Building New Business Models

Many executives talk about doing business today in an environment that involves a faster pace of change, multiple disruptions, technology advances around every corner, and newly emerging competition.  This type of volatile, complex, and uncertain environment mandates that companies reinvigorate their way of doing business with next generation business models that can attract customer loyalty, build higher barriers to entry, and offer better customer experiences. 

While most management teams will agree that this ‘new norm’ requires companies to revitalize their businesses with new compelling models, most executives wrestle with how to create new business models – ones that are profitable and sustainable.

The framework Blue Canyon recommends to successfully assess, evaluate and build new business models involves answering two sets of sequential questions:

1.  What do your customers along your customer chain value?  How can these customers benefit from us? Can we help them create savings, garner premium prices and/or increase volume?  These are the core questions associated with the CoDestiny approach to shared successes, those that identify how a firm can create value for customers in order to capture value for shareholders.
2.  How can we redeploy – mix and match, expand, or integrate – our products and service resources differently so we can help our customers realize these benefits?  For many firms, this involves moving from a traditional product or service focus to one that involves a “solutions” offer.  For others, it is a more straightforward transformation, reflecting a response to new messages from the market as to what is needed to deliver value to customers.

Examples of successful new business models are plentiful. Electrical and communications component suppliers that sell many SKUs in large catalogues have integrated their products differently to allow for streamlined buying and use.  These suppliers now offer prepackaged kits used in specific contactor applications.  The benefits to the later-stage customer chain participants are numerous—intermediaries can deploy these product mixes faster with decreased working capital, and contractors find these prepackaged kits easier and quicker to use, resulting in labor savings.    

In addition to integrating products differently, new business models can also involve smart expansions of a supplier’s service. We have seen multiple examples in recent years involving the implementation of a “Bring-It-to-Me” offering.  Technology suppliers to car rental offices, hospitals, and bank branches, have helped their customers strategically move equipment, services, and information closer to the point of the transaction.  This has yielded value for end customers.  Today, car rental receipts are printed where the driver parks the car, hospitals immediately bar code patients' ID bracelets to electronically link them to their medical records, and bank customers bypass the mail, and even the ATM, by depositing checks through scanning equipment and online banking applications. Suppliers who have worked closely to enhance these Bring-It-to-Me models understand that the end customers benefit from convenience and accuracy and direct customers [hospitals, car rental companies and banks] benefit from attracting and satisfying new customers, gaining operational savings in the process.