90% of business managers the question is no business model of their companies. Rethinking how to develop innovative business models or investigate other types of business models for your company, it is one of the main tasks to be undertaken by anyone with responsibility for Startups, SMEs or consolidated companies.
"Questioning" my business model, it involves thinking about how our company or entrepreneurial project brings business value to customers and how they pay for the value they receive. It is also important to know the type of market in which we operate and what other factors influence.
In the early twentieth century the business model of a company in general was rather simple; A company manufactured a product or performing a service and charge for it.
The evolution of society, the uncertainty, the rate of change, Internet, technological advances and the emergence of new needs and therefore new opportunities has forced companies togenerate new innovative business models as alternative ways to generate income .
A few examples of companies that have developed innovative types of business models
If we look back, there are some examples of innovative projects in Spain, introduced by large companies worldwide, who dared to innovate, to rise from the ashes. Examples such as IBM orGillette illustrate the "rise" when their positions in the market were threatened.
Others however, failed to see what was coming to them from their privileged position, as is the case of Kodak. In its day it was one of the innovative businesses in the world, which collapsed with the advent of digital photography.
Defining business model
The business model refers to the way the company creates, captures and delivers value to its customers. Put another way, it is the way the company creates value for itself and for its clients by transforming raw materials into finished products and selling the finished product to the customer.
Description of innovative business models
IBM changed in 2003 its business model and its model to generate business, from manufacturing and selling computers and hardware, to offer innovative services based on solutions and information technology (IT) business. He sold his development unit PCs to Lenovo, the hard drive to Cisco and printers to Lexmark .
With this example of an innovative idea at the time, IBM became the company outsourcing, consulting and recovery services world's largest enterprise data, upending model types known hitherto business.
Gillette changed its business model of selling razors quality, lowering the price to make them accessible to almost everyone, with the aim of generating revenue from the sale of spare parts;razor blades. That simple change introduced to the market one of the most innovative business models and case study in many schools.
The very competitive, Internet, and the speed of birth, evolution and disappearance of startups, has generated a whole list of new business models, business models and innovative business ideas pure or mixture of several existing ones.
Let's make the most interesting overview:
Business model long tail
Term coined by Chris Anderson in 2004, is one of the most innovative business models that have emerged in recent times. Innovation business model long tail (long tail) that is characterized advantage of a wide range of items with low demand, but that can become profitable business and generate profits due to a large volume of small sales .
In the traditional model, which is governed by the Pareto Principle , 80% of the population bought 20% product. This fact was less sold unprofitable because of the high development costs, storage, distribution and marketing products.
Companies to save costs, limited their production and marketing, only to the best sellers, ie 20%.
But with the advent of internet , they have generated new innovative business models, which include having a huge range of products of low demand, but become profitable businesses to get sold worldwide, generating together a high turnover .
This type of business model is especially interesting when selling software products ( Google Play ), digital ( Itunes , Grooveshark ) and even physical products ( Amazon or Ebay ). Are you sure other innovative business ideas happen.
Bait and hook or products tied
The novelty introduced the innovative idea of bait and hook, is offering a basic product at a very low price , often with losses for the company that offered (bait) and then charge high prices associated product, spare parts, or services (hook).
Examples of these types of business models, the telephone companies that "give away" mobile phone (bait) in exchange for a permanent contract for a certain time (hook). You feel that you give away the phone, but the company recoups its investment and earn money on monthly billing service during the contract period.
Another example of this type of business model, are companies that develop almost free software (SAGE) and then must pay upgrades, maintenance and even technical issues queries.
multilateral platforms
As explained by Alex Osterwalder in his book Generation business models , the multilateral platforms are based on business models that bring together two or more distinct but interdependent groups of customers .
In this type of business models, there is interest only if all stakeholders involved are a value proposition and therefore all are present. Multilateral platforms provide the channel that allows interaction between groups, and thus its value increases as the number of users who use.
An example of this type of platform is the web PuroMarketing where a large number of free users are offered quality content. PuroMarketing revenues are obtained by advertising companies that want to leverage the traffic generated by this web content.
Google is another example of innovative business model, where the vast majority are users who do not pay, but generate benefits from a percentage of companies or individuals who pay for services such as Google Adwords . These companies pay back because there are plenty of free users, who are the target audience for advertisers.
( Download the business model canvas in pdf )
Free como modelo de negocio disruptivo
In this model at least one of the actors involved benefits from a free offer. To do this, another part of the customer segment should fund products or services offered free of charge to the other party or segment. In recent years, product offerings and services, especially Internet, have grown exponentially. Advertising or model Freemium are some of the mechanisms that support to offer free services to the users.
Freemium business model is to offer basic services for free, charging for premium services a monthly fee or a fee for use. On the Internet there are countless examples of this type of business model; Unbounce, Dropbox, Linkedin or Spotify .
Affiliate business model
In this business model, the company you want to sell a product or service establishes some sort of reward for providers, companies or individuals that attract customers or orders for their products. These types of business models are based on a commission or reward.
An example of the business model of affiliate offline are organized tours that take tourists to eat this or that restaurant, or visit this or that handicraft factory, because they receive a commission for each person eating in the restaurant or purchase in the factory.
With the advent of Internet, it has also come innovation in the business model and has passed the online field. The owner of a web, rent space for third parties to place their ads. They are based on the amount of traffic they are able to refer the client's website. Hence the company needs to attract traffic, offering gifts to agents (individuals, companies or websites) that can get those new visitors.
A clear example of this business model are affiliate blogs on any subject they publish third-party ads.
For example, in this blog we can include an affiliate banner to test the plugin to share on social networks that employ or one of the hosting providers also use in our projects . If you click on the banner and shopping, we took us a commission (small ;-))
In these business models it is important to measure 2 ratios :
- Number of people registering for the number of people who visit the website.
- Number of people buying on the number of people registering.
Both figures are important and will allow us to make decisions to refocus the web strategy or redesigning our business model.
In any case, it is essential for the profitable business model, the cost of acquiring a new customer is less than the benefit obtained by that client . Otherwise, the affiliate business models are doomed to failure. Some examples of business projects are Bonusralia or Ono .
Business model franchise or license
It is a business model where a company or individual who has products or services successful and recognized in the market, allowing other people or companies that exploit their brand image, its products or services, under the supervision of the business owner , in exchange for R oyalties .
This type of business model, franchising allows entrepreneurs or investors bet on operating a business that is already proven that it works and that "only" is replicated in a place where it does not exist yet. The clearest advantage is to leverage the brand image that already exists and is positioned in the market, have customers almost before opening the business and especially to have the help and support of the franchise in the early stages.
The disadvantages are the royalty to be paid to exploit the franchise that the franchisee is more limited in decision-making and naturally because a franchise does not guarantee you success, it is nevertheless booming business especially, is they can become profitable businesses in times of crisis. For example, franchise or Equivalenza 100 Montaditos have been able to develop innovative business profitable franchise and expand globally, even in times of crisis.
Subscription business model
It is a classic business model, but led to other market sectors is a model of completely new business. The model is that the user pays a subscription and in return receives a value proposition that compensates for the fee you pay. Classic examples are subscriptions to magazines or newspapers, television channels.
I recently visited Bodegas Casa Primicia in Laguardia (Rioja Alavesa) and in addition to its core business model, producing and selling wine, they had launched a new line of business: the Casa Primicia Brotherhood. For an annual subscription you can enjoy its facilities, halls, gardens, vineyards and also owning a barrel stored in the original cellar of the house.
The innovation in the business model not only means developing new business models, but by adapting and combining existing business models to other market segments.
Another example is a restaurant that runs away from the traditional model: I prepare food, come customers, sell food. You can innovate by applying the subscription business model by paying customers who can enjoy other services besides traditional restaurant, wine tastings, special dinners or meetings and interesting gatherings.
Well I leave a very interesting article with some ideas of innovative projects that are supposed torevolutionize the world soon. ( Innovative business ideas examples )
I hope this post has given you tools, examples of business projects and helps to Innoves or improve your business model and find the one that best suits your idea or business plan to make it an innovative business project.
Already you have your business model? Need help to define or innovate in that you already have? Leave your comment with your experience or opinion. Thank you very much.