% of executives thought that their business models are at risk.

#3 What Business Model Changes Have Industrial Firms Been Making

Mika Ruokonen and Miikka Laitila (Futurice) highlight some of the business model innovation changes industrial firms have been making:

  • Digital sales, marketing, service channels, customer relationships and thought leadership
    Instead of serving customers face-to-face, moving interactions and relationships to COVID-proof digital channels. Supporting customers in their online buying activities through content, insights and advice.
  • New partnerships e.g. in product delivery and servicing
    Using new technology and partnerships to broaden offerings and activities in the customer work, e.g. finding local service providers for spare part deliveries. Already happening in B2C, and the models could potentially be used in B2B.
  • Shift from products to services
    Moving from the provision of single products to continuous service agreements, various XaaS models and total solutions that are provided to customers. Moving from selling ownership towards selling access. Various bundles of equipment, software and services.
  • Outcome-based value propositions
    Outcome-based offerings whereby customers can buy based on the value delivered. Data ecosystems to support outcome delivery.
  • Platform business models
    A company acts as a network orchestrator that matches the supply and demand of goods and services in a given industry sector or value chain.
  • Selling data and insights
    Understanding what valuable data assets a company has and then identifying existing or new customers that could buy data and insights, then launching data-enabled offerings and revenue models.
  • New remote activities
    New remote activities, such as remote support and services that are delivered from anywhere in the world where COVID-19 outbreak is not hurting the operations too much in a certain moment of time.
  • Automation in operations
    Applying automation in plants, warehouses and facilities.
  • Scalable talent ecosystem e.g. outsourcing
    Using more outsourcing, partners and freelancers to create more workforce flexibility, building an ability to quickly scale up & down resources and activities thanks to partnering.

Read more here

#4 Focus On Resilience

The second factor is the resilience of a business model. We can classify business models along two dimensions, which lead to four types: Product, Project, Platform and Solution. Within the same industry sector, the business model types with higher inclusiveness have been better off because, on average, they showed higher resilience in times of the pandemic.


Increasing inclusiveness can be achieved when the comprehensiveness of the offering and/or the stickiness of the business transaction is enhanced, via a platform or solution business models. This implies moving from standalone, often physical offerings with vastly independent transactions, to comprehensive and integrated offerings with recurring transactions.

With higher inclusiveness levels, we have generally witnessed an increase of resilience. The higher the offering’s breadth and depth, the bigger the ecosystem around its customers, and the more premium services are integrated (e.g. free-of-charge shipping, unique content), the less reasons exist to change vendors. 

Furthermore, subscription-based monetization models increase the probability that the customer will continue the relationship with the same vendor and often leads to a chain of transactions.

Read more here

#5 What’s Happening In Different Industries

Here’s a glimpse of how companies in different industries are adjusting their business models:

Supply Chain, Health, Cybersecurity, Insurtech, Retail, Enterprise Tech, Travel, Media & Advertising, Fintech - click here 
Pharma - click here
Manufacturers - click here
Auto industry - click here
Financial services - click here
Retail - click here
Mining - click here

Do share any other resources about business model changes in different industries

#6 Examples Of Business Model Pivots

During our recent Innov8rs Connect Unconference, Vincent Pirenne (Board of Innovation) shared some examples of business model pivots.

 
The team at Board of Innovation also keeps track of business model pivots in this public list:

If you’d like to understand the current state of the Low Touch Economy, join Nick de Mey’s session on 26 November - What We Got Wrong About The First Year of the Low Touch Economy

#7 Highlight Anomalies and Challenge Mental Models

As companies position themselves for the new normal, they cannot afford to be constrained by traditional information sources, business models, and capital allocation behaviors, argue Michael Jacobides and Martin Reeves.

Instead they must highlight anomalies and challenge mental models, revamp their business models, and invest their capital dynamically to not only survive the crisis but also thrive in the post-crisis world.

Any analysis of growth opportunities must go well beyond a simple categorization of what you already know. You need to challenge your ideas about what’s happening in your traditional business domains by taking a fresh, careful look at the data. This requires that you actively seek out anomalies and surprises.

Dive deep into the data - Anomalies usually emerge from data that is both granular (revealing patterns hidden by top-line averages) and high-frequency (allowing emerging patterns to be identified rapidly).

Take multiple perspectives - In the military, a technique for discovering what you don’t know is to use the “eyes of the enemy.” Military leaders ask themselves, What is the enemy paying attention to? and then shift their own attention accordingly to illuminate potential blind spots and alternative perspectives. 


#8 Testing, Testing, Testing

The key to preventing spending unnecessary amounts of resources and time on developing a business model is through the continuous testing of its most critical aspects. That way, you get fast feedback from customers, users, and partners regarding the feasibility of the model. 

Check this guide to help you:
·    Understand the testing process step by step
·    Choose the right tools that can help you find the right questions
·    Understand the best test formats and setups for the successful development of your business model

Over to you. What business model changes have you worked on, or seen? Any examples of successful pivots you can share?
Feel free to comment below with your takeaways, or ask questions to the experts featured. If you rather don’t respond publicly send me a DM or email hans@innov8rs.co

For the best and latest on Business Design, join our upcoming online event 7-11 December, featuring innovation leaders from Bosch, Nestle, Microsoft, DNB, NASA, and Google X. Check the agenda here and general info about Innov8rs Connect series here.

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