The New Age of Business Models

The pace of technological change seems to occur at a more dizzying rate each year. Remaining relevant requires continuous adjustment. Enterprises stuck in a mode of “status quo” are readily being displaced by innovative, disruptive companies that creatively find new ways to do things through technology innovations and development of new value chains. The ng Connect ecosystem is a great example of how new value chains can be rapidly enabled to create innovative solutions.

Paralleling the rate of technological change is a similar trend for business models. So many new models have been created and existing models turned upside-down that it’s clear it is also critical for creativity to be applied to how money flows through a value chain. Also noted is that new models exist where non-monetary values can actually be used to purchase real items.

Recently Apple became the most valuable US-based company. Why? Apple has leveraged their technical innovations to create new business models that have disrupted existing industries. They’ve changed the music industry. They recently leaped past Amazon and Google in the cloud-based content storage arena because of deals with record labels that Amazon and Google have not obtained. For a small annual fee, this benefits the end user by not needing to upload their content obtained outside of Apple — Apple “matches” it via their library. (This also legitimizes any music obtained in questionable ways without the end user actually realizing that they have now paid for their music.) The technology here is not revolutionary, but the business model is new. The market has highly valued the combination of technology and business models.

Recently there have been a few other entities making entries with innovative business models:

  • Groupon.com – Seller offers specific deals for a Groupon guarantee of takers. Takers get a great deal. Seller gets a revenue boost. Groupon gets 50%.
  • “Pay With a Tweet” – Buyers can pay for products, services, content, or access by promoting a product to their friends. This puts a value on your social network. It also opens the door for up-selling.
  • “In app” revenue – Offer a free app that proves to be addictive. Offer app extras that enhance the user experience for a fee.
  • Kickstarter.com – Funding seekers pitch their creative idea. Funders choose whether to fund it and if so, the amount they would like to contribute. Seekers get capital, funders get a % of earnings, and kickstarter gets 5% of funding.
  • “Penny Auctions” – Buyers purchase a number of bids. Each bid is “$0.01” in price. Last bidder when time is up wins. One winner, many losers. The auction site can often collect more than an item’s retail value; however, sustainability is questionable.

Some of these may fade away or themselves be disrupted but some will continue to create new spaces that will be sustained. One thing’s for sure, they are no doubt innovative.

The challenge for the ng Connect ecosystem is to add value to new service concept ideas by coupling them with innovative business models. Creating such turnkey solutions complete with new business and revenue models enables Service Providers to implement the concepts more rapidly and with more confidence, because their business cases have more validity around the sources of new or enhanced revenues. Along the value chain, this approach also assures the ng Connect ecosystem of more commercial successes.

Lee L’Esperance
Alcatel-Lucent
www.alcatel-lucent.com

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