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THE TRANSFORMATIVE BUSINESS MODEL
BY STELIOS KAVADIAS, KOSTAS LADAS, AND…
THE TRANSFORMATIVE BUSINESS MODEL
BY STELIOS KAVADIAS, KOSTAS LADAS, AND CHRISTOPH LOCH
What does achieve such a transformation is a business model that can link a new technology to an emerging market need.
What, exactly, enables a business model to deliver on a technology’s potential?
To answer that question, the authors embarked on an in-depth analysis of 40 companies that had launched new business models in a variety of industries.
This paper presented the key takeaways from our research and suggest how they can help innovators
transform industries.
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The Six Keys to Success
They got from the analysis of 40 companies. A higher number of these features usually correlated with a higher chance of success at transformation.
1 A more personalized product or service. Many new models offer products or services that are better tailored than the dominant models to customers’ individual and immediate needs. Companies often leverage technology to achieve this at competitive prices.
2 A closed-loop process. Many models replace a linear consumption process with a closed loop, in which used products are recycled. This shift reduces overall resource costs.
3 Asset sharing. Some innovations succeed because they enable the sharing of costly assets. Sometimes assets may be shared across a supply chain.
4 Usage-based pricing. Some models charge customers when they use the product or service, rather than requiring them to buy something outright. The customers benefit because they incur costs only as offerings generate value; the company benefits because the number of customers is likely to grow.
5 A more collaborative ecosystem. Some innovations are successful because a new technology improves collaboration with supply chain partners and helps allocate business risks more appropriately, making cost reductions possible.
6 An agile and adaptive organization. Innovators sometimes use technology to move away from traditional hierarchical models of decision making in order to make decisions that better reflect market needs and allow real-time adaptation to change in those needs. The result is often greater value for the customer at less cost to the company.
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Each feature on this list is tied to long-term trends in both technology and demand. The six features that characterize successful innovation all link a recognized technology trend and a recognized market need.
All six features represent potential solutions for linking market demand and technological capability.