What different types of business models can be used to drive innovation?

Overview

A business model is the way a company generates revenue and makes a profit.

Business model innovation is the process of creating new ways to generate revenue and make a profit.

It’s important because it allows companies to stay competitive and adapt to changing market conditions.

Two well-known global brands that have used this strategy are:

• Amazon – they started as an online bookstore but have since expanded to include a wide range of products and services, such as Amazon Prime, Amazon Web Services, and Amazon Fresh.
• Uber – they disrupted the taxi industry by creating a platform that connects riders with drivers, and have since expanded to include other services such as Uber Eats and Uber Freight.

How to

The process of business model innovation involves several roles and responsibilities:

1. Leadership – sets the vision and strategy for the company.
2. Product development – creates new products and services that align with the company’s vision and strategy.
3. Marketing – identifies customer needs and preferences, and develops marketing campaigns to promote the company’s products and services.
4. Sales – sells the company’s products and services to customers.
5. Operations – manages the company’s processes and systems to ensure efficient and effective delivery of products and services.
6. Finance – manages the company’s finances and ensures that the new business model is financially viable.

Best practices

• Understand your customers’ needs and preferences.
• Focus on creating value for your customers.
• Be open to new ideas and be willing to take risks.
• Collaborate with other companies and organisations to create new business models.
• Continuously monitor and evaluate the success of your business model.
• Be prepared to pivot or change your business model if necessary.

Examples

Here are two potential examples of business model innovation for everyday small businesses:

1. Subscription model – a small business that sells products or services could offer a subscription model where customers pay a monthly fee to receive regular deliveries or access to exclusive content or services.
2. Freemium model – a small business that offers a software or app could offer a freemium model where customers can use a basic version of the product for free, but pay for additional features or functionality.