Business model innovation

Driving business resiliency and growth

2023 was the year of “efficiency.” Industries from big tech to health care focused on cutting costs and improving financial sustainability in the face of elevated interest rates, continued supply and demand constraints, and other market uncertainties without prioritizing business model development. Wringing marginal performance improvements out of existing business models, however, will not be sufficient for long-term business resiliency and growth. Let’s make 2024 the year of “evolution.” 

Why focus on ‘business model’ development?

Before planning out your business model innovation, it’s important to align on a definition. The term “business model” is widely used, but often tends toward jargon. In our view, “business model” can be defined as how an organization positions itself to create, deliver, and capture value. It consists of three core elements that are mutually reinforcing: a value proposition, differentiating capabilities, and a monetization model. 

When to evolve your business model

There is no single indicator that signifies the need for business model innovation. Rather, an enterprise will often experience shifts across multiple dimensions (internal and external) at once, creating the impetus for business model development. 
 

When these dimensions start to affect customers, businesses should reevaluate their business model to see if the value proposition, capabilities, or monetization model need to evolve to better meet customer needs. Even when a business is growing, it is important to continuously monitor internal and external drivers to stay ahead of the market and to continue to drive long-term, resilient growth. 

How to evolve your business model

Successfully evolving a business model requires a clear strategy and vision that supports your growth priorities, value proposition, monetization model, capabilities, and management systems. 

Prioritizing business model innovation can come with some important implications to your organization. However, doing so successfully can drive resilient growth with significant value uptake for both your organization and your customers. 

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