Be brave and explore new business models for growth12.03.2021
Market shifts and the ever-increasing speed of change challenge the growth potential of companies. In addition to the traditional building blocks of growth (organic growth, R&D and M&A) more agile ways are needed. Learning from and working with start-ups can be one option to unlock growth from new business models and speed up the process.
Last year the Finnish Ministry of Economic Affairs and Employment (MEAE) identified and reviewed potential growth opportunities for Finland. 400 multidisciplinary experts were involved in this project led by the MEAE and Verona Consulting (former Talent Vectia) (blogpost unfortunately only in Finnish). New business models were one of the three identified growth opportunities, hence we are focusing on them in this blogpost. A business model is the way an organization creates, delivers, and captures value.
New ways of creating value
The spread of digitalization and the growing amount of data indicate a need and opportunity for new business models. Industries previously relying on production-based earning models can suddenly expand to services thanks to the data and platform economy. While it is important to develop these enabling technologies, it is equally important to have a constant dialogue with your customers, detect changing market needs and develop new ways to create value.
The pace of digitalization varies from industry to industry and it still isn’t too late to get started with your organizations digital transformation. There will be continued interest towards the potential cost savings and growth opportunities linked with digitalization. Especially on the B2B side, the global players in the data and platform economy have not been chosen yet and ecosystem business models are still evolving.
Searching for growth
A solid base for seeking growth begins with future foresight and updating your growth portfolio and strategy. This sets a direction and helps make the most out of your available resources. Value creation can start from internal capabilities or external inspiration from start-ups, new technologies or the direction venture capital is flowing. In some cases, it may even be necessary to create your own market and build an ecosystem around it.
You can increase your speed by learning from or collaborating with interesting start-ups like Meyer Turku did with the help of Verona Growth. Tulip, the growth company they partnered with, already had a market-validated solution that saved both development time and cost. Being brave and working iteratively comes naturally to growth companies, things that are needed when testing new business models.
From trial and error to scaling up your new business model
Creating endless PowerPoint decks and Excel sheets based on internal knowledge will only bring you so far, even with the best growth strategy. The best and fastest way to test your hypotheses about customers, value creation and cost structure is with real customers.
Just eight weeks can take you from idea to your first paying customers like Reima proved during their venture journey. Piloting is about having the right mentality – yes, you will most likely fail at first, but like a start-up you must keep iterating to find a winning model. KPI’s and metrics need to be adjusted to the right level of maturity so that the love for ROI and other details doesn’t kill the creative ideas too early.
After you’ve determined that the new business model was a hit with customers and you want to scale it up by integration with your core business, some change is needed. The more concrete and focused the business model is, the easier it is to implement, but you should also consider whether changes are needed to your management model. New ways of working are implemented first and foremost through people so involving key stakeholders and having a good reasoning for the change are crucial for successful change programs.
Persistent while agile
A company’s ability to envision, pilot and scale up new business models is crucial for creating value in a changing world. While you should be brave and agile when trying new things, the fact is, results do not come without commitment to the process. Don’t give up even if your first trials aren’t successful. Take the VC approach instead – you’ll need a certain number of pilots and learning from them before you can hit the jackpot.
In case your organization is interested in finding growth from new business models and needs some support with this, we at Verona Consulting and Verona Growth are happy to help. We have a lot of experience in building growth strategies & ecosystems, best options for start-up collaboration, piloting new business models in agile ways and managing strategic change projects.
Remember these three things when thinking about new growth opportunities:
- Business models – Embrace digitalization and explore new ways of creating value enabled by new technologies and the data economy
- Courage – Be brave to pilot new business models and don’t get caught up in internal analysis paralysis
- Collaboration – You will increase your speed and success rate when partnering with outsiders and getting fresh perspectives