OrganizationJanuary 3, 2022by admin2

Why You Need An Innovative Business Model

Taking seamless key performance indicators offline to maximise the long tail. Keeping your eye on the ball while performing a deep dive. Completely synergize resource taxing relationships via premier niche markets. Professionally cultivate one-to-one customer service with robust ideas.

A business model design is the foundation of your business, and without one, it’s unlikely that you’ll have much success in the long run. Today, with so many competitors out there trying to get ahead, it can be hard to differentiate yourself from your competition, especially if you’re only using the same old model. Innovative business model design can help you stand out from the crowd and catch your customers’ attention, even if you have the same products or services as everyone else.

What is business model design?

A business model describes how a company or organization plans to deliver value to its customers and achieve a profit, as well as how it will use resources while doing so. The design of a business model includes identifying your target customer, defining your value proposition (what you offer), pricing strategy, key partners, and delivery channels. Creating a business model allows businesses to see how they add value in their industry – and if they can’t add value they might not be able to succeed.

 

4 major elements of business models

Business models are basically ways to describe how a company makes money. Here are four elements of business models to consider 1. Revenue streams—in other words, what does your company sell? What products or services does it offer? 2. Value propositions—how does your business solve its customers’ problems? What value do you offer? 3. Channels—how do people buy from you and how do they receive and use your product or service? 4. Cost structure—does your business operate under fixed or variable costs? Are there certain expenses that aren’t necessary in order for your business to succeed?

 

The problems with traditional business models

The premise of a traditional business model is that profit results from selling a good or service for more than it costs to make, says Richard Rumelt, professor at UCLA and author of Good Strategy/Bad Strategy. But that model is deeply flawed. Making more money than you spend doesn’t create sustainable advantage. Look no further than Blockbuster and Borders to see what happens when companies rely on margins over innovation: they get crushed by nimbler competitors who can consistently deliver value at lower cost. Or consider Kodak, which failed to realize that its business model was inherently unsustainable until it was too late.

 

How to embrace change

Business models are essentially blueprints for success. If you want to succeed, your business model needs to change with changing times and changing circumstances. You don’t have to reinvent yourself every month or even every year, but if you don’t embrace incremental change on a regular basis, you run a very high risk of being left behind by your competitors. Incorporating new technology into business is also important because it can help streamline processes and make them more efficient.

 

Start by defining your value proposition (VP)

Essentially, a value proposition is your promise to customers that you have a product or service they’ll want. A VP is made up of three parts: who it’s for, what problem it solves and how it solves that problem. It should be compelling enough that customers would take action after reading one sentence about your business. After all, there are plenty of companies out there competing for their business — so make sure you tell them exactly why they should choose you.

 

Define your target market (TM) and customer base (CB)

This is arguably one of the most important elements to incorporate into your business model. Your company’s target market includes everyone who would be willing to pay for your product or service; it doesn’t matter if they are actually capable of paying—as long as you can realistically meet their needs. The customer base, on the other hand, consists of all those who can pay for your offering. In order to make money from a business, you need both of these demographics to see value in what you have to offer and buy your products/services. Without them, there isn’t any sustainable demand for your business model.

 

Identify your core competencies (CC)

Start by identifying your core competencies and understanding how they play into your business model. While many businesses only focus on products and services, it’s important to understand what you bring to customers that can’t be replicated. Your core competencies are key to creating a successful business model design. When developing a new model or adapting an existing one, take time to examine your strengths and weaknesses in order to find areas where you have opportunities for improvement. By capitalizing on your unique business-model components and emphasizing what sets you apart from competitors, you will achieve success in any market conditions. It’s not enough to simply adapt yourself to survive—you need to stand out as an innovator with a competitive advantage over rivals who aren’t devoting resources toward innovation as well.

 

Build your revenue stream stack (RSS)

Before you start developing your business model, you need to think about how it will generate revenue. The typical startup path is to build a product and then look for customers or clients. But in these days of cutthroat competition, there’s another way to go: build your revenue stream stack (RSS). That’s right—think of your overall business model as a stack of revenue sources that supports your enterprise. Some companies find one highly lucrative source, while others add streams from several different places. It all depends on what works best for your business objectives; below are some ideas to get you started.

 

What do you need to change about your business model?

Business models don’t last forever is a tired cliché, but that doesn’t make it any less true. Markets change, and your business model needs to reflect that change. The trick, of course, is being able to identify when that time has come. Here are some early warning signs that your business model may need to be overhauled Business isn’t growing at expected rates: If there is no discernible reason for slowing business growth, chances are good that you need to take a hard look at your business model. It may have become outdated as markets have changed, or consumer preferences may have shifted out from under you.

 

What resources are available for you?

A business model design is vital to starting a business. With one in place, you can begin to envision your start-up in action, laying out how all of its components should fit together. A good model will take into account: what kind of product or service your business will offer, who exactly your target market is, and whether there’s enough demand for that product/service to sustain and grow your company as you expand into new markets. Your choice in business model should also take into consideration any resources you have at your disposal. Is it worth launching with a limited marketing budget? How much capital do you have at hand? Do you need government funding to support your venture? Before beginning work on any type of business plan (including a model), give careful thought to your resource constraints, which are influenced by both internal and external factors. For example, access to skilled workers might be scarce locally, but online communities could connect interested parties around the world.

2 comments

  • Geovanni Considine

    January 25, 2018 at 9:35 am

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  • Ms. Rita Thompson

    January 25, 2018 at 9:35 am

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