Significance of Business Model Innovation post 2020

In 2020 when the COVID Pandemic threw the world into disorder, many entrepreneurs and Business Leaders took a step back, stopped all their processes, and started to analyse whether their current business model is still appropriate or not. The reason for this action is, all of a sudden, due to COVID, everything started to change. People and Companies started to look for alternative place of actions, I mean they started to work/focus on Plan B. Everyone started to focus on "Business Model and Business Model Innovations". 

Some might say, "In this pandemic situation will innovative changes in the business model really work?".

A Business model is something which outlines how a business or organisation delivers value to its customers. In its simplest form, a business model provides information about an organisation's target market, that particular market's needs, and the role that the business's products or services will play in meeting those needs.

And coming to innovative changes in the model, 

A Business Model innovation describes the process in which an organisation adjusts its business model. Often, this innovation reflects fundamental change in how a company delivers value to its customers, whether that is through the development of new revenue streams or distribution channels. 

Moreover, a business model may seem like a straightforward concept but if you observe you will find it has shifted and changed over time, especially in the last one year (2020). Some of the most successful organisations today are those that have reinvented the model, disrupting the industry that was and creating a kind of value that customers are looking for. If you look post pandemic, business models have been transformed by technology and interconnectivity. Entrepreneurs are on a mission to use this situation and build the future. They are inevitably breaking many rules in order and rethinking the traditional models and recreating new models 

to make their mark in the business world. Business model innovation and rethinking has allowed them to create a trademark and take advantage of changing customer demands and expectations. 

Essential Components of Business Model

1. Value Proposition 
2. Target Market
3. Competitive advantage
4. Cost Structure
5. Key Metrics
6. Resources
7. Problem and Solution
8. Revenue Model
9. Revenue Streams
10. Profit Margins

These are the essentials that make up a business model, and they are likely to change as your business matures. From the outset, you may not have a clear idea of what each of these components will look like for your business.

Types of Business Models:

1. Subscription model
2. Bundling model
3. Freemium model
4. Razor blades model
5. Product to service model
6. Leasing Model
7. Crowdsourcing model
8. One-for-on model
9. Franchise Model
10. Distribution model
11. Manufacturer model
12. Retailer model

Tips for developing effective business model

When you decide to write a business model, it isn’t just about copying and pasting a business plan or decide what products or services you should go for. When preparing a business model, you should establish a strategy of how you will be providing value to your customer base in the long term.

1. Identify your target audience and outline common challenges and what solutions your business can deliver to that target.
2. Determine Business process. Outline core business activities by determining the main aspects of your business offerings. It is important to know how your business will operate in order for your business model to work.
3. Keep records of your resources. This will enable you to make sure that your business model is suitable for maintaining your activities. Resources can include warehouse, website, intellectual property, client list, capital, and so on.
4. Creating a strong value proposition will distinguish you from your competitors. By clearly determining what value your business can bring, and how your products or services are better than what your competitors have to offer, you are on the path of delivering a strong value proposition.
5. Identify key partners. It is impossible for any business to operate effectively without having established a few key partnerships that will enable business to keep serving its customers.
6. Create a strategy to generate demand. Unless you are planning to do something truly radical for the launch of your business, you will have to think ways to build up interest in your company and start thinking ways to find leads and close deals. By drawing a demand generating strategy, you will be creating an outline of your customers journey whilst establishing what their key motivators might be for taking acting.
7. Focus on reevaluating your business model and make changes wherever needed.

Patterns to follow in 2021 - Post pandemic 

1. Virtualisation – In 2021, it will remain difficult to travel and meet people face to face. Remote work is establishing itself as a standard way of working via online meetings and workshops, supported by high performing online collaboration tools. 
2. Subscription - This second pattern describes a business model logic where a customer pays a regular fee, typically on a monthly or annual basis, in order to access a product or service. While customers usually benefit from lower usage costs and general service availability, the company generates a steadier income stream.
3. Orchestrator – Within this pattern, the company's focus is on the core competencies in the value chain. The other value chain segments are outsourced and actively coordinated. This allows the company to reduce costs and benefit from the supplier's economies of scale. Also, the focus on core competencies can increase performance.
4. De-materialisation – It aims to create products that require less or no material, reducing the resources needed for production and logistics. This can be achieved by intelligent product design that allows the removal of certain materials or parts from a product while maintaining its functionality.
5. Localisation – This patten describes a holistic view of how a company — or a circular ecosystem — is embedded in a particular geographical environment. The use of local resources within a geographically limited environment reduces negative environmental impacts stemming from energy consumption (e.g., through reduced logistical effort). The company can also increase control over its resource procurement.

Ultimately, mapping out a business model may feel overwhelming, but it is important you focus on all the aspects that will help you and your organisation grow, and also create value.