All You Need To Know About Business Models In Digital Transformation

Even the biggest companies have switched up their models


In very simple terms, your business model is how you plan to make money from your enterprise.

A refined definition of a business model is the way in which you create and deliver value to customers. Your strategy tells you where you want to go and the business model tells you how you are going to get there. 

In this time of Industry 4.0 with Digital Transformation, businesses are getting disrupted faster than they get established. We all know what Apple did for music, Uber did for taxis and Airbnb did for hotels. Digital is helping them to enhance their existing products and services and helping to launch new products and services.

Companies are using various business models to be successful:

- Freemium model: Basic products/services are provided for free, but users are charged for advanced features. E.g. Coursera, LinkedIn, Spotify, Dropbox, Skype

- Pay as you go or Subscription Model: Pay only for services which are used. E.g. Netflix, Kindle, New York Times, Safari Books online

- Customer experience model: Provide the customer with an experience they've never had before. E.g. Tesla, Disney Land, Apple

- On-demand model: Provide customer service on demand and with superior speed. E.g. Uber, cloud services from Amazon, Microsoft

- Marketplace model: Provide a platform for buyer and seller interact with each other directly e.g. ebay, Alibaba

- Free model: Provide the typical services to users free and sell their behavior data to different businesses e.g. Google, Facebook, PatientsLikeMe

- Crowd-sourcing model: Receive money for engaging crowd for common goal, innovation, problem solving. E.g. Kaggle, CrowdAnalytix

- Bundling model: Selling similar products or services together. E.g. Microsoft Office

- Gamification model: Use of game-like feature to simplify the interaction. E.g., Khan Academy, Nike +

Some of the biggest companies moved on from their core business model and changed embracing digital and adopting new technology to get closer to customers in real time and grow exponentially.

Nike had moved on from being a sports apparel company to a fitness-driven, personalized wearables (like FuelBand) manufacturer. Amazon started in 1995 as an online bookstore but went on to become a leader in technologies like Cloud, Drones, and web services. Philips started as light bulb company and moved on to become a leader in healthcare equipment, touching millions of people's lives.

GE has moved forward from its core industrial products – from jet engines and gas turbines to CT/PET scanners, locomotives with sensors that monitor various parts of the machinery. The company developed its own Predix IoT platform with advanced analytics to provide real-time information to improve efficiency, increase productivity, and schedule more effective preventative maintenance.

Apple adopted multiple models from PC manufacturer to selling online music, to a subscription model of iCloud.

Changing your business model drastically may not work. Don’t try to boil the ocean but start with how you can deliver greater value to customers through digital technology. Success in choosing one business model over another will depend on how well companies understand their customers’ needs. 


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