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 this seems to be a good idea, just by thinking about all the benefits, a lot of consideration goes into it. Executing the 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 plan that outline how an organization will make money, which goes beyond just pricing, and usually this plan or guide is tailor made to suit an industry or the market trends. And if the generation of the model is centered around strategic choices concerning things like identity, resources, target customers, supply chain and channel strategy as well as valuable products & services, the business is likely to be on the right track- for the most part.
How do you know it’s the right move?
As mentioned, the business model will depend on what is happening in your industry or your external economy, becomes relay useful where there is either rapid economic growth or when things are falling apart, like in our current situation. So, businesses that are rethinking their business model now won’t be doing themselves a disservice. This will help them highlight any loopholes in the model and seek new ways to make profit. Some things to consider include what the change will mean for the business in general and specifically i.e. customers, employees, partners. You also have to figure which part of the model needs innovation and the skills, technology and other resources needed to make the change.
How to ensure the change is effective?
Especially during economic turmoil, the general rule of thumb is to start with what you have. This means evaluating the existing capabilities and assets to see how they can help with the innovation process. This prevents you from making unnecessary expenditure 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. The chances are that they also need the assistance and so this will make it easier to go through the times more smoothly.
This also means that your current busines doesn’t go to “waste” but only serves as a stepping stone into the new phase. It also helps to have a deep understanding of the current situation i.e. customer behaviour, current trends, and the impact whether financial or otherwise to be able to design the new business model. This just ensures that you aren’t going in blind and the change doesn’t backfire.
After the design and implementation process, it will help to put in measures to track and monitor progress. This involves regular analysis and testing of the strategies to find out which ones are working are which ones aren’t. Since the stability of the industry or the economy is still uncertain, there should be an element of flexibility, to make it easier to transition again if the need arises.
It might be easy for businesses to rush, out of panic or excitement, depending on the situation, 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 you are on the right track, you have to take the time and do the work to come up with sustainable ideas and strategies. Also, all your stakeholders should also be away of the new development and what it will means so that it doesn’t take them by surprise.