Building the “Connected” Business Model: Identifying Capability Requirements

A business model describes the method or means by which a company tries to capture value from its business. A business model may be based on many different aspects of a company, such as how it makes, distributes, prices, or advertises its products. The business model concentrates on value creation. It describes a company’s or organization’s core strategy to generate economic value, normally in the form of revenue. It identifies the capabilities required for successful responses to potential strategic opportunities. The model provides the basic template for a business to compete in the marketplace; it provides a template on how the firm is going to make money and how the firm will work with internal players (firm’s employees and managers) and external players (stakeholders such as customers, suppliers, and investors). Customer satisfaction has become more focused. In the 1960s a strong brand promise targeted towards broad socioeconomic segments sufficed; the power and effectiveness of television advertising supported by trade marketing through efficient distribution (increasingly being offered by multiple retailing intermediaries in almost all product categories) was a successful formula. The value chain and its supply chain response are undergoing considerable change. The older measures – contribution to profitability, productivity, and added value – continue to be applicable, but we now see digital transformation is poised to change almost everything, increasing collaboration within the value chain and a broader view of “returns” to stakeholders.