Idea in Brief
The Question
No new technology can transform an industry unless a business model can link it to an emerging market need. How can you tell whether a model will succeed in doing that?
The Research
The authors undertook an in-depth analysis of 40 companies that launched new business models in a variety of industries. Some had transformed their industries; others looked promising but ultimately didn’t succeed.
The Findings
Transformative business models tend to include three or more of these features: (1) personalization, (2) a closed-loop process, (3) asset sharing, (4) usage-based pricing, (5) a collaborative ecosystem, and (6) an agile and adaptive organization.
We usually associate an industry’s transformation with the adoption of a new technology. But although new technologies are often major factors, they have never transformed an industry on their own. What does achieve such a transformation is a business model that can link a new technology to an emerging market need.