Table of Contents
The Business Model describes ‘how an organization creates and delivers value in a given socio-economic and cultural context’.
Why do business models evolve?
- Technology Disruptions: tech is the scenario that quickly changes these days
- Commoditization: when a product/service is not able to compete on value, it becomes a commodity by simply competing on price.
- Competition: when a product/service bases its sales on actual value, not price, competition will play an imperative role. Competition is the most evident reason for business models to evolve.
Business Model Evolution Timeline
- 1900-1950 Mass Production: business models ownership of production facilities
- 1950-1990 Distribution & Marketing Business Models: low-cost production & distribution networks
- 1990-2010 Internet & E-Commerce: Business Models Control of Information Flow
- 2010-2025 Customer-Centered Business Models: Data-driven “customer obsession”
- 2025-?? Data-Driven Predictive Business Models: AI-based psychometric customer prediction
Digital Evolution
1. The main drive of business model evolution is the digitalization of means, products, and services (Apple/Uber). 2. Digital can help enhance current products and services, making business models evolve, instead of transforming/launching, which permits entrepreneurs to Rethink their products. 3. The company is rethinking its model by monitoring the production through analytics, the real-time data allows for enhancing efficiency/productivity/maintenance, thus adapting its model to customer’s values and increasing profitability.
Business Model Shifts
The Digital Shift: From analog to Digital, allows a new kind of accessibility, faster and cheaper than offline operations. Users receive things within 30 minutes at no delivery fee, business stores have a 70% cheaper cost structure, with real-time customer-driven information and no stock.
The Services Shift: from products to services e.g. Netflix, depends on the problem has been solved.
The Exponential Shift: from incremental to exponential, normally the value is created by a self-sustainable mechanism with a profound change, generally, global (SpaceX).
The Stakeholder Shift: from shareholder to stakeholder. Shareholders invest in order to get profit for themselves from the business. Stakeholders aim to benefit everyone involved, starting with the customers, who will feel cared for and be loyal to the brand.
The Circular Shift: from linear to circular. The value is created in reusing and cutting down waste, in order to reduce the footprint.