What are two common traits shared by some of world’s most successful companies? That’s easy — innovation and adaptability.
When you look at the Googles, Amazons and Ubers of the world, you’ll see that they’re willing (and eager) to implement a “future business model.” Rather than basing their company around what works at the moment, they have a penchant for pushing the envelope and testing the limits.
The question is: Is it time to push your business model into the future?
Characteristics of a Future Business Model
According to The Harvard Business Review, there are four primary characteristics of a future business model.
- It substantially outperforms the status quo from the customer’s perspective
- It tends to violate traditional constraints
- It builds brand presence before markets have been clearly defined
- It enables adaptation as conditions change
The companies that adhere to this business model are highly customer-centric and meet an intrinsic need that other competitors are failing to fulfill. This often involves defying current boundaries and may go against conventional logic.
There’s a high level of experimentation associated with a future business model where buzz is usually created before a product ever actually hits the market (think Amazon drones). Smart companies also understand that perpetual change is inevitable and develop an infrastructure that enables them to evolve as needed.
To get a better idea of what a future business model looks like, it’s helpful to look at some current examples. A PowerPoint presentation from the Center for Service Innovation points to four specific emerging trends that more and more companies are implementing.
- Sharing economy – Uber and Airbnb are great examples
- Servitization – This focuses on meeting the increasing needs of consumers rather than just “selling a product”
- Open innovation – Think open-source software, which facilitates and encourages collaboration to optimize a product
- Sustainability – Environmentally-friendly products and social responsibility are huge right now
Is This Something Your Company Should Push?
A future business model is by no means for everyone. It takes a combination of key insights, comfort with perpetual experimentation and a certain level of courage. It also requires plenty of trial and error and a willingness to make mistakes.
Not all innovations hit their mark. In fact, many fall short. But there are some serious advantages of implementing this business model.
Here are some of the biggest:
- You can outperform competitors who are stuck in the past
- It enables you to scratch an itch that competitors cannot
- It makes you incredibly flexible and adaptable, which is becoming increasingly important in the 21st century (Just think about the demise of Blockbuster)
- You can gain a reputation for innovation
- It can potentially lead to massive success and profitability (Just look at Google and Apple)
It’s important to point out that a future business model doesn’t necessarily mean you have to be clairvoyant or reinvent the wheel. According to The Harvard Business Review, “Succeeding does not require predicting the future. Instead, a great future business model is based on an accurate directional read of the future, providing flexibility and optionality as the future unfolds.”
In other words, you simply need to have a pulse on what’s going on, be truly in touch with your demographic and be on the lookout for new (and sometimes radical) ways to meet their needs.
“Adapt or perish” is a fitting quote that encapsulates the philosophy behind a future business model. Although it requires you to “put yourself out there,” it’s viable for certain companies and can pay dividends in some cases.