Digital transition: how to rethink your business model?
The digital transition is constantly shaking up the established order. In this changing environment, companies need to adapt and question the way they operate in order to reinvent themselves. How can you rethink your business model? Find out all our business advice.
Your business model: how do you define it?
What is a business model?
The business model is the backbone of your company. It defines your business model based on your offer and its environment: partners, distribution channels, resources, costs, customers. It defines the key elements of your company's positioning, with its objectives, resources and culture.
Focus on the business model canvas
Several tools are available to help you define your business model. The best-known is the business model canvas, developed by Swiss researcher and entrepreneur A. Osterwalder. It's a grid that serves as a framework. Each box has to be filled in. The aim is to list the expected elements in relation to the title of the block: customer segmentation, main activities, etc.
Define your value proposition
There are nine boxes on the canvas, with a central one: the value proposition. For it is the keystone of the whole. Underlying it is the question of the offer and its relevance.
The business model, an enlightening approach
The business model canvas is commonly used :
- as part of an entrepreneurial approach,
- in business schools such as HEC (Hautes Etudes Commerciales), management schools and other business schools,
- as part of an innovative business project.
Simple to use, the business model canvas is accessible while clearly laying out the fundamentals.
Your business model: how to reshape it?
Understanding its reference framework
With the business model canvas, you highlight the structural flows of your business. In particular, your cost/income ratio. The result is your reference WCR (Working Capital Requirement): a crucial indicator for assessing your company's financial health and sustainability.
Evaluate your performance
Positive cash flow is a good thing. However, profitability is not necessarily correlated with it. You also need to keep a close eye on your margins. The classic pitfall is to fill your order book with production, without generating sufficient net income in the end.
Setting targets
Forecasting plays a fundamental role in long-term thinking. Based on the forecasts in your business plan, they provide a starting point and enable you to assess the results achieved along the way.
Staying on course
The business model canvas also enables you to keep your focus on the essentials. Jostled by changes in the environment, you may find yourself straying from your core business. If it's a necessary overhaul, so much the better. If it's surreptitious, beware. This is where your reflection will serve as both a wake-up call and a safeguard.
The impact of digital on your business model
Analyze usage
Online purchasing is growing exponentially, and the sharing economy is expanding all the time. People consume differently, renting rather than buying. It's important for companies to identify these emerging digital trends, so they can anticipate their impact on their business.
Renew yourself
There's no room for complacency. Every company, no matter how dominant, must adapt or risk being left behind. Keep an eye on competitors and new entrants. Small structures and start-ups often reveal changes in the making. Agile, they reflect the market and its demand. Leave behind the straitjacket of your preconceptions, and look at the situation with fresh eyes.
Trigger signal
What criteria should you use to trigger a pivot in terms of business model? Often, external elements serve as a signal: a market study, a consumer survey, a sociological analysis... The growth of your business can itself be a trigger. Growing your business often means rethinking the fundamentals of your business model in order to scale up.
Pivoting intelligently
Does pivoting mean radical change? Not at all, especially as the risk would be to deviate from the initial trajectory of your business model. The best way is to operate in iterations: this is the lean startup approach. This is the lean startup approach, where changes are made incrementally, and market reactions are tested.
Adopting lean startup
Lean startup is an empirical approach. There's no need to stubbornly validate all the initial postulates: just launch, and the market responds. The risk is lower, and change is easier to implement.
Digital revolutionizes practices and forces companies to evolve. It's crucial to put the fundamentals of your business back into perspective. It's by iteratively rethinking your business model that your company will stay in the saddle.
Article translated from French