In this article, we are going to learn what a business model is and why it is important to have a time-tested business model. The article covers different types of upcoming business trends and business model innovation that have taken place so far.
Business models are structured procedures that an organisation follows to deliver value to its customers in terms of products or services. The organisation earns a reasonable profit, besides registering sustainable growth for itself and all its stakeholders. In other words, business models are the means of creating, developing and running a business effectively so that the organisation, its stakeholders and its customers all are in a win-win situation.
It is obvious that business models thrive in line with the economic growth of a nation and accomplish all statutory compliances. Startup companies and established organisations both use business models relevant to their activities. The future of business models will be guided by digitalisation, business model innovation and the use of technology.
Concept of a Winning Business Model
Business strategy has been the backbone of competitiveness in the recent past. However, at present, the necessity of sustainable advantage has given way to the development of business models. Today’s business model concept owes its credit to the globalisation and technological changes in business in the early 1990s.
The sole purpose of the above-mentioned business models was to create a difference in their customer experience by providing value-added services. The future of business models rests upon three core elements, namely value creation, profit and logic.
If an organisation must play a long business inning, then the following points to these key factors must be considered -
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Value creation concept
Organisations must have answers to all questions related to the value they create in the business model -
- The organisation must know who their target customers are.
- The venture must have a clear notion about the services or products they offer.
- The firm must be sure that these services or products perform the desired value addition for their clients.
- The organisation should be clear about its market strategies, both for the long term and for the short term.
- If the products or services offered are a section of the value chain, the venture must know which part of the value chain they are in. This knowledge will enable them to work effectively with the stakeholders.
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Profit concept
Since the main purpose of business is profit, organisations must know the following points –
- Sources of revenue for the organisation must be mentioned in the business model.
- The business cost structure, both fixed and variable, must be known to the organisation.
- Prominent drivers of profitability must be specific.
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Logic Concept
There should be a clear road map elaborating how the organisation must meet the profit and growth objectives. However, it may be noted that a business model becomes a winning combination only when it interacts effectively with other business models of stakeholder organisations at the specified juncture of the value chain.
Similarly, a winning business model must consider the effects of business competition and should be able to nullify those effects to the extent possible. Though an ideal business model today must be technology driven its backbone must contain all the other points discussed above.
Future Business Trends
Business trends refer to an alteration in an organisation’s business opportunities, thereby resulting in a change in its priorities and performance. Trends in business mostly occur due to the Government’s policy amendment, changes in customer preferences, a spike or low in market demands, socio-economic fluctuations, statutory or regulatory changes, political scenarios and technological advances, amongst others.
Irrespective of the nature of business trends, small or medium organisations need to follow the latest trends for the sake of survival. However, it is important to note that large organisations often utilise market research data and technological advancements in their favour to act as trendsetters.
Some of the latest and future business trends are as follows -
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Technologies
AI (in the form of ChatGPT and other forms) is the most widely used technological tool in today’s business. It helps in digital marketing through’ its content creation abilities. It also supports design, operation and supply chain management functions. Immersive technologies like augmented reality (AR), virtual reality (VR) and mixed reality (MR) help to develop newer products, train employees and delight customers together.
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E-Commerce platforms
This is another widely used platform in today’s business wherein a third party can establish a connection between the customer and the product or service provider, thus rendering a smooth and satisfying experience to the buyer.
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Work environment evolution
The COVID-19 pandemic has taught organisations the skill sets of technology-enabled remote or online working. Similarly, remote training and learning also flourished.
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Team building flexibility and cost reduction
Networking and software tools have enabled remote team building. Travel costs have been reduced substantially. Work-from-home or anywhere initiatives have reduced office footprints, thus reducing the cost of renting out or owning office spaces.
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Rise in entrepreneurship spirit
Loss of employment in the pandemic days has urged many individuals to embrace entrepreneurship as an alternative. This has not only helped them to pursue their passions but also freed them from the bondage of corporate life. Thus, the crisis sparked up their innovation and self-reliance, giving way to one of the most happening future business trends – the startup era.
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Social media marketing
People generally use social media to stay connected between friends and relatives. It also provides entertainment and enlightenment. Organisations made the best use of this huge networking system for the purpose of promoting their products and services.
Digital marketing and networking through text messages and emails produced positive results through better customer proximity and genuine reviews.
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Sustainability and corporate social responsibility
With global warming and the deteriorating environmental situation, people have become more conscious regarding sustainability in business and the responsibilities of corporations in society.
Corporates, on the other hand, reciprocated with their commitment to make the business sustainable in line with the environment. Their social responsibility initiatives also became prominent.
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Enriching employee well-being
Focus on improving employee experience increased. Besides suitable compensation packages, organisations also added perk benefits in the field of healthcare, professional development opportunities, recognition programs, engagement events etc.
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Online community engagement
The involvement of the community in social media creates an environment of opinion building and personalisation of products and services. Reviews and remarks of potential customers are the tools organisations use for product improvement processes.
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Chatbot customer service
Organisations now have made customer support easier and more accessible with the Chatbot service.
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Cybersecurity guidelines
If business must flourish, it needs to stay safe. With the massive growth of digitalisation, cyber fraud and data theft or hacks are major concerns that organisations must deal with. Thus, most organisations nowadays have very strong cybersecurity guidelines in place.
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Freemium model concept
This is the most happening concept meant for mobile users, where free-to-use mobile apps are offered to consumers with limited access. However, these apps also offer exciting premium services at a subscription. These premium services are sometimes offered free of charge for a limited period; just to lure the customers into subscriptions, when they become addicted to them.
Business Model Innovation
The future of business models depends on business model innovation. It may be noted that business model innovation is different from product and process innovation. Thus, it is not limited to the research and development wing of the organisation.
Here the stakeholder of business model innovation is a team consisting of the Business or the Operation Head, the IT Manager and the Human Resource Head. The sole purpose of involving these professionals in the process is to translate the raw innovation into practice.
Organisations with standard innovation habits are often observed to include business model innovation as their strategic objective. They become the leaders while other companies following the said innovation become laggards.
Business model innovation may be defined as the architecture of boosting competitive edge and value creation, on whose foundation the future of business models is created. It brings about changes both to the process of client value proposition and operating procedures.
At the value proposition level, innovations help organisations locate market segments and make changes to products and services. Profitability, revenue, competitive advantage and value creation for clients are the main concerns addressed by innovation at the operation level.
It has been already proven that the future of business models rests on innovations. The subject of business model innovation is vast and intriguing. A few reputed institutions conduct courses on senior management programs where the organisation’s C-suite and other senior officials undergo an interactive session of resourceful learning and return to their work front as innovators in their capacity.
Frameworks for Business Model Innovation
There are five established frameworks for business model innovation -
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The Business Model Canvas
This is essentially a chart where a company’s customers, assets, infrastructure, finances and value proposition are made available for easy viewing, comparing and further innovating newer ways and means by amending each parameter against others.
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Lean startup methodology
This is one of the best-practised innovations in recent times and is the future of business models. This innovation is digitalisation based and hence business and finance model studies can be performed effectively with available data and future results can be interpolated. This reduces resource wastage to the bare minimum thereby generating better customer delight. This strategy is being used by several low-cost startups.
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Blue Ocean Strategy
Blue Ocean refers to new or uncontested market opportunities for an organisation. It is a scenario where the organisation creates its market demand and caters to the same in a monopolistic manner.
In this case, the value proposition is not unique but also lucrative to the customers. This strategy may be applied only after the existing market is carefully explored and examined with enough available data.
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Disruptive innovation theory
This is a case where smaller companies take over unnoticed market spaces through deep market surveys. The process thrives on the understanding of people’s reach, purchase power, convenience etc., particularly in rural areas and tier two and above cities.
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Design-oriented theory
The future of business models also depends on the design think tank of an organisation. Taking continuous feedback from users and working on product or service design models ensures customer delight.
Conclusion
During the last few years, many Indian start-ups have performed significantly well. The market segments they have operated in include but are not limited to automobile, food, pharmacy, electronic devices, fashion, retail, finance etc. The e-commerce segment has made significant progress and so has the service sector. These organisations have survived the test of time and have become the future of business models.
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FAQs
- How to stay up to date on industry trends and innovations?
The best methods to stay informed about industry trends and innovations are networking participating in industry events and following influencers and thought leaders.
- What is the future of business models?
The future of business models is to study the existing emerging business trends and research innovations with the support of technological advancements.
- Why is it important to follow trends in business?
Organisations are required to follow market trends to stay relevant in business and survive in the long run. An individual is required to follow business trends to stay relevant in the job market.
- What is the trend of entrepreneurship in India?
The trend of entrepreneurship in India is booming as observed from the numbers of start-ups in recent days.
