Consider the following events in our business world that have occurred in this decade:

1. Kodak files for bankruptcy in 2012 after having dominated film photography for 130 years and once employed over 1,45,000 employees globally. Today, Kodak lies in ruins, unable to recover from the devastation caused by onset of digital photography.
2. Circuit City, the giant American consumer electronics retailer leader, goes bust in 2008. It shut down 155 stores across the United States and laid off over 3000 employees. Best Buy takes over as the market leader.
3. Encyclopedia Britannica, a much revered and coveted collectors item, marches into oblivion in 2006. EB is ravaged by a rather innocuous, free online encyclopedia offering called Wikipedia. EB last sold just 5000 copies globally in 2012.
4. Borders, the legendary American book stores chain shuts down 400 stores and files for bankruptcy in 2010, lays off 19,500 employees and finally shuts shop in 2011.
5. Airbnb is touted to be the biggest risk that Hilton faces despite the fact Hilton has the largest number of hotel rooms worldwide (some 1,45,000 odd) of both managed and owned properties and Airbnb doesn’t even own a single room….

Many questions come to mind:

• How come these once revered, iconic companies who were industry leaders and toast of investors and employees and who set the rules of the game, bit the dust and faded off into oblivion?
• What is it that caused such devastation in these companies so much so that they could never ever recover and went financially bankrupt to the point of no return?
• Why did these so called leaders not see the oncoming changes being brought about by such disruptions – be it technological, economic, regulatory etc. and make necessary shifts or adjustments in time that could have probably saved them?
• Was it a sense of helplessness or complacency or sheer callousness or even the feeling of invincible supremacy that led to the downfall of these companies?

The answer lies somewhere probably in between. Coupled with a host of issues that arise through a detailed post debacle analysis, the answer lies in the fact that these companies were beaten by smarter, more agile, more flexible and most certainly more innovative competitors who employed novel, more focused and differentiated Business Models.

Today countless new business models are emerging in a highly dynamic, competitive and complex business environment. Entirely new industries are being formed as old ones crumble. New-age, innovative business models are transforming industry landscapes at an unprecedented pace be it music industry, publishing industry, E-commerce, Telecom, Healthcare .. to name a few. Upstarts are challenging old guard, some are scrambling to reinvent themselves. You do not get a second chance.

The theme in today’s business environment is TRANSFORM or PERISH.

Strategy has been primary building block of competitive advantage for past three decades; now it begins and extends with the choice of business model to compete in the first place. Business Models are less durable than what they used to be; earlier the basic rules of the game for creating and capturing value was fixed for years as companies executed their business models better than their competitors. This is not true anymore. Today, the scenario is different – business models are subject to rapid displacement, disruption and in extreme cases, total destruction.

Examples:

1. Bitcoin bypasses traditional banks and clearing houses with blockchain technology.
2. Coursera and edX threaten Ivy League business schools through massive open online courses (MOOC).
3. Tencent outcompetes in internet services through micro-transactions.
4. Uber sidesteps the license system that protects taxicab franchisees around the world.

In the McKinsey follow up survey of 2015, 7 out of 10 companies are engaging in business model innovation and 98% are modifying their business models to some extent indicating that Business Model Innovation is here to stay.

Reasons for Business Model Innovation:

1. Pressure to crack open markets in developing countries, especially those at the middle and bottom of the pyramid
2. Economic slow down in developed markets has forced companies to modify their business models or create new ones
3. Rise of new technology-based and low cost rivals is threatening incumbents, reshaping industries and redistributing profits

• A Business Model is the critical piece that decides the competitiveness of an organization and if it can effectively compete as a leader or as a mere “also ran”
• A Business Model is the heart of all operations that an organization engages in, invests in and ultimately chooses to play in
• A Business Model has the ultimate bearing on the destiny of an organization; whether it can successfully survive and play out in the ever increasing VUCA business world

Key Questions:

1. Are we poised and well equipped to ride out of this present complex and unpredictable business environment that is ever changing on all fronts – economic, regulatory, competition, stakeholders and investors?
2. Is our organization truly differentiated from the competition in terms of having a winning business model that will ensure distinct competitive advantage and thereby disproportionate revenues share, market share and undisputed market leadership?
3. Are we in a position to leverage our internal competencies and align with external collaboration to create powerful business models that change the course of our industry and create new paradigms for growth?

In order to effectively address the above critical questions and develop a coherent strategy to deal with these issues, it is first necessary to understand what Business Models are, how do they get created, what are the key building blocks or pillars of a good business model, what differentiates a good business model from a bad one and finally how do we execute a perfect business model in order to create true, substantial value for our stakeholders and yet compete effectively through true differentiation.

Keep watching this space for more details. A very exciting and first in class, comprehensive capabilities building program in Business Modelling Innovation is round the corner. Blended through pedagogy, rich repository of case studies and tools, the program endeavors to equip industry practitioners and students the fundamentals of Business Models, types of business models with case studies, Business Model Design, Business Model Execution Process and finally new age, emerging business models that threaten to further disrupt established leader companies across various sectors.

The program is industry agnostic – meaning by it is applicable to all industries engaged in products and services. Be it FMCG, Technology, Banking, Consumer Electronics, Pharma, Healthcare, start-ups and Retail, to name a few, the program will be applicable to each one of them with high level of take away learnings.

Announcing shortly – Come September !