In the past couple of years I have read much more widely than ever before as I have tried to understand Business Technology, the bringing together of technology and business into a single capability as opposed to IT which is a separate operation that must be aligned to business. There is no shortage of stuff to read around the topic, and most of it seems to be from a business point of view, and poses lots of interesting and difficult questions about business models. One of the most thought provoking places to learn more is here. Of course having just had the news that the last two major USA investment banks have decided not to be investment banks anymore and change their business model to retail banking it kind of makes the point about the importance of ‘business models’.
As a simple technologist I can’t say that I can answer too many, if any of the points raised, but as an engineer I tend to want to research for facts so here is my conclusion from examining as many case studies as I can find to try to identify the common business threads that technology has played the leading role in changing. I would not say everything fits but i have found that I can recognise four reasonably common threads, and the first three may be interesting, but it’s the fourth one that is driving the market;
1) The cost and availability model where technology is used to master volume manufacturing and distribution to the point that the technology is ubiquitous and standardised. In these markets the brand name is not important as the product is seen as a simple non serviceable ‘one off’ purchase, and therefore all that matters is its cost and availability. Think of many electronic devices, a portable LCD television as an example – call it Industrialisation or maybe Globalisation – and reflect on how the ability to design and manufacture low cost reliable electronics to, and for global, markets has created a recognisable change factor. The impacts on supply chains, online sales activities, buying by using price comparator sites, etc are all part of this thread.
2) The strong brand model where the key lies with using technology to support and extend the value around ‘trust’ and ‘services’ as much, if not more, than the product specification itself. The product could be of variable quality and / or requires there to be service support both factors that make the choice of supplier, their reputation and accessibility the issue, – call it Intimacy – and reflect on the increasing need to have good web sites, CRM, etc to deliver to expectation and maintain the brand values. The challenge is to understand how quickly now the message of bad service spreads, remember DELL Hell?
3) The targeted community model based on finding, targeting, and inter acting with a community to provide what they want and are prepared to pay for on the grounds of added value. Interestingly this is, in my estimation, really the only new model and therefore justifies the title of – call it Innovation – but i am not sure that it’s about business model innovation. Those enterprises practicing this model are actually practicing continuous innovation in what they sell, as the goal is to provide what the targeted community wants to buy, so as their requirements change so does what they buy. This model is based firmly on Web 2.0 community and collaboration principles and technology.
4) These three form pretty recognisable business models, but the last and most numerous in terms of examples is none of the above, I guess if it has a name it would be the local department. For every enterprise making strategic choices above there would seem to be a huge multiple of user departments who have decided to work differently around using the external web based services for ‘collaboration’. Where is my evidence? Easy go onto FaceBook, or LinkedIn, and type in the names of well known enterprises, and one after another up will come groups, usually private, dedicated to doing something that they can’t get out of the regular system. That’s where the change model is coming from, and also the use of external services as opposed to internal IT.
Try it out, but before you move to stop it, take a much closer look at what is being done, and where the benefits are for the enterprise, it’s probably going to be a valuable lesson in what perhaps an enterprise should be doing with new technology. Don’t tell your colleagues the answer, but enable them in what they have found to be the answer, and of course this gives the business case too!!