In January 2015, the Global Center for Digital Business Transformation (DBT) collaborated with CXO Transform in a webinar to share their research into three categories of digital business model. The DBT is a Cisco and the IMD business school joint venture dedicated to original research and creating opportunities for executives to innovate new business models for the digital age.
The Digital Vortex
You might have already read the material they have been publishing since 2015, and one of those studies was called “The Digital Vortex” – How Digital Disruption Is Redefining Industries. The Digital Vortex is the inevitable movement of industries towards a digital center, in which business models, offerings, and value chains are digitised to their maximum extent.
As industries move toward the center of the Digital Vortex, where disruption is most intense, it’s important to recognise that the movement isn’t simply due to new technologies. Because the new technologies are enabling new digital business models, which in turn give rise to rapid competitive change.
Digital Business Models
The webinar presented research into three categories of digital business model, which are Cost, Experience and Platform Value. Each business model category consists of five digital business models, as shown below.
While companies have been competing on cost and value for many years, digitally enabled business models allow disruptors to combine low costs and preferable experiences, in ways that previously couldn’t have been accomplished. Platform value is also a new source of competitive advantage that disruptors use to build new businesses, that quickly serve millions – and disrupt established incumbents.
Digital Business Model Webinar Takeaways
Three key takeaways from the webinar were:
- Digital disruptors’ threat to incumbents is not due to technology per se, but the business models leveraging that technology to deliver cost value, experience value, and / or platform value
- Combinatorial disruption combines two or more of these business models. In extreme cases this presents truly existential threats to incumbents
- Incumbents can fight back and grow their companies by also employing digital business models and combinatorial disruption
Watch a 2-minute an introduction to the webinar below.