Transforming Your Business Model: When Will You Get Started?
Technological innovation and digitization have given companies the opportunity to develop new extremely profitable services. Business leaders who want to transform their business models to new hyper-connected services can be precise and eloquent on their need to escape the commoditization trap, but rare are those who 12 or 18 months later have successfully made decisive progress, built platforms, and launched their offerings. Some have succeeded by getting new targeted services to market quickly, ensuring that these services are right for their customers and their third party partners while managing uncertainty with the flexibility to adapt and customize.
What should companies be focusing on when considering these radical business model transformations?
A leading global provider of printing solutions and services was suffering loss of market share due to new market entrants that were offering much lower cost bases. Simultaneously, they recognized that enterprise customers were under pressure to comply with environmental regulations by reducing their paper and electricity usage. The printing solutions provider honed in on these needs and launched attractive Managed Print Services that supported thousands of networked printers per customer via a new outsourced business model. With this new connected service, customers no longer had to buy machines, but paid for the actual value delivered based on multiple attributes that determined the price per page. Leveraging the rise of ubiquitous secure connectivity allowed them to continue innovating through the launch of advanced mobile and cloud-based services such as Print to Remote offerings. Being able to dynamically and flexibly monetize new services helped them grow their business to a multi-billion dollar operation in just a few years.
How to get started in launching a “market testable” prototype within 12 to 24 months
In my experience, companies succeed in transforming their business models when they overcome some key challenges: first, they identify a well-defined and narrow market that does not expose the entire company; then they recognize their existing value drivers and establish how much of the newly created value will be shared with the customers; next, they quickly allocate resources despite the uncertainty of the profitability outcomes of these new services.
Indeed, it is essential to set up a cross-company business unit that pulls talent from all departments – Sales, Marketing, Research, Finance, IT, HR – and gather strong executive support to protect these financial and human resources from the drain of more mature units. Analysts refer to this Culture Shock as one of the main hurdles to getting services launched. Accenture talks about this in their report on transforming business models.
The value and success of these hyper-connected transformative models are extremely interlinked with the technology platform that monetizes and enables them. When selling new innovative services, tweaking and optimizing pricing and creating tailored packages from various options are vital processes for ensuring the profitability of new business models. This can be a sustainable method for targeting, attracting and retaining customers and can keep enterprises ahead of the competition as long as the technology can support the model.
By choosing the right technology, we have seen customers reduce the time it takes to react to competitive offers and launch new services from many months to a couple of weeks! The Accenture report suggests a cohesive digital platform that offers the flexibility, ease of use and speed for maximizing this profitability equation. Indeed, in the launch of connected services that transform business models, the underlying technology platform is more than ever a competitive weapon.
As our printing solution provider and other successful transformers in the services industries have shown, getting this formula of speed, well-defined value propositions and service monetizing technology into place for a targeted part of the business is key to launching a company-wide transformation.
Expanding these models profitably is achievable; the crucial part is getting started!
So, when will you get started?