Many successful businesses have failed because success kept their management too busy managing ‘business as usual’. They missed opportunities for major innovations in how their sector operates.
Unencumbered by success or a legacy mindset, competitors, new entrants or unexpected alliances can seize those opportunities and revolutionise the dominant logic in a sector.
This extract from the risk section of Aviva’s Strategic Report could apply to almost any business.
Advances in technology present both opportunities and risks. There is a recognition of the importance of these opportunities. There is also a recognition of the risk that the business might not seize those opportunities before a new competitor such as ‘big technology companies and low cost innovative digital start-ups’.
Brand extension is a long-established growth strategy. We have seen how Amazon have extended from being an online store selling books to a global store selling almost anything, anywhere. What enabled this extension was more than the brand. It included core competencies in online shopping, data analytics and logistics. From Ocado’s strategy report, we can see that they too are considering how they could leverage their core competencies to work with relevant partners to disrupt other sectors.
In the digital age, a business model is not necessarily about how a business entity generates value. It can be about how two or more businesses form alliances across a digital ecosystem. Together they deliver a combined value proposition to each party’s commercial advantage.
Whichever business model framework is used, the first objective is to articulate an understanding of the current business model. This can frame a strategic conversation about how to modernise it, or even how to transform it, for the digital age. Each element of the business model can be adapted:
14 UK’s corporate governance code 15 The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 16 Financial Reporting Council 17 Sustainable Development Goals
