Founder and CEO of Africent Group, a consultancy service company with interest in oil and gas, technology services, and agribusiness.
The world is going through a lot right now, and with some businesses on the verge of collapse, there seems to be a growing need for adaptation to the times. And while changing your business model may seem to be a good idea when you think about all of the potential benefits, it’s best to put a lot of consideration into it. Executing such a change takes a lot of strategic decisions to make sure your business can handle the shift and really gain those advantages.
The purpose of a business model is to guide a business to success. Or in simple terms, a business model is a plan that outlines how an organization will make money, which goes beyond just pricing. Usually, this plan is tailor-made to suit an industry or market trends. And if the generation of the model is centered on strategic choices concerning things like identity, resources, target customers, supply chain and channel strategy, as well as valuable products and services, the business is likely to be on the right track — for the most part.
How do you know that business model innovation is the right move?
As mentioned, your business model will depend on what is happening in your industry or the economy, and it becomes really useful when there is either rapid economic growth or when things are falling apart, like in our current situation. So businesses that are rethinking their business models now probably won’t be doing themselves a disservice. This could help them highlight any loopholes in their model and seek new ways to make a profit.
Some things to consider include what the change will mean for the business in general and specifically (i.e., how it will affect customers, employees and partners). You also have to figure out which part of the model needs innovation and whether you have the skills, technology and other resources needed to make the change.
How can you ensure that the change is effective?
Especially during economic turmoil, the general rule of thumb is to start with what you have. This means evaluating your existing capabilities and assets to see how they can help with the innovation process. This prevents you from making unnecessary expenditures that will only cost you more. If possible, create a partnership with your stakeholders (i.e., customers, suppliers, partners, etc.) so that you can have a mutually beneficial relationship. Chances are that they also need assistance, so this will make the change process smoother.
This also means that your current business won’t go to waste, but rather will serve as a steppingstone into the new phase. It helps to have a deep understanding of the current situation (i.e., customer behavior, current trends and the impact, whether financial or otherwise) to be able to design the new business model. This helps ensure that you aren’t going in blind and that the change doesn’t backfire.
After the design and implementation process, it will help to take measures to track and monitor progress. This involves regular analysis and testing of the strategies to find out which ones are working and which ones aren’t. Since the stability of the industry or the economy is still uncertain, be flexible to make it easier to transition again if the need arises.
Depending on the situation, it might be easy for businesses to rush into finding new ways to create value and profit as soon as there are changes in the industry or economy, but innovation comes with consequences, both positive and negative. So to ensure that you are on the right track, take your time, and do the work to come up with sustainable ideas and strategies. Also, make sure that all of your stakeholders are aware of the new development and what it will mean so that it doesn’t take them by surprise.
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