Digital transition: how can you rethink your business model?
The digital transition is constantly shaking up the established order. In this changing environment, companies are having to adapt and question the way they operate in order to reinvent themselves. How can you rethink your business model? Read all our business advice.
Your business model: how do you define it?
What is a business model?
The business model is the backbone of the company. It defines your business model based on your offering and its environment: partners, distribution channels, resources, costs, customers. From this are derived the key elements of your company's positioning, with its objectives, resources and culture.
Focus on the business model canvas
There are several tools for defining your business model. The best known is the business model canvas, developed by a Swiss researcher and entrepreneur, A. Osterwalder. It is a grid used as a framework. Each box has to be filled in. The aim is to list the expected elements in relation to the title of the block: customer segmentation, main activities, etc.
Specify your value proposition
There are nine boxes on the canvas, with a central one: the value proposition. This is the keystone of the whole process. Underlying it is the question of the offer and its relevance.
The business model, an enlightening approach
The business model canvas is commonly used :
- as part of an entrepreneurial approach
- in courses such as HEC (Hautes Etudes Commerciales), management schools and other business schools,
- as part of a business innovation project.
Simple to use, the business model canvas is accessible while clearly laying out the fundamentals.
Your business model: how can you reshape it?
Understanding its reference framework
Using the business model canvas, you can highlight the structural flows of your business. In particular, your cost/income ratio. This gives you your benchmark WCR (Working Capital Requirement): a crucial indicator for assessing the financial health and sustainability of your business.
Assessing your performance
Positive cash flow is a good thing. However, it does not necessarily correlate with profitability. You also need to keep a close eye on your margins. The classic pitfall is to fill your order book with production, without the net result being sufficient in the end.
Setting targets
Forecasting plays a fundamental role in long-term thinking. Based on the forecasts in your business plan, it provides a starting point and enables you to assess the results achieved along the way.
Staying on a consistent course
The business model canvas also enables you to keep the essentials in focus. Jostled by changes in the environment, you can sometimes stray from your core business. If it's a necessary overhaul, so much the better. If it's done surreptitiously, beware. This is where your reflection will serve as both a wake-up call and a safeguard.
The impact of digital on your business model
Analysing usage
Online shopping is growing exponentially, and the sharing economy is expanding all the time. People are consuming differently, renting rather than buying. It is important for companies to identify these emerging trends, associated with digital technology, so that they can anticipate their impact on their business.
Renewing
Standing still is out of the question. Every company, no matter how dominant, must adapt or risk being left behind. Keep an eye on competitors and new entrants. Small structures and start-ups often reveal changes in the making. Agile, they reflect the market and its demand. Leave behind the straitjacket of your preconceptions, and take a fresh look at the situation.
Trigger signals
What criteria should you use to trigger a pivot in terms of your business model? External factors often act as a trigger: a market study, a consumer survey, a sociological analysis... The growth of your business may itself be a trigger. Growing your business often means rethinking the fundamentals of your business model in order to scale up.
Pivoting intelligently
Does pivoting mean radical change? No, especially as the risk would be to deviate from the initial trajectory of your business model. The best way to do this is by iterating: this is the lean startup approach. This is the lean startup approach, where changes are made incrementally, and market reactions are tested.
Adopting the lean startup approach
Lean startup is an empirical approach. There's no need to stubbornly validate all your initial assumptions, just launch and the market responds. The risk is lower, and change is easier to implement.
Digital technology is revolutionising practices and forcing companies to evolve. It's crucial to put the fundamentals of your business back into perspective. It's by iteratively rethinking your business model that your company will stay in the saddle.
Article translated from French