How to change your business model

Regardless of the method, it is important to understand what you want to know and how to integrate this data into your thinking. 

“Today’s recipe for success will not necessarily be the same tomorrow,” says Suzanne Breton, senior director and expert in strategies and business models at Raymond Chabot Grant Thornton. 

It’s a maxim that we should always remember – not just when a company is in crisis. Breton collects data from clients to understand their changing needs and preferences, something that can be done by asking a few questions during transactions, surveys, and in discussion groups. 

It’s also important to continually adapt to your surroundings. 

“A business does not evolve in a vacuum,” Breton notes. “It must keep an eye on the market.” 

These days, it’s no longer sufficient to remain attentive to the region, country or industry the business is situated in; competition is global and interconnected. Breton suggests following major trends that are not necessarily unique to a given industry. The arrival of Expedia and Airbnb, for example, was the result of the evolution of the internet, not the travel industry. From here, we can observe the more direct competition and the evolution of its business models, consumer habits of customers, and more. 

Many leaders are slow to think about their business model – either because they are too busy with day-to-day management or because they see it as too big a task. 

“We must demystify the evolution of the business model,” Breton opines. “We can proceed stepby-step; it’s not always a drastic break.”

Planning leads to success

Changing a business model is not just about the entrepreneur or the managers. Customers can be affected, but also employees, suppliers and business partners. It’s important, then, to plan the exercise well. 

“It’s not an instant transition; it can take months, sometimes more,” says Robert Bastarache, strategic advisor at Innovaction Strategies.

He admits that leading executives often underestimate the scope of the process and its duration. They also sometimes have a limited vision of possible changes. 

“The business model is not just what the customer sees,” Bastarache explains, “but also includes logistics, expertise, organizational culture, work organization, I.T. systems and more.”

The energy and time required to alter a business model is another good reason to begin the process when the company is doing well and making a profit, rather than losing market share or seeing its survival threatened by another model. This makes it possible to test new ideas in a calm, steady climate, with greater financial stability. 

“You also need to know how to build on the strengths of the company and ensure that costs remain controlled throughout the process of change,” adds Bastarache. “By continually conducting this exercise, we improve, we spread the costs, and we allow ourselves leeway to make mistakes. The business will gradually transform and become stronger.”

Three companies that forgot to evolve

Kodak

Kodak failed to adjust to the arrival of digital cameras, not wanting to harm sales of photographic films – the product that had made it so successful. 

Blockbuster

The movie and video rental business, which had 84,300 employees and 9,094 stores in 2004, did not evolve to a digital model. 

Sears

Its catalogue had prompted a retail revolution, but Sears was unable to adapt to the challenges posed by Walmart, Amazon, and digital commerce.