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Keys to business transformation

Six key elements typically feature in successfully transformative business models, says Harvard Business Review article by three academics at Cambridge Judge Business School.2016_news_keystobusinesstransformation-883x432

Professor Stylianos Kavadias

Professor Stylianos Kavadias

There are six key elements – including personalisation, asset-sharing and organisational agility – that typically feature in transformative business models that have a high chance of success, according to a new article in Harvard Business Review by three academics at Cambridge Judge Business School.

Transformation of an industry usually occurs not through new technology alone but through a business model that links new technology to an emerging market trend, says the article, which defines “business model” as “how a company creates and captures value.”

The article in the October 2016 issue of Harvard Business Review – entitled “The transformative business model” – is co-authored by Professor Stylianos Kavadias, Margaret Thatcher Professor of Enterprise Studies in Innovation and Growth, and director of the Entrepreneurship Centre at Cambridge Judge; Dr Konstantinos Ladas, an associate at the Entrepreneurship Centre; and Christoph Loch, Director of Cambridge Judge.

Dr Konstantinos Ladas

Dr Konstantinos Ladas

The article is based on an in-depth analysis of 40 companies that launched new business models in a variety of industries. “All of them seemed to have the potential to transform their industries, but only a subset had succeeded in doing so,” says the article, which then identified six recurring features that correlated with a higher chance of success at transformation.

They are:

    • A more personalised product or service tailored to customers’ needs.
    • A “closed-loop” process in which products are recycled to reduce resource costs.
    • Asset sharing, such as the way Airbnb and Uber allow people to share their homes and cars with others.
    • Usage-based pricing that charge customers when they use a product or service, often growing the number of customers.
Professor Christoph Loch

Professor Christoph Loch

  • A more collaborative ecosystem that improves collaboration with supply chain partners to reduce costs.
  • An agile and adaptive organisation that allows real-time decision making that better reflect market needs.

The article includes a case study of the company Healx, which has been supported by the Accelerate Cambridge programme at Cambridge Judge, part of the School’s Entrepreneurship Centre. The company focuses on personalised treatment of patients with rare diseases, and the article discusses how the company used many of the six key elements in order to further its business transformation potential.