Changing the Traditional Business Model to Embrace Data Flows
By Melissa Dymock
Panelists at a Thursday morning session of the FiRe conference discussed how to change the traditional business model using data flows.
“Current business models are fundamentally broken,” Johan Hagel III, Director and Co-chair at Deloitte Center for the Edge said.
He said the return on assets for public companies in U.S. has declined by 75 percent the last several years, a long-sustained erosion with no sign of turning around. However, new models based on flow and data are enabled and available.
“Flows have always been the great enabler of commerce,” said Paul Sallomi, vice-chairman at Global TMT Industry Leader. While the new flows made by technology create vast opportunities, it takes time to develop the tools to take full advantage of them.
“The tech that has become available is making the invisible visible, at scale and at real time,” Hagel said.
While he said the inclination is to use the new tech to make current models faster and cheaper, there’s much more than can be done.
“What we’re talking about here is to push the envelope further into something more transformative,” Sallomi said.
One idea Hagel suggested is the “trusted advisor” business model, where you connect the customer to everyone. Traditionally, this has been available only to the wealthy because you have to know the customer very well to do this. With the data flows, it can go to the mass market, enabling business to say, “I know you better than anyone else and you can trust me to connect you to the resources that will serve you.”
Another model Sallomi suggested is to change the way customers pay for service. The old way is that the customer buys the service and the service is given. The customer may end up paying for unused services. With data flows, he said, customers can pay for usage. Then with monitoring, the service can be enhanced as it’s given.
Hagel added that they could move from paying for usage to paying for value. This would give the customer more value and give the business more incentive to create value. He said that companies could also use data to move beyond prescription to preventive. He used the example of brakes becoming anti-lock and now activated with a sensor.
To discover more or read other articles from the conference, visit StratNews.com or our Medium blog.