If you are reading this blog you are probably thinking of improving your business model. But how to manage this endeavour? In Envision project we conducted 115 case studies, where we have studied how micro, small, and medium sized companies (SMEs) improve their business models. As you might guess, our research confirms that business model innovation looks easy but that implementation of ideas are complex and needs careful management attention. Instead of trying to delimit the changes to only some element of the business model, the SMEs should consider the whole business model, and especially focus on the offering and collaboration with business partners.
It seems that in (re)designing business models managers in the SMEs are struggling with abundance of options: success seems to require a combination of service innovation, branding, promotional activities, channels, target markets, enabling technology, re-organised networks, and revenue models. Based on our survey and insights from the cases we provide some guidelines:
1. Does your business need a make over? If the market is on the move, or your company performance is dwindling, take a good look at your current business model.
2. Use business modelling method(s) and tools to gain better understanding of your business model and the potential for change. Ask help from consultants, researchers or other experts if you are unfamiliar with the tools or feel uncertain.
3. Do not think that you can delimit the changes to only some parts of your business model. The business model innovation will most probably mean changes to your offering, but also for your collaboration with business partners as well as target market, revenue model and information technology. There is no single panacea.
– Consider if you can improve your current service or product offering with some add-on services or differentiate it with for example by (un-)bundling it with other products or services.
– Pay attention to your business partners. Key partners are core to your business model. That does not only apply to suppliers, but also to your customers. For instance, can your customer become your partner, in co-design of new offerings, or can key partners become a channel to reach new customers? Collect data on customers and on their (usage) behaviour.
– Rethink your customer segment or target market from multiple sides.
– If you have limited finances, instead of major investments in own information technology and digitalisation look for simple solutions based on cloud technologies or platforms in combination with apps to meet your requirements.