Business models for the digital age
By Tim Vieyra, Managing Director of Comotion Business Solutions - Sep 11th, 08:25
Gearing up for digital transformation is daunting for any business owner. Taking a business model that has proven to be successful and moving it into the online space involves challenging the status quo, questioning assumptions, and taking an honest look at what works and what doesn’t if a business wants to maintain its competitive edge.
For any business to successfully navigate the transition into the digital age, it needs a solid game plan. Tim Vieyra, Managing Director of Comotion Business Solutions, a cloud solutions and software development company in Cape Town, who has witnessed many businesses transfer their operations online, had some sage advice for anyone wanting to take the leap into the digital age.
Have clear objectives
Many digital projects fail because there is a vague need to go digital. However, as with any strategic decision a business makes, having clear objectives is imperative. Specifying what a business wants to get out of its digital transformation will help steer it in the right direction.
According to Vieyra, Capitec Bank nailed it. The bank originally embarked on a digital strategy to develop a low-cost banking offering that appeals to mass-market consumers. They built an end-to-end electronic platform that removed paper from the banking process. Not only did they save money on overhead costs, but the improved efficiency made them forerunners in client service. Their digital strategy was so successful that their simple products appealed to people across the income spectrum without the need for complex product segmentation.
Iterate, iterate, iterate
Changing a business model is risky and making assumptions is part of the process, including the efficiencies gained from automation and, crucially, how the business model will be received by end-users (customers and staff). Your project should be designed to shed as much light on these assumptions as possible early on.
To achieve this, it’s important to develop a clear understanding of what hypotheses you are making in your new business model. These can be in the form of statements like “we believe our new app will be awesome because of X which we will see by looking at Y metrics.” This should be informed by market research, observation, internal data, and even case study research.
You then use that to design the first version of your business model (which includes your applications, business processes, and customer propositions), in the most cost-effective way possible. Make sure you don’t blow all your capital on the first round! This will give you the crucial early data to see whether your initial hypotheses are correct and give you sufficient runway to adapt.
With each iteration, new information and insights emerge that will inform companies about what works and what doesn’t. Don’t be scared to re-plan, re-work, and adapt your tactics based on the new information. Vieyra warns that sticking zealously to an old plan even in the face of emerging information is what leads to very big and very expensive projects not yielding their intended results.
Don’t fall for cheap window dressing
We’ve all encountered an app that looks the part, but as soon as you want to do something useful you run into the old, archaic business processes. Every bank ever has had an app like this. Most of these window-dressing approaches do plug short term needs, but ultimately fail to deliver what customers are expecting. Businesses need to be bold in their thinking around their business processes and consider each and every touchpoint of the customer journey in order to deliver a valuable product that performs well and does what the end-user expects it to do.
Play to your strengths
All businesses have a unique selling point that can be invaluable when executing a digital strategy, as it gives everyone an opportunity to carve out their own niche in the digital space.
Fashion giant Burberry, famous for its iconic trench coat, made a strategic — and ultimately highly successful — transition into the digital world using social media and a very well thought through platform as its means of maintaining effective two-way communication with its customers. Customers have a unified experience. A customer can see their favourite trench-coat on social media, start a purchase online and conclude that same purchase in-store. They used their unique retail footprint with their digital platform to deliver something that few other businesses would be able to do. They challenged the way they had always done business, whilst staying true to their brand.
Their unique strengths enabled them to deliver something unique to customers and cemented their position as a pioneer in digital innovator in fashion.
It’s important that customers feel they are dealing with one company and not a patchwork of apps and business processes, making the importance of fostering a consistent brand tone, essence, and style across all platforms even more important. The customer journey should integrate engagement from sales and marketing all the way through to customer service in one unified platform. Consider the core of your customer platform and make it relevant to the line of business you’re in. Again, Burberry has masterfully achieved this goal.
Develop new capabilities in the business
A digital transformation is more than just skin-deep and the temptation to leave things to the IT guys should be avoided at all costs. Technology is a fundamental part of any business model and senior management should develop an awareness of how it is used within the business in order to create new opportunities and maximise existing ones. By doing so, a business can improve everything from its long-term digital marketing strategy to its day-to-day operations.
For mid- to lower-level staff, who have to operate a new digitally enabled business process for the first time, adapting to a new working method can be challenging. Internal change management is crucial to allow employees whose companies are undergoing business model makeovers to go along on the journey.
Execution is key
People only see what a business actually does and not what it intends to do. Having the best strategy without executing it well is no better than having a bad strategy. In fact, it can actually be worse - a business is likely to spend more money on a good strategy than a bad one!
Ultimately, there is no one-size-fits-all strategy and a digital transformation means something different to everyone, but with the right approach, you can effectively future-proof your business and make sure that it is well-positioned in the technology economy.
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