I have talked before about the Collaborative Economy (see 2016: Is it the Year of the Collaborative Economy), which is based on building a platform to aggressively scale assets, create APIs to share as well as plug in other APIs. This uses a Collaborative Value Chain approach.
I have since been thinking about how to compare and describe traditional business models versus the new ones. Here is a simple classification of how to think about business models in the digital age (I have adapted this based on a model from Peter Weill). If your business uses a Collaborative Value Chain approach, then depending on how closely connected your business is to the end consumer, you will adopt an “Eco-System Driver” or a “Plug & Play” model.
Using this as a guide, the more traditional models are those companies that still own and/or control their Value Chain. Again, depending on how closely connected your business is to the end Consumer, you will either be a “Supplier” or be using an “Omni-channel” business model.
Rather than being 100% committed to any one business model, it is very likely that existing organisations will adopt a portfolio approach to address significantly different customer segments. Large existing organisations that have significant investments/capital in “controlling the value chain” in particular will take this approach. These companies may decide to pilot a “collaborative value chain” approach for a new segment, to address innovation and drive new revenue streams.
What do I mean by this?
I’ll use an example I have previously shared: the experience of buying a car. Today you have auto manufacturers, dealers, financiers, banks, insurers and so on, all competing within their own industry silo to develop and offer the very best experience. In this case, each company is using an “Omnichannel” business model approach. But who is addressing the actual lifecycle experience around purchasing a car? Who will be the ‘Eco-system Driver’ that assembles and curates this end-to-end experience?
This is the new battleground, and there is currently room for companies such as an automaker or bank, to take on this role and dominate.
By identifying a large segment of potential customers, an existing large auto manufacturer could, say, create a totally new “branded destination” where they own the end-to-end customer experience.
Adopting a Collaborative Value chain approach requires an eco-system of partners … digital partners.
It also requires the client to make decisions about what platform elements they want to build and own, versus open-source. What APIs do they need to access from partners, and what do they need to make available?
To assist in determining the right digital partners, a business leader can start by filling in this Digital Partner Eco-system Map. Below is a template to help guide you, but there is no need to stick to the exact boxes. You may find a box missing that you need to add (I adapted this from a Center Electric diagram).