Future Business Models: Rethinking Organizational Structure

7 minute read

There is no doubt -- what the future holds will be filled with radical breakthroughs and world-changing discoveries. As we have seen in recent years, every major industry - whether it be finance, healthcare, biotechnology, or mobility, is about to be completely re-imagined. 

The future is approaching at a rapid pace and will arguably be the greatest display of innovation the world has ever seen to date. 

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These rapid changes have led to many rethinking of whether the classical business model of the 19th century has outlived its usefulness. Globalizing markets, shifting government regulations, and technological changes are some of the major themes in which companies need to take into account if they want to reinvent their business models to flourish.


The World is rapidly changing

Windturbines in sunset

Some businesses have attempted to restructure the organization using a horizontal or team-based approach, whereas others are still structured with a command-and-control hierarchy where top management and executives are the only ones making the decisions.

Maintaining an old business model is making it hard for global corporations to compete. And given the rapid rate of which the world is accelerating makes it increasingly difficult for businesses to stay afloat.

More recently, businesses have taken an agile approach to address the organizational component of a transformation. Within a short time period, they are able to develop new ideas or an innovative product, implement it, and observe the end results. The feedback they receive from the results then acts as a guiding tool for future optimization.

Still, this type of approach is not apparent in all businesses. Companies today are still using a linear-based approach which is often time-consuming and projects become abandoned altogether. The rapid rate of the changes involved in the various industries, further demonstrates that there is no time to pursue these linear processes.

This rapid pace within the business world calls for a new form of cooperation. Transitioning away from the classical strategy that focused more on capital accumulation, towards one that focuses on knowledge and people will ultimately lead to the creation of value.

A recent article published by Peter H. Diamandis highlights 7 business models that reshape how we work, live, and create value. 

In the article, he stresses the importance of businesses leveraging these existing business models in order to be successful in the 2020's. Here are a few of them:

The crowd economy

The ecosystem that consists of people who participate in a shared platform towards innovation, problem solving, or efficiency is referred to crowdsourcing. With billions of people already online and many more joining, has revolutionized the way we do business.

Crowd economy models rely on staff-on-demand to add more flexibility towards generating new ideas while veering away from the traditional organizational structure.

The data/free economy

Often referred to as the 'bait and hook' model, the data, or free economy, refers to businesses collecting data from a large number of users after using their free services. This type of model spurred from the 'Big Data Revolution' that allows businesses to exploit user information on an unprecedented scale. 

The smart economy

In recent years, the advent of new technologies such as artificial intelligence (AI), blockchain, 5G, Big Data, and Internet-of-Things have created countless possibilities of implementing this existing technology towards newer and smarter products. If we look at AI alone, $13.5 billion in venture capital was raised for AI-related companies in the US for the first 9 months of 2019 alone. 

The circular economy

The closed-loop economy, often referred to as the circular economy, describes an alternative system focused on replacing the current make-use-dispose systems focusing on positive society-wide benefits. Given the rise of environmentally-conscious consumers, these models have become more attractive and will grow increasingly prevalent in years to come.

Decentralized autonomous organizations (DAO's)

DAO's are organizations that lead to a decentralized economy in which their financial transaction record and program rules are maintained on a blockchain. This approach eliminates having to involve third-party entities in a financial transaction which decreases cost and simplifies the transaction.

In Shermin Voshmgir's book, Token Economy, he states that "blockchain and smart contracts are governance technologies that have the potential to provide higher levels of transparency while reducing bureaucracy and self-enforcing code."


Towards A new business model

Octavian rosca

A successful business model, requires a ‘systematic structured and end-to-end process that answers the way, what, and how, about the company’s future way of doing business’.

If businesses are to remain competitive in a complex environment, they must adopt a new business model that enables them to generate growth opportunities by capturing value quickly and profitably. This does not mean that you have to completely change your current business model.

The focus should be on using innovation in order to evolve rather than revolutionizing the existing model. It is about rethinking your business around innovation and addressing the customer needs today and in the future.

It must focus on involving the whole organization in the decision-making process to be a contributor of value. This requires encompassing the knowledge and feedback from all the employees to create new ways to help the company’s resource base grow.

However, there are many hurdles that exist for companies, especially large ones, to make the commitment to change their business practices. This is in part because of resistance from shareholders who have been quite comfortable with the idea that the existing business model has created value over a long period of time.

This is a reason why it is often hard for large companies to change and looking at their shareholder ownership is very important to drive future decision-making.

Customer satisfaction is at the forefront of achieving a good business model, but in order to stay competitive long term, companies need to look beyond creating value for customers by capturing new values.

Nasa Space

Business model innovation in dynamic environments 

In a research paper published in 2018 by Hacklin et al., they investigated how business model innovation plays out in dynamic environments. Three main observations were made.

First, pivoting the primary business model improves value creation and value capture at a greater rate compared to launching a new secondary business running in parallel.

Second, proactively pivoting the primary business model rather than making reactive changes is move likely to lead to value creation and value capture.

Thirdly, under lesser degrees of value migration, launching secondary business models may sustain or improve value creation and value capture.

In the research paper stated above, you can also see how companies like Cisco, Google, and Apple pursued approaches that gave them a competitive advantage within their industry over companies such as Sony Ericsson and Nokia.


Using a structured process towards achieving success

In 2017, McKinsey & Company released a report called 'Sprinting toward a new business model', stating the success of companies depends on using a structured process: 

1. Setting a strategic direction: developing a target for the future business model which sets the strategic direction of the entire company or business area

2. Designing a new business model: based on the strategic objectives outlined previously, develop the concept that includes the business’ vision

3. Implementing solutions: Fleshing out the sub-processes that are tested on stakeholders

4. Communication: By keeping key stakeholders, executives and employees informed, motivated and actively involved will the transformation effort be successful

5. Tracking progress: Specify key performance indicators (KPIs) to monitor progress

Valuer’s data-driven platform provides businesses further insight when formulating this structured approach. Specifically, Valuer is able to aid in the decision-making process that the entire organization can contribute to and stand behind.


Bridge above the water

New business models towards a more sustainable future

A huge part of our economy runs on the back of large corporations whose business models are sustainable for ensuring profit, but not when it comes to the environment.

If we take the most extreme example of the fossil fuel industry, either they completely restructure their business model, otherwise, the planet suffers.

However, there has been a push towards using less dirty fuels such as natural gas instead of coal. Although a step in the right direction, there is a dire need to transition away from fossil fuels altogether.

As such, there is some optimism towards a greener, cleaner future. Businesses are acknowledging the negative impacts of climate change and are shifting their business practices to address these challenges.

In the next few years, there is a good chance we will see a major shift towards greener alternatives and part of what will drive this transition is the national government and the investment sector. If we look at some of the key findings from the Global Trends in Renewable Energy Investment 2020 Report we see that investment figures are constantly on the rise within the renewable energy sector.

There is a need for connecting entrepreneurs, small businesses, and innovative solutions with large corporations in an effort to drive innovation faster to market. This will, in turn, address some of the major challenges the world is facing today.

A key player in driving innovation towards a more sustainable future is the government, whether it be from the national level or from individual municipalities. Of course, businesses need to take a more proactive approach towards embracing a greener economy.

Mary Ritter, the co-founder and former CEO of Climate-KIC, states that economists are concerned about what will happen to companies who don’t adjust to the effects of climate change.

The main opportunity now is not just to make your company efficient but to rethink how business is conducted to make a profit from climate change innovation that will ultimately be better for businesses, the economy, and the whole world.


New business models in emerging markets

We are currently living in an exciting time period where globalization is making it easier for entrepreneurs and businesses to introduce new ideas, products and innovations in emerging markets. 

According to a Harvard Business Review post, they argue that novel ventures allow companies to cope with stagnant or often, competitive demand at home, by creating new profitable revenue streams abroad. 

Some of the greatest challenges for businesses to be successful abroad is to incorporate a business model that addresses the customer's needs, affordability and assumptions. This may sounds obvious, but what is important to note is that company's cannot simply import their domestic models into emerging and diverse markets. It's much more complicated than that. 

It is important for businesses to implement a multidisciplinary outlook when trying to introduce themselves in emerging markets.  Failing to address these needs is a common reason that so many companies have little success when trying to bring their own business model to emerging markets. 


New business models after the advent of covid-19

Within the span of a few months, the world has witnessed advances in digital transformation that would have normally taken a few years.

Consumers’ habits have completely changed - online consumption of goods, remote education, telehealth, and more. As such, businesses are feeling the negative effects as a result of the coronavirus.

On the other hand, some businesses have shown to be successful in capitalizing on emerging markets such as disinfection services, remote communication services, and fitness. These are just some examples of where searching for new business models and to accelerate it proactively is crucial for mitigating unpredictability beyond the horizon.

Given the acceleration of digital, tech, and analytics, is it imperative for companies to be able to thrive post-Covid. Some of the traditional methods of scouting for new innovative possibilities are now more challenging, venture capitalist and networking opportunities are slowed, and the idea of conducting business meetings to propose future action plans makes the process even more cumbersome.

Furthermore, the Covid-19 crisis has led to a wave of political, economic and social disruptions which has changed the traditional method of decision-making. We have seen various sectors - ranging from health and financial to energy and education - are now "more exposed than ever amidst a global context of concern for lives, livelihoods and the planet." 

In order to shape this recovery, the World Economic Forum has set up a new initiative called The Great Reset aimed to offer new insights to help inform the future of business models that will drive the future of global relations and national economies. 

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Valuer is able to provide businesses an easy to implement, data-driven tool for the entire organization to be involved in such a way that eliminates the hurdles associated with the presence of Covid-19.


Where Valuer can help

Valuer provides the tools for companies to identify relevant products and services that will add value to their company portfolio using data-driven processes. 

Specifically, we use concrete data that scans the startup and small business ecosystem to find the best opportunities companies are searching for. By integrating a workflow solution allows for the people within an organization to work towards a common vision for the company and ultimately drive future growth. 

As we have seen in recent years, the number of new business models are becoming increasingly popular and disrupting various industries on a global scale. These new innovative business models are spawning new innovative ideas that are disrupting the marketplace and it is up to companies to be prepared to minimize the impact of these disruptions and to capitalize on important opportunities. 

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