The difference between winners and losers is often that winners are able to see opportunities and position themselves to take advantage of them better than others in the market. Increasingly, positioning to take advantage of new opportunities can include the need to achieve business model transformation.
We don’t have to look too far for examples of these transformations such as the rise of low cost airlines, the transition from CD to downloads in the music industry, and the rise of internet shopping. All three of these examples are easy to understand in hindsight and we can all recognise the significant shifts in business models that they’ve undergone, however, each of these markets continues to change as players continue to adjust their offerings in very dynamic markets. It’s no longer good enough to reposition and then expect stability and a new equilibrium to be reached.
For these players there is no longer a ‘static equilibrium’. Their norm is operating in a ‘dynamic equilibrium’ where they have to continuously adjust to maintain their position. If we take simplistic look at Amazon as an example, in the first phase of its existence it was a disruptor to the book selling market. It then expanded out into other markets such as music, etc… and this is what most people would credit Amazon with. The reality is that Amazon has then moved its business model to one of a trading platform and logistics business, another significant, but less visible, business model transformation. This allows them to sell and distribute other peoples’ goods and content, whether that’s through their portal and warehouses or through their Kindle devices and store.
Business model transformation, whether transformational or incremental, is a fundamental part of success and survival for many businesses in the modern world.
One such company that’s undergoing a business model transformation is Monetise, the mobile money specialist, which is moving from an upfront licence model to a subscription model. In its results released today it’s clear that they’re experiencing a financial impact from this business model transformation and much of the press comment around this has a mildly negative sentiment to it for various reasons.
But, what is often lost in the relative short term views, is that firms like Monetise are seeing opportunities and positioning to take them, and this takes investment. Investment in business model transformation and other commercial innovation is increasingly as important as investing in product R&D. Whilst the progressive players have woken up to this and are developing the new mindsets, skillsets, and toolsets to leverage the opportunities, the vast majority of organisations remain well behind the curve.