Creating the right Digital Business Model Framework (DBM) for your business is vital for thriving in the disruptive era. It’s no longer news that digitalization is compelling companies to change their models along two dimensions. The first revolves around Customer-centricity while the second entails partnering with others who can provide complementary services. Choosing an appropriate business model quadrant cannot be overemphasized as a toolset for building a next-generation enterprise. Quintessentially, BMQ falls into four(4) categories – Supplier, Omni-Channel Business, Modular Producer and Ecosystem Driver.
The first one is the Supplier model. This is more of a traditional business model where a producer sells through other enterprises. For example, TVs or phones sold through retailers. This category of BMQ is fast fading away as most organizations are hastily tilting towards digitalization. Firms in this quadrant have a partial knowledge of how customers feel about their products which is a major downside.
The second is the Omni-Channel Business. These businesses provide customers access to their products across multiple channels, including physical and digital, thus, delivering a seamless customer experience. With the ever-growing needs of customers, an omnichannel approach is one way to stand out from the competition. When creating your omnichannel strategy, it is critical to consider the challenges you may face and then establish systems that help surmount them. Great omni-channel businesses like Walmart offer multi-product and multi-channel customer experiences. The challenge for this includes: Connecting both online and offline data, Using one-size-fits-all content, Measuring the wrong KPIs, Poor fulfillment processes, The problem of channel conflicts, Integrating all channels and touchpoints, Inefficient inventory management, The speed of delivery, Ineffective communication across channels. This, in a way, narrows the opportunities therein.
The penultimate is the Modular Producer. It’s ‘plug-and-play’ characteristically. The product must be able to fit into the ecosystem and must be the best amongst its peers, mobile-enabled and platform-based, for instance, PayPal.
Lastly, Ecosystem Drivers have the best of both worlds: deep end-customer knowledge and a broad supply base, leveraging these dimensions to provide consumers with a seamless experience, thus, establishing a digital ecosystem with a coordinated network of enterprises, devices, and customers that creates value for all stakeholders. This model has higher revenue growth and net profit margins than the others, and not surprisingly, it is the toughest business model to achieve. Amazon and Netflix have powerful ecosystem-driver businesses. This means that customers of all kinds will increasingly prefer the efficiency of a ‘go-to’ digital ecosystem driver to conduct transactions in every domain.
