An increasing number of firms organize business initiatives to react positively to the threat of changes in the economy and society. In the future, business models will dictate how successful agile companies are. A variety of approaches provide support with systematic development and testing, and one of these is called the Business Model Canvas (BMC). Prof. Reinhold König, director of the Steinbeis Transfer Center for Technical Sales and Management, explains the model to TRANSFER.
Modern times are about rapid change in many areas of society. Inventions in the world of IT, medicine, biology, manufacturing, and many other fields of technology seem to explode onto the scene every day. In the background, governments make alterations that affect the business environment, as do environmental concerns, and this also affects business activities. These are made worse by sweeping changes in society in terms of its value systems, demographic developments, population movements, etc.
Overall, this results in a whole variety of areas for firms to embark on business initiatives. It’s almost like society actually needs wide-scale entrepreneurial activity just in order to cope with the challenges of continuous change. And more and more developments will be disruptive, so we can expect changes to happen in leaps and bounds as society strives to deal with the personal and professional workload. Just pulling out one simple example of an area where something like this has already happened: business and private correspondence – which has practically been swept away by electronic communication in a matter of years. Additive manufacturing will also fuel tremendous changes in production processes, with individualized products, logistics systems, and warehousing.
As a result, society will need a larger community of entrepreneurs than it has in the past. People often associate the term entrepreneurship with the word startup or setting up a business, and of course the developments touched on above do indeed hold a variety of opportunities for new businesses. Despite this, entrepreneurship should not just be seen within the context of startups. Even established companies have to react to threats to their existing activities and seize business opportunities. This is precisely why existing firms invest time in new business concepts, which require the right kind of realigned structures and will not be implementable under established business models. The term used to refer to this is corporate entrepreneurship and the “intrapreneurs” who work in this area are comparable to business founders. They have entrepreneurial responsibilities and are given the freedom they need to work independently. This puts them in a different category compared to managers in the established business. Another area in which entrepreneurial skills are required is business succession. This is because a firm that was shaped by a business owner will have a new entrepreneur at the helm. Such processes are typically marked by people questioning or expanding existing business models and changing a firm’s financial arrangements. So this means that corporate entrepreneurship, startups, and business succession are all important areas requiring genuine entrepreneurial skills.
One key success factor in business is ensuring a company applies a suitable business model. The role of a business model is to provide a succinct picture of the value that will be created for specific target groups, how value chain processes will be matched to this, and the underlying revenue model of any commercial undertaking. In the future, competition will revolve around business models. Industry outsiders and new firms will suddenly pop up in the markets of established companies with services that go the extra mile based on completely novel business models. Just one example of this is Airbnb, which has grown into a major competitor for hotel chains within a matter of years. It’s important to note that new business models are not just about new technologies or inventions. Instead, new funding models, alternative capital investment arrangements, new market entry models, or even unique links with target groups can result in successful business models. As this happens, there’s a risk that existing business models – that were previously perfectly successful – simply become obsolete.
This raises a key question: How does one identify or develop a potentially successful business model? Well, in recent years a number of new methods have been developed that make it possible to systematically foster creativity in order to provide overviews of business activities and develop business models that can then by tested and implemented in actual markets. These methods pull together a combination of creative and engineering-based techniques and one of them is call the Business Model Canvas (BMC). The BMC was first introduced in groundbreaking books by Osterwalder et al. called Business Model Generation and Value Proposition Design.
Their techniques are also used at the Steinbeis Transfer Center for Technical Sales and Management, which provides support with entrepreneurial projects aimed at developing, checking, and reworking business models through a combination of consulting and coaching. The BMC method was made available as a strategic tool for planning and implementing entrepreneurial activities. To develop a successful business model, key players are brought together to form a business model team. They learn the methods directly as they work on a solution to the specific problem. This also involves testing alternative business models and the overall technique is based on early implementation, a measured application of risk, and quick adaptation if new insights are gained. Naturally, Steinbeis also provides help with these parts of the process.
Prof. Reinhold König is director of the Steinbeis Transfer Center for Technical Sales and Management at Karlsruhe University of Applied Sciences. His center was set up in 2002 with the aim of providing companies with services that improve their success rates with the marketing of products and solutions. Its most important services now include the development and assessment of business models, consulting and coaching, and market research in the fields of marketing, technical sales, and internationalization.
Prof. Reinhold König
Steinbeis Transfer Center Technical Sales and Management Karlsruhe University of Applied Sciences (Karlsruhe)
reinhold.koenig@stw.de