4 Benefits of Digital Business Model Transformation
There is a tendency to focus on the digital and technological aspects of digital transformation. While implementing innovative technology is certainly important, a successful transformation requires strategic, cultural and business model changes alongside tech and operations. Paradigm-shifting technology like 5G and IoT will only succeed when paired with the right business model and market opportunity, and many communications service providers (CSPs) are seeking proven use cases to learn what others are doing to extract value from their investments.
Before getting involved in a major technological transformation, companies need to get back to basics with a revamped business model. Months into technological deployments like enterprise collaboration tools and video conferencing, companies must decide how these new offerings fit into their long-term business plans. Many companies find themselves at a crossroads: some will reduce existing costs to retain customers, others will offer new digital services to attract new customers, while others will follow a hybrid model.
Focusing on the correct business model now will pay massive dividends down the road. Let’s explore the four main benefits of a transformative business model and how it can help navigate your company’s digital transformation.
1. Complexity Simplified, Agility Personified
By focusing on a business model now, a company can be better prepared for the future. It’s important to consider both business and customer needs, rather than the technology that will provide support. This approach allows companies to simplify complexity, as the blueprint has already been established; the materials and tools they will use later might change, but the blueprint remains the same.
Having a solid foundation from the outset will also help scaling down the road. If a blueprint calls for scaling rapidly to support new customers, that will need a cloud-native solution with low latency that can scale to handle demand. Operational agility will give operators the advantage when launching new digital services and products.
2. Delight, Don’t Disappoint
As technological tools like conversational AI and chatbots continue to improve, customer expectations are heightening. Around 80 percent of consumers say that customer service they experience is just as important as the product or service. To keep existing and new customers happy, companies need to reevaluate how they interact with customers. This involves delivering a more personalized customer experience to both legacy and digital native customers. Additionally, it’s important to be able to recalibrate quickly and repackage offerings based on customer preferences.
If a company finds that its customers want to interact digitally, and their newly formed business model dictates a low-cost, automated customer service experience that can handle many customer interactions. Understanding customers’ expectations will lead to the right technology and a better customer experience.
3. Nurturing a Partnership Ecosystem
When considering transforming a business model, companies need to ensure that every system is integrated. In terms of infrastructure, long gone are the days when systems needed to be upgraded once every three years. Today, systems need to be upgraded quarterly, or even monthly. Making sure that systems in the cloud can interoperate leads to a partnership ecosystem with companies like Netflix and Google. The ability to interoperate with other companies’ clouds is essential for a successful, long-lasting partnership.
If a business model includes working with partners, such as bundling a streaming service with a cell phone plan, companies will need assistance in managing their digital partnerships. By expanding into new markets and partner ecosystems, they can create new revenue streams and gain a competitive advantage in offering new services.
4. Connected Company
A company that pulls in the same direction is a company headed in the right direction. It’s imperative to make sure that the entire organization, from the CEO to interns, are on the same page, connected and working toward a common goal. This includes making sure that each team, from marketing to finance to upper management, are in sync.
The benefits of a united, connected organization are extensive. If the entire company is united and working from the same playbook, it will be easier to deliver new releases quickly and respond to customer demand. A connected company approach invites a collaborative environment, which is a main driver for innovation.
Business Model Transformation in Action
Consider Spark, a leading telecommunications company in New Zealand. By focusing on a generic product model, they were positioned to leverage their capabilities for changes in the marketplace. Spark’s innovative model was created before Netflix, Spotify and IoT, but their business model allowed them to quickly adopt and capitalize on new technology.
Change is the only true constant, ensuring that a transformation is a constant evolution. But having the right solutions in place will help you adapt to any challenge and continually transform. You can’t take the “digital” out of digital transformation, but by focusing on the right business model, you can position your business for success as technology evolves.
Visit our digital transformation resource page more information about how a digital transformation can elevate your business.