Published on January 30th, 2014 | by Irene Ng0
New Business Models of Today
What is the business model of today, in this modern, digital world?
Here are some of the thoughts I shared on this issue, during a recent interview with the Singapore Management University (Read the full interview here)
In the past, firms would have quite a distinct relationship with its market, and this connection with the customer would have likely been in the form of feedback loops or loyalty programmes. This form of business model can be considered a ‘loosely-coupled system’.
Today’s connected world however, shakes up this ‘loosely-coupled’ system. In a connected world, the business model is not just the firm’s business model, what it offers and how it creates or capture value. The new business models of today are ‘tightly-coupled’ systems that function in a more systemic way. They reflect the changing relationship with the market, and are accelerated by customers connected through social media.
New business models emerging in the connected world are moving towards more collaborative business models. Today, business models interact with other companies’ business models, and what emerges on a wider scale is an economic model of ‘who does what and who gets what’ in the economic system.
We will also see more input and participation from the customer, who will no longer be passive. Thanks to greater digitisation and connectivity, individuals are today empowered to control their own behaviour through information. And the digital visibility of the customer experience of a product, available as personal data, is a firm’s biggest opportunity to create market advantage through configurable products or service. (For more on this subject, check out my book Value & Worth, soon to be in bookstores as a Cambridge University Press publication).
This in turn will spur the development of the personal data economy, which will radically change how we make things because we can apply our data on to new products and services in a way that we never could before. This is what we are looking at in the RCUK HAT project, which aims to create the first-ever Multi-sided Market Technology Platform to allow individuals to trade their personal data for personalised products and services in the future.
Going forward, companies will really need to think about their business model architecture seriously, as they will have their role assessed with the public—and other firms—in terms of openness, as well as their role with the government, the market and citizens.
I believe that a sound business model architecture – together with agility and collaboration with others – is essential in determining companies’ future survival.
What do you think?