Business Modeling to Reinvent Business: How to Design and Implement a New Business Model
Reinventing business and implementing new models are undertaken by organizations as these are seen as necessary catalysts for sustaining growth and development. The need to improve the way the company operates without completely changing its prototype arises from the existence of game-changing opportunities waiting to be seized in the market.
Staying wedded to the current business model is like throwing away the opportunity to better meet the needs of the consumers in a more affordable and efficient way. Remember that process innovation could only get you to a certain efficiency ceiling and there will always come a time when reinvisioning your business is a must.
But before venturing into a business modeling again, executives must first assess their organizations’ current business models, as well as that of their competitors. They must walk back and take a good look at the current structure and identify all strengths and weaknesses of the systems in place for creating value for customers and generating profits.
Business Modeling Tips on Assessing Your Current Business Model
Having a fundamental understanding of the existing business model is a prerequisite to business modeling or designing and implementing a new one. The assessment must be done in order to create a baseline for improvement, to which the new model would be built upon.
One effective way to view at the current business model is to define the 9 Business Model Canvas blocks or to look at it in four segments:
- Unique Selling Proposition. This includes the value you create for customers and how you make it available to them.
- Profit Formulation. This includes how your company is managing sales generations and operation costs to keep it at a profit level.
- Fundamental Resources. This includes the company’s human resource, technology, facilities, equipment, and funding that contribute into creating the value being offered to customers.
- Strategic Processes. This involves the systems in place in order to ensure that the whole organization performs as whole. Hiring and procurement are some of the examples of these systems
Having a full understanding of these four segments enables companies to create a new business model or reinvent the existing ones in order to assess if they have already reached the boundaries of their current business models. We however recommand to analyse your model further on and try to define other blocks. Wise Cluster Canvas is a good tool to have this holisitic approach.
Also included in this assessment stage is studying the possibility of tapping new customers and establishing new markets. By assessing your current model using this canvas, the question whether it is possible to adjust the price, your unique selling proposition, your resources and composition of the company’s current offering is addressed.
Implementing a new business model
Execution of business modeling is done in three successive phases – cultivation, acceleration, and transition process.
- Phase I. Cultivation. This is the experimentation phase in business modeling, where the proposed business model is tested and revised as necessary. This is where the new model is applied at a small-scale in order to gauge its profitability and success. It is important to ensure that the core operations of the company is not affected by the activities being carried under this business model incubation stage.
- Phase II. Acceleration. Once the company is confident that new business model would work, they go to the acceleration stage of business modeling. In this stage, the company must establish the processes needed to increase the scale of the new business model execution. The company must develop the procedures and rules needed to guide the full implementation of the new model and monitor its performance as it progresses.
- Phase III.Transition Process. As the final stage of business modeling implementation, this stage involves looking at the current condition of the core operations of the company in order to assess if it is safe to fuse the new model in it or to keep it secluded.
Reinventing the company and implementing new business models without putting the existing models at risk is a very tricky job. But it is not impossible as well. Getting hold of the whole implementation process while nurturing the new innovations could actually reinforce the core business at a whole.