Keep up with the times or soon you’ll just be history. Cultural change, technical and digital developments prompt companies again and again to think about whether they are still on the right way. This goes for SMEs as well as for the big players in industry.
If a company considers addressing new target customers, increasing its profit, introducing a new product or exploiting new channels for distribution and communication, the first step towards Business Model Innovation has already been taken. Often the process is not entitled as such, Harry Bouwman, Delft University of Technologies, Netherlands explains: “The moment you start thinking about your company and the potential, which has not been exploited yet, you can talk about Business Model Innovation.”
The advantages of change
According to a study of Envision, an EU-funded project for the setup of Business Model Innovation, 37% of the European SMEs have engaged in exactly that. The optimization of products and services as well as the introduction of profitable processes are on top of the list with regard to Business Model Innovation. The Austrian SMEs differ from their European colleagues insofar that they don’t focus as much on growth and exploitation of new market segments as they do on processes that increase their profit.
Regardless of the objective a company, an entrepreneur or a start-up has, simply concerning themselves with thoughts about their personal Business Models and defining core activities and USPs does make sense according to Bouwman. The focus is put back on the basics and the positioning in the market and towards customers is therefore sharpened again.
The driving factor Digitalization
Besides cultural change and an unprecedented speed of new developments, the digitalization during the past two decades was one of the main factors triggering companies – small and large alike – to deal with their Business Models. At the turn of the millennium even Sony Music Germany or General Electric Europe observed the development skeptically in order to get active a few years later.
“The Digital Transformation however is not a process that is ‚decided‘ in the board room, it is a learning process that stretches across all departments”, says Carlos Härtel of GE Europe. Step by step the company cast off its defensive attitude towards the digitalization, which was limited to the protection of service contracts in 2010, and turned into one of the leading digital industrial enterprises in the process. Crucial milestones within this process are the optimization of productivity, the development of apps for customers as well as the provision of Predix. The platform was originally developed to drive the digital transformation of GE-internal processes in areas ranging from aviation to supply industry and was already successfully adapted by other industry companies.
The end is the beginning
„Whenever a business has a clear value propostion to the customers around the data they can aquire, if every customer sees data around the equipment they buy from us as essential to be competitive and successful in the market place – if that is beyond any discussion and finally has become normal – I think that is the endpoint of the transformation.“, Härtel explains the process. The end of a Business Model Innovation will always be the beginning and for industry enterprises as well as for SMEs this means remaining as flexible as possible – with regard to thinking as well as to structures.