“Reinventing Your Business Model.
Harvard Business Review”, 1 – 11.
Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008)
Description of the topic:
The success of any business model depends on maintaining the elements of the model as per the needs of the customers, markets and the current trends in the market. If the current model is not able to fulfil the above mentioned elements, then it may be replaced by a new model. The development of a new business model requires identification of the need to inculcate change in the current model and then develop a new model. The evaluation of the existing model and critically analyzing it would help in developing a base for the new busienss model.
Tha formation of the business model is on the basis of four elements as mentioned by the authors in the paper and they are: Customer value Proposition (CVP), Profit Formula, Key Resources and Key Processes. The authors have given the examples of the technology and industrial giants like the Apple Company, Tata Motors and Gillete Company. The strategies developed by them in order to develop a new business model for the launching of new products or to establish a significant position for the existing product in the market. This involved critical evaluation of the needs of the people and targeting them through modifying the business model or developing a new model.
They stated that great business models are made by developing a synchronization among the above mentioned four elements and maintaining it for ensuring growth and success in the market. Evaluating the new model on timely basis for identifying any need for further changes in the model has to be followed.
Research Question Statement:
The statement of the research around which the conceptual paper provides its discussion and analysis is:
When should one feel the need to inculcate change in their business model?
The research also answers the question of how these changes should be incorporated and maintained until any need of developing a new business model arises again.
Significance of the reseach question
The research question that is developed above helpd in identifying the need to implememt changes in the existing busienss model. The research determines the critical factors which help in evaluating the business model and develop a successful strategy for the company. this is very impotant for developing the required position and acquiring the desired market share through the implementation of the business model. The topic also helps in understanding the rules and norms that act as barrier in the path towards achievement of the business goals and implementation of successful model.
Descritpion of the researcher’s methodology
Researchers have desribed the different methods of identifying the need and then incorporating any kind of change in the business model. It is often observed that a specific firm cannot identify the changes that are required to be made in the business model for the fulfillment of the company’s goals and objectives. The attitudes of the CEOs have ben studied and evaluated. On analyzing their behavior, it was found that all the successful CEOs were innovative and adaptive to the changes in the market and the corresponding changes in the needs of the customers. It also established the approach of these CEOs, where they always felt the need to continuously introduce small and significant changes in their business model. It helps to understand the doubts in the minds of the senior management and executives regarding the difficulties in adopting the new model or changes in the existing business model. The attainment of success through the adoption of the changed model is very difficult and hard for many companies. At the same time, maintaining the interests of the stakeholders, investors and customers in the new business model is also very necessary.
It discusses that each and every successful company caters to the needs of their customers and develops a best optimal ssolution through implementing the changed or new business model. This step involves developing a modified business model or developing an altogether new model which would help the business in developing a niche for itself in the market.
Logic or method used
The logic or the approach used in the develpoment of a new model or modifying an old model is simply based on understanding the required elements of a successful business model. These elements include developing a customer value proposition, evaluating and developing a profit formula and obtaining the key resources and key processes involved in the development of the new business model. The inter-relationships between these four elements have to be understood and it should be analyzed sequentially in order to develop a systematic approach towards generating a new business model. The method that is used for identifying the factors for bringing change in any business involves carrying of simple one on one interviews and filing up of questionnaires by the senior managers, Managing Directos and CEOs of the successful as well as average companies.
The authors have illustrated from the example of Hilti steps improvisation, where the old tools of the business are redeveloped and the existing narrow approach towards the purchasing and owning of products is carried out. However, on the other hand, Hilti developed a tool which is based on providing a flexible market structure and easy availability of the resources as and when required by people for different purpose. The Hilti’s ideology developed higher margins of profit for the people through one on one approach of the marketing and mangement team of the company.
Assumptions and analysis
The authors have asumed that the market is prone to change anytiime and hence, its consequences are to be planned through assumptions regarding the impact of the business modes. They have developed a need for understanding the concepts of core model of the business strategy. During such times, the barriers occuring in Finance and Operation are evaluated and handled effectively for laying of the base of any business model. Assumptions are made on the basis of the needs and elements that are required for understanding the current trends in the market and introducing changes in the model accordingly.
The anlysis of the developed model has to be carried , while observing all the barriers and obstacles that come in their way. The analysis is made through interaction with senior managers and employees of the firms which have inculcated changes in their business model in their past and have emerged as a successful venture in the market. Analysis helped us in developing a research theory, where the companies tend to accomplish their goals and tasks through effective and innovative business model.
The study helps in discussing the needs of inculcating changes in the business model through identification of different factors required for the success of a specific business model. The results obtained through the evaluation of the four elements state the importance of inculcating changes in a busienss model to ensure the success and cosistent growth of the Company in the market.
There is also development of specific innovative approaches of the senior management which would provide solutions to the existing problems in the current business model. The results of the study would determine how the employees are also responsible for inculcating changes in the business model. The employees are exposed to the market conditions and they have a good understanding of the market.
The study immensely contributed to the learnings of the firms and provided the CEOs with an extensive research regarding the methods of identifying the needs for developing changes in the currently used business model. The barriers which occur in the adoption and implementation of these studies are discussed and handled efectively. The authors have explained through the models adopted by Dow Corning Organization, where they substituted their high margin offers with new low margin offers.
The practices involved in the success of a busienss model were identified. This included considering the strategies that were above the rules and identifying the potential compeition. A secret element of the analysis and implementation of the new business model has been described that consists of observing patience after putting in all the efforts.
Limitations of the research study
The limitations of the research tend to be the change oriented approah of the researchers. The need of introducing change is stressed upon excessively and considerable amount of resources which are currently being utilized through the current business model are neglected. The importance of the steps involved in developing current models of business has not been given much importance. The barriers and problems involved in the implementation of new changes in the business model has not been discussed completely.
There are very few intense limitations of the study as the study has effectively explained with the help of examples regarding the needs to inculcate changes in the busienss model and developing a new model for the same.
Further issues for future attempts
The futurre attempts of developing a new business model or modifying the existing one through considerable changes are evaluated. The scope of sustaingn the success in a company is very much depended on the business model adopted by the company. Timely modification of the business model would help in ensuring that the current business model would accomplish the needs of the customers as well as the fincancial market across the globe. There are many examples of product innovation where, a new product developed through an innovative business model had a huge impact in the market.
Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008). Reinventing Your Business Model. Harvard Business Review, 1 – 11.