Usually business transformation is emerging associated with the adoption of a new technology. Creating a new business model that can link a new technology to an emerging market need is a condition to achieve the transformation success.
Business model, generally, can be defined as description of how a company creates and captures value. The system which organizes interaction of various features to achieve corporate objectives is defined as business model. The model indicates customer value proposition, pricing mechanism, corporate’s organizational structure, partnerships, and structure of supply chain.
In case of market stability, the model will reflect the most efficient way to allocate and organize resources. If a new business model successes to, usually, leveraging a new technology to change how business is performing, it will overturn the current dominant model.
Relevant researches reported that there are six 6 features of business model increase the potential of transformation success.
A higher number of these features usually correlated with a higher chance of success at transformation. The features include a more personalized product or service, a closed-loop process, asset sharing, usage-based pricing, a more collaborative ecosystem, and an agile and adaptive organization. Each feature is tied to long-term trends in both technology and demand.
On the tech side, sensors that allow cheaper and broader data capture, big data, artificial intelligence, machine learning, internet of things, cloud technology, and developments in manufacturing that creating more possibilities for distributed and small-scale production represent tech trends enable the organization to transform if those features are linked well to satisfy market and customer needs.
On the market side, greater diversity in customer preferences, higher factor prices, heightened regulation further increase the challenges for companies looking to gain market share. All six features represent potential solutions for linking market demand and technological capability.
Some researches strongly suggest that business models with transformative potential tend to have three or more of the six features. If organization is thinking about changing business model or entering an industry with a new model, it can rate itself on how well model performs on the six features. If it doesn’t beat the competition on any of them, chances of success are low. But if model significantly outdoes the current model on three or more features, organization is well positioned to succeed.