Success in the digital age is about creating a bigger value chain for your existing business by modifying and adapting business models accordingly. Let’s find out how to make this B2B disruption happen the next time you have a big idea.
Extending the Value Chain and Welcoming a Cliché
How many times have you looked at a competitor’s successful product and thought to yourself, “How can I add something similar to my business?” This happens in every industry—just look at the auto industry’s attempts to mimic the success of Toyota. But this sort of red ocean strategy won’t help you succeed as all companies go digital.
When you’re coming up with that big digital idea, think about how you can take a blue ocean strategy approach. In other words, find that white space in the market and discover how you can become the cliché such as you are the “Uber of X.”
Before you scoff at the overused “Uber of X” term, remember how important innovation is in the digital space. Extending the value chain is not just about imitating what Uber achieved and becoming the “Uber of X” -- it’s about creating new value for your customers that did not exist before. For example, NYC’s taxis finally launched their own app to compete directly against Uber extending the value they previously provided to their customers. Don’t stop at just Uber. There are multiple business models you can strive for— why not become the “Twilio of X”, the “Viber of X” or the “iTunes of X”?
New Business Models for Delivering the Big Digital Idea
Now that you’ve done your research, you know exactly how to extend the value chain for your customers. There’s just one problem left to solve—how to deliver this additional value. Consider these six business models designed for adding value and B2B disruption for digital companies:
- Uberization (Market Making): Uber is now the classic example of digital, on-demand service, but there are other examples to learn from. Robin, for example, has uberized the lawn care business by creating a 'service-as-a-service' model. With a “set-it-and-forget-it” modification of Uber’s business model, Robin has extended its value chain for greater user convenience to the customer. The key to these business models is connecting buyers and sellers in creative digital ways. Could you carve out a new market in your industry?
- Free/Pay: Mobile app developers are thriving on the “freemium” model. Users start using a product or service for free and have the option to gain more features by paying a fee. Zapier’s automation software provides an example of a free/pay model that could work for your new idea. Want a more immediate example? A personal favorite of mine is ToDoIst.
- Digital Marketplaces: The music industry started with vinyl and continued to evolve with technology—and then iTunes completely revolutionized the market. Can you find a blue ocean idea or product by designing a digital marketplace or launching an app store for your new idea?
- Open Platforms: As telcos and massive enterprises try to capitalize on the openness of software-defined networking (SDN), you don’t have to miss out on the benefits of open source tech. Twilio took the open platform idea and developed an API that embeds communication features into any developer’s project. Could you create a public facing platform out of existing data in your business?
- Internet of Things: It seems like just about every new piece of technology is “smart.” From smart toasters to smart toilets, companies all over the world are taking advantage of this digital business model. FitBit, specifically, has found a way to carve out an entirely new business with the Internet of Things. How can you add sensors to retrieve data in your products?
- Digitize Existing Devices and Services: While FitBit took advantage of the Internet of Things business model to develop a new digital product, some companies can benefit from digitizing their existing devices or services. Even back in 2011, washing machines were getting the digital treatment. But what if you could put an entire bottle of detergent in the washing machine and have it dispense the correct amount on its own? These are the things you have to think about as you digitize your products.
I realize this is a lot to take in and you’re probably too busy with daily operations to find the time you need to properly dedicate time to thinking about the next big digital idea for your industry. We love doing this for our clients and can help.
If you want help creating innovative new products, download our End-to-End Product Development Process White Paper.