Is It Time to Change Your Business Model?

by CXOtoday News Desk    Dec 16, 2013


Faced with emergence of innovative and disruptive technologies, most companies today find it hard to predict how the market will shape up or what the future holds in terms of customer buying trends. To add it, they have to constantly deal with challenges related to shrinking budgets, government regulations and rising competitive pressure. These factors are forcing companies to relook at their existing business models and work towards a structure that is better aligned with the dynamic market forces.

According to a recent KPMG survey, more than nine out of 10 companies in the US are changing their business models to meet customer demands, leverage disruptive technologies, and remain competitive in the global business landscape.  “Business model reviews and changes have become a permanent component on the corporate agenda,” says Stephen G Hasty Jr, a KPMG partner and US Innovation Leader for Advisory. “Companies today face unprecedented challenges to develop operating models that can help them respond to and translate current marketplace pressures into competitive advantages.”

“With a carefully considered transformation process, companies can also make themselves agile enough to manage the new, unforeseen challenges that lie over the horizon,” he says.

KPMG’s survey which covered more than 900 US-based multinational companies found 93 percent of respondents indicating that their organizations are changing business models.

Among all the factors, “changing customer focus and buying patterns” was selected by respondents as the top reason for business model changes. Other triggers for changing operating models included “new technologies” (30 percent), “domestic competition” (29 percent), “a changing global environment” (26 percent), and “balancing growth with shrinking budgets, while raising efficiency” (25 percent), with “government enforcement action,” “foreign competitors,” “a widening global footprint” and “industry consolidation” all chosen by 22 percent of respondents, who could choose more than one “trigger” in their responses.

 “Alignment of business strategy with an organization’s operating model can help institutionalize the transformational process, embedding enough agility to help the organization evolve more quickly and easily as new marketplace challenges come along,” says Hasty. “Companies can leverage and capitalize on disruptive forces in order to thrive amid emerging challenges and threats to their business.”

Hasty concluded that as companies face multiple, equally intense transformation triggers – globalization; a slowdown in Western economies; significant, disruptive technology shifts; and select domestic issues, such as broad regulatory changes and an overhaul of the healthcare industry – there is an opportunity to gain competitive advantage for the executives that can lead their organizations through timely and proactive changes to their business models.