Which business models are under attack?

Business Model Innovation

CBA has bought a $300,000 robot to put in its innovation lab. That’s a pretty symbolic statement for a company with over 1100 branches. Estimates of the impact of Robotic Process Automation on bank branch jobs vary considerably, potentially ‘saving’ between 20% and 50% of employee’s routine processing. As with driver-less transport, the economic case is very compelling. It is, at the same time, an opportunity and a threat.

The banks have no choice than to work on business innovation and transformation by tapping technology enablers as much as they can. There is, globally, US$23 Billion of FinTech funded startups heading their way. It is a wave that must reach landfall, and will undermine traditional banking and financial services foundations. Indeed if banks weren’t working on innovation we’d be concerned they are asleep at the tiller. They have realised early, what the general population has yet to realise, the sands under the feet of Australian businesses is shifting, and its going to erode incumbents’ business models.

Here are 3 general business models under threat:

1. Anything related to money is being completely disrupted by FinTech

• Getting money
  1. via Peer to Peer lending e.g. Society One, Money Place, Direct Money, Marketland
  2. via non-bank-lending; Moula, Prosper
• Making mobile payments – Google Wallet, Apple Pay, Samsung Pay
• International Money Transfers – World Remit, Transferwise, World First
• Personal Budgeting – Moneybrilliant, Pocketbook 

2. Businesses swapping knowledge for money are being impacted because

1. knowledge is becoming more accessible to a business’s clients and 
2. basic knowledge processes are being automated

EXAMPLE – Think about the growing sector of ‘robo advisors’ in financial planning. e.g. Stockspot and iRobo

3. Retail is being eaten away by online shopping

• Consumers go to stores to get sizes and preferences right and then buy on Catch of the Day or other online means at deep discounts
• Crowdsourced wine purchases – Naked Wines, supports independent winemakers
• Noble by Noble has crowdsourced men’s underwear sales and manufacture (made in Australia)

What impacts do new business models often have?

• They dramatically increase the revenue dollars per employee, or the revenue dollars per brick (brick = fixed asset dollars)
• More engagement with customer base and thus more insulation from competition
• More future proof revenue growth
• Less focus on product innovation and more on market innovation – ie the expansion of demand by changing the prevailing way a market operates.

How do you innovate your business model though?

Step 1 : Understand what your current business model is. I have ways to do this being published soon, but using the Business Model Canvas is a great start

Step 2 : Get your team to list the technology or behavioural trends you can find, no judgement, just whatever trends are purported to be here or coming

Step 3: Have a look at which parts of your business model are the most under threat from those trends. e.g the trend toward robo-advisors would impact organisations whose service is slow or whose customers are less satisfied

Step 4: Design a new business model that attacks prevailing norms and resolves your own weaknesses to those trends. a.k.a. embrace technology (as your facilitator for new growth)

Step 5: Create a DIVERSE team (age, gender, function, behavioural style) and get them OFFSITE, preferably with support like Lean Startup methodology to build new growth areas for the business that are sponsored from upon high but managed lightly. Look for employees who are the most outspoken about change and who seem less content with business as usual. The outcome this team is tasked with is to generate new revenue growth

Business Model Innovation is your major tool against the onslaught of waves of change about to start lapping at every business’s feet.