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There are lots of ways you can go about improving your business. You can incorporate new technology, launch a new product or expand your revenue streams.
If you want a good place to start, check out our first post in this series about 8 ways to innovate your business.
Here, we’ll focus on transforming your business model with innovation. There are three things to keep in mind when exploring new business models:
- Design your business model around bringing value to your customers;
- Develop a strong business infrastructure; and,
- Use the information to your advantage to predict changes.
These three things can unlock new dimensions to your business and can help you attain revenues and profits that aren’t possible if you stay static with your business model. Let’s take a closer look.
What is business model innovation?
Your business model is all about how you make money while delivering value to your customers.
Innovating your business model involves changing two things at the same time:
- The value you bring to customers; and,
- Your operating model.
By changing what you provide and how you provide it, you can innovate your business model.
Why business model innovation is important
Business models don’t last as long as they used to. It used to be that companies stayed operational and valuable for decades while using the same business model.
Nowadays, competitors sprout up at a rapid pace, technology disrupts consistency and consumer tastes constantly evolve. Putting those factors together means your business model is at risk of becoming outdated.
The rapid changes and risks can be scary for business owners like yourself. It might be tempting to constantly tweak your business model to keep up. If technology and consumer trends are constantly changing, then you might think your model needs constant love and attention.
Well, yes and no. Business model innovation is great. But sometimes it’s okay to leave your business model alone and prevent yourself from acting too radically and putting your company into a corner. Let’s look at how you can build up your resiliency and create adaptable business models.
Tip #1: Design your business model around your strengths
How does your business create value? Once you find it, your business model should be designed around bringing that value to the world in new ways. The value proposition is the thing that you bring to your customers’ lives – it’s the solution to their problems.
Your value proposition is unique to your business. If personable customer service and sales representation are the things that set you apart from your competitors, then make sure your business model leverages that advantage. Make sure that your customers are able to engage with the personable and professional representatives somewhere along the service chain of your company.
The ingredient to your success is unique to your company. Think about ways you can proudly display your secret sauce through your business model.
Tip #2: Deepen your business infrastructure
For your business model to withstand the constant pressure and the changing economic conditions, you need a solid business infrastructure.
Your business infrastructure is the foundation that ensures your operations run smoothly. It’s the coordination of all your inputs – your human resources, technology, and customer relations department that work together to achieve your goals.
If you strengthen your infrastructure – the ability to handle change in your organization – then your business and the services it provides can withstand shocks and changes to the market.
To do so, make sure your company can answer the following questions:
- What do we need to accomplish our goals?
- What needs to be done today?
- Who needs to do it?
If everyone in your company is able to consistently answer these types of questions, chances are good that your business infrastructure is in okay shape.
Tip #3: Be analytical and predict changes
If your business model needs to adapt to changing business conditions, how do you know when (and how) to change it? The answer is all about using the information to your advantage.
Some companies invest millions of dollars in business analytics every year and it’s a growing field of study. However, you don’t need to be on the cutting edge of sophistication with your own analytics. You can observe what’s happening at the company level to determine your business needs.
Try to define and measure your own successes in order to understand how your company is doing. Listen to your staff and watch your competitors to gain valuable insights into your marketplace and industry. If they start to use digital platforms to engage their customers, you can try to match their business model and ideally one-up them with your own unique spin.
Gathering even simple data can help you predict the direction of your industry and offer you opportunities to change the course of your business model.
Business model innovation in practice
Looking for an example of business model innovation for inspiration?
One of the best examples is also a timely one. In 2020, millions of businesses around the world are forced to adapt their business models to the economic and social impact of the COVID-19 pandemic.
With many countries around the world practicing social distancing and staying indoors, many businesses – like those in restaurants or retail – are disrupted.
With consumers not coming to the physical locations of restaurants, businesses have to respond by shaking up their business models:
- First, businesses are finding new ways of bringing value to customers.
- With storefronts closing to the public, many restaurants have revamped their offerings to allow for more food delivery and even curbside pickup.
- The businesses are relying on their foundations to make sure they are able to re-allocate their resources efficiently.
- Less service staff to help customers in-store means they need to increase their delivery staff and shake up their marketing strategies. Each change shows off how their strong and adaptable business infrastructure helps them to weather the storm.
- The businesses have predicted the required changes.
- The businesses have read the news and crunched to numbers. If people aren’t going to be coming to their restaurants any time soon, they know they need to take action, fast. By using their predictive abilities, they identified the need to innovate their business models.
For now, social isolation and business model adaptations are a new normal for many businesses in countries that feel the deep impact of the COVID-19 pandemic. Only time will tell how long it will last – so businesses need to keep focusing on predicting what will happen, relying on their value proposition, and staying the course with adaptable and innovative business models.
Ready for more ways to improve your business and unlock your innovation potential? The next post in our special series – 8 Ways to Innovate Your Business – is all about improving your products and services. Check it out here [insert link].