Starting up a new business is often a lot like following mathematical formula. Take a hard look at what other businesses are doing, model your business after a business model that looks successful, fill in the obligatory financial projections, and hope for the best. From here, it is then just a matter of handling details like determining what sort of payment processing methods your business will utilize to rake in the profits. What could be easier?
Unfortunately, with so many startups failing within their first three years of operation, many entrepreneurs are ever seeking to find a road that no other businesses are traveling on, an overlooked business model and opportunity that will give them the edge in the business world. Who would not want to capitalize on that one unseen business model that no one else has been able to figure out yet? More importantly, how does one go about figuring out this radically new business model?
Building That Better Mousetrap
One approach businesses take, in their attempt to develop a radically new business model, is to build a better product or service than anyone else in the industry is able to offer. Although this strategy often works, and though it is often very profitable when it does, typically this approach does not generally lead to much in the way of exhibiting radical changes to already existing business models. That is to say, unless improving the product also introduces other dynamics, such as introducing new ways to distribute that product. For example, video rental stores used to exist on every corner, but today people pay for the opportunity to have DVD’s mailed back and forth from Internet-based video rental services instead. By walking down a path no one else was walking on, a company like Netflix can sometimes emerge to dominate an industry for a time.
Creating a Dependency Driven Market
Another way radical new business models are formed is by looking at which businesses depend on which other businesses to feed them with resources in order to survive, and change how the dependency chain operates. For example, if a major retail store depends on getting the bulk of its products from 30-different distributors, and your company can simplify that by reducing it down to their only needing to deal with your company instead, at a much cheaper cost mind you, then you are radically changing the nature of the dependency chain in the flow of business in that industry. Eliminate the major retailer as well, and once again this self-sustaining radically new business model may emerge to dominate the industry by leaps and bounds.
Changing the Platform
In the tech industry, platforms are sometimes everything. A platform is sometimes both a product and a service. Playing with these notions may reveal a new approach to using platforms to manipulate an industry, once again leading to a radically new business model and higher profits than industry-related competitors are able to achieve. Such has been the case for companies who jumped on the mobile device platform development and cloud services bandwagons. The question that often remains is who will figure out the new radical business model first, placing the competition at a huge disadvantage in the process?