Digital Business Models

While the digitization of marketing operations and the workforce is good and necessary, these alone won't protect a company from disruption. Every year we're seeing new innovative business models trigger the slow death of traditional models that once enabled many companies to become very successful. But if companies simply hang on to what worked well in the past, as their old business models become obsolete, so will the companies themselves if they don't develop new business models that are fit.

For the digital economy.

My name is Rob Llewellyn and as you know, companies need people with the right capabilities to manage and lead transformation. As you know, orchestrating successful transformation isn't that easy. And I mean innovative transformation, which creates a new future without the constraints of the past. Which is why I hope that what I share in this episode will help you get better equipped to perform at your best as a manager, leader or consultant. If you want to learn more, go.

To studythrive.com while the digitization of marketing operations and the workforce is good and necessary, these alone will not protect against disruption or enable you to disrupt your market. The digital economy is witnessing the gradual expiration of traditional business models. Models that were incredibly effective in the pre digital era, but that are unable to compete with new digital business models which take full advantage of new technologies and new ways of doing business. Successful digital business models present a better way than traditional alternatives in any market. When a new model changes the economics of an industry and is difficult to replicate, it can create a powerful competitive advantage. And every day, innovative and disruptive companies are rethinking the way their business model can create, deliver and capture value business models that will trigger the slow death of traditional models. Airbnb did this for accommodation. Uber did it for taxis. Expert 360 are doing it for management consulting. And countless other examples exist where better alternatives are being made possible by leveraging the power of digital. And the one thing these alternatives all have in common is that through the innovative convergence of digital technologies, they deliver better value to customers in the way of price, experience offering or or platform value. So these four types of value are key to creating an effective digital business model. Customers get used to new value that digital business models offer them. Their expectations rise, and soon these better alternatives become the expected norm. And anything less isn't given a second glance. New value changes markets forever, regardless of the companies that are dominating them at any given point in time. Every dog has its day. Nokia was once an industry dominator. Now we have Apple. And in a way for the customer at least, who's next doesn't really matter. Apple gave customers more value, and at some point in the future, either Apple or another company will disrupt the market again and raise customer expectations even further. The once incredible offerings of Nokia's 5110, released in 1998, seem a distant memory, but at the time, the 5110 was cutting edge and exceeded customer expectations. Ten years ago, most of us wouldn't have expected to order our products and services online and expected them to be delivered the same or the next day. One company did it, then another and another. Until now it's become the norm and companies that are unable to do this will eventually become surplus to the needs of customers and they're increasing expectations. Customer expectations are being consistently raised and they certainly aren't going to look back and wait for complacent companies to play catch up. While key to a company's strategic success, business models also make very good stories, and stories are a powerful tool for communicating within organizations. A business model story can be used to help a workforce understand the value their company wants to create and deliver to its customers. While this isn't the lesson to talk about organizational change, culture and mindsets, it's worth remembering that the business model can be a very useful tool in helping to deal with the formidable people side of transformation and help people understand the need for transformation. There are many blends of business models which leverage price offering, experience and platform value. So let's consider four of them. There's the subscription model adopted by the likes of Netflix and Amazon Prime. This model captures regular business and revenue by providing a subscription based offering for something that has traditionally only been bought when needed. Then there's the freemium model which Dropbox and Skype use. This provides people with a basic offering with an option to upgrade to a paid offering. The experience model is one which is used by Apple and Tesla and provides an outstanding experience which people are very happy to pay for. And the business model which is most revolutionary is the platform model upon which the likes of Airbnb and Uber have grown. The platform model facilitates high volumes of customer and supplier relationships, relationships that become incredibly attractive to the customers and suppliers and which can create huge revenues for the platform orchestrator. There are other models which are all innovative variations of how price offering, experience and platform value converge to provide the company with a highly effective way of making money in the digital economy. The threat of competition needs to be a key consideration of a company's digital business model in response to the market situation. So you need to define and build powerful digital business models that enable your company to exploit market opportunities and protect against the threats that the digital economy presents. To do this, begin by asking questions such as what's the source of competitive advantage for our digital business model? Are we prepared to be a platform orchestrator in our industry, or will we settle for being orchestrated? What are the threats and opportunities we need to respond to? How can we manage business complexity in the digital economy? And how can we simplify our customer experiences? How can we create new and desirable offerings that generate profitability? What internal constraints will hold back our strategic ambitions? And what new transformation capabilities can help us thrive?

If you want to take your transformation capabilities and credentials to the next level, go to studythrive.com.