Digital innovation – one man’s meat is another man’s poison
The digitalization of ever more aspects of consumers’ lives gives rise to enormous opportunities for the creation of new wealth. New apps, new service, new platforms, new data and new devices have become a crowded playground for all kinds of companies that want to tap emerging chances. New companies have entered the scene, sometimes with remarkable success and breathtaking growth. Facebook, founded in 2004, was generating revenues of US$19 billion by 2015. Or take Airbnb – it was founded in 2008 and was soon nearing revenues of US$1 billion, also in 2015. While new startups are in a gold-rush mood, many established companies find themselves with their backs to the wall. Traditional retailers, banks, travel agencies, print media and many more are experiencing hard times and fighting to survive. At first sight, entrenched and new players do not have much in common, but when one takes a closer look, it becomes clear that both types of companies face the same challenge: They need to develop new business models that work in the digital world and create value for connected customers.
New technologies – new value chain
Digitalization came hand in hand with product innovation, from faster personal computers and better smartphones to wearable technology. Now we’re moving towards smart-just-about-everything. But all these new products, applications and services are changing our lives in radical ways. It is not only products or services that become obsolete but also organizational processes and systems because they simply no longer create enough value. To seamlessly account for the digitalization of the business and the customer side, new ideas are mandatory, and, increasingly, the whole business model is the new source of innovation. Business model innovation is a complete reconfiguration of how a company does business. Its design is one of the most fundamental strategic choices that entrepreneurs and managers can make because it defines how a company taps into the networks of companies and institutions and customers that surround it. It might bring together previously unconnected players; it may link current players in new ways. It can introduce completely new digitally supported activities and drop redundant ones. It stakes out friends and foes and helps companies make crucial decisions when it comes to anchoring their competitive advantage in a digital world. Innovating the business model can bring tremendous value to stakeholders. A smartly designed new business model can increase the total value created for all stakeholders, including customers, partners and suppliers.