Why Sustainable Innovative Business Models Matter Nowadays

Why Do Business Models Matter? 

OK, so innovation is the only pathway to long-term profitability. But what’s the deal with business models themselves? 

Those without a business model can forget about profitability, be it short-term or long-term. At their core, these models are high-level business plans for making a profit in a specific marketplace. They describe how a business creates, captures, and delivers value to customers or clients. 

Building a sound business model is one of the most important business decisions for a company, especially a startup. Once your business has a clear picture of how it wants to operate, it can focus on nothing but growth in the right direction. 

Unfortunately, not all business models can achieve significant business growth. Traditional business models, for example, won’t get you far in today’s rapidly evolving business landscape filled with technology, innovation, and disruptive market forces. 

These models rely on physical infrastructure, face-to-face interactions, and old-school marketing methods like word of mouth, print ads, and billboards. In other words, you need an extensive initial investment followed by high fixed costs (rent, equipment, etc.), only to be limited by your location and impossibly long sales cycles. 

Let’s say you decide to give such models a chance. Over time, you’ll notice your products or services aren’t reaching new markets, your business is losing customers, and you’re standing still while your industry is rapidly changing. 

Do you know what these tell-tale signs signify? They’re telling you it’s time for a change, preferably to a technology-based business model that leverages online marketplaces and opens up a world of possibilities for your business. 

Innovative Business Models: New Ways of Delivering Value 

Armed with a business school diploma and big dreams, many would-be entrepreneurs set out to launch their businesses. They’re usually met with a bustling marketplace teeming with competitors. The only way to cut through all this noise is to bring something new to the table. 

In other words, new business owners must find never-before-seen ways to deliver value to their customers. That’s what business model innovation is all about. 

Even already-established companies can benefit from innovative business models. They will fundamentally change how the company operates without jeopardizing its core business. These changes leave no stone unturned, addressing general aspects like the company’s revenue model and specific elements like revenue streams. 

But are all these changes really necessary? 

In short, absolutely. Tweaking your existing model can lead to a short-term competitive advantage. But as your market matures and the competition intensifies, these changes cease to be enough to make any real difference. 

As much effort as innovative business models require, it will all be well worth it. Your business will reach the other side with an enhanced value proposition, increased efficiency, and extended competitive advantage. 

But to achieve this desirable outcome, you must first choose a suitable business model. As many a case study will suggest, Business Model Canvas (BMC) boards will be your loyal allies in this endeavor. 

These simple yet effective sketches depict the reality in which your business operates in nine elements. 

Let’s take Apple as an example. This is how the nine elements on the tech giant’s BMC board could look like: 

1. Key partners (app developers, retail partners, etc.) 

2. Key activities (developing innovative hardware and software products) 

3. Key resources (intellectual property, manufacturing facilities, retail stores, etc.) 

4. Value propositions (high-quality and user-friendly products) 

5. Customer relationships (fostering a sense of loyalty among customers) 

6. Customer segments (individual consumers, professionals, businesses, etc.) 

7. Channels (the App Store, authorized resellers, etc.) 

8. Cost structure (research and development, manufacturing, marketing, etc.) 

9. Revenue streams (hardware and software sales) 

These BMC boards wouldn’t benefit startups much as these businesses operate under high levels of uncertainty. But this doesn’t mean startups are left empty-handed. They can use Lean Canvas boards, which focus on the problem the startup has been created to solve. 

By basing their business model on a perceived problem, startups ensure their business operations move in the right direction from the get-go. These boards also have a “solution” element limited in scope, pushing startups to use simple and easily testable ideas. 

For instance, for Airbnb, the problem would be “costly and impersonal hotel accommodation,” and the solution is “a marketplace connecting travelers with locals renting out their properties.” 

Examples of Innovative Business Models 

By now, it should be clear that innovative business models are must-haves and not nice-to-haves. Let’s see how some of the biggest names in the business world used them to get where they are. 

• Amazon. Amazon’s subscription model has been a game changer for growing customer lifetime value through enhanced loyalty and repeat purchases. Millions of customers no longer feel the need to shop around and compare prices, as they have access to a personalized delivery program that helps them save money in the long run. 

• Uber. What was once a simple ride-hailing service is now a comprehensive transportation platform that differs from competitors thanks to its food delivery and electric bike rental services. 

• Netflix. Capitalizing on the internet’s growth and physical media’s decline, Netflix shifted from DVD rentals to streaming video content. This strategic transformation enabled the streaming giant to reach a larger customer base and generate new revenue streams. 

Besides focusing on innovation, these revolutionary companies made sustainability a core part of their business models: 

• Airbnb. Relying on a sharing economy model, Airbnb has managed to disrupt the traditional hotel industry and offer a seamless experience for guests. The best part? The company doesn’t need to own a single room for its business model to keep flourishing. 

• Tesla. Once a regular electric car manufacturer, Tesla is now a full-service company that has made using renewable energy accessible and appealing. 

• Honeywell. Honeywell is transitioning from a product-oriented corporation to solely offering software and industrial technologies while being a leader in green supply chain management. 

How Can Green Brother Help Startups? 

Finding key partners is one of the instrumental parts of devising a successful business model. That’s when Green Brother comes into play. 

But Green Brother is much more than a simple business partner. It’s your gateway to packaging your innovations into a sustainable business model. 

Let’s say you have an innovative prototype you’re excited about. Reach out to Green Brother, and we can help you turn it into a market-ready product. This process starts with identifying viable yet innovative business models and goes on to address the infrastructure and the competencies you need to make your dream a reality. If you can’t get these on your own, we can propose various financing options, capital grants, and cooperation opportunities to get you to the finish line. 

We pride ourselves on always bringing together the right actors to get a marketable product out of a project. However, we also pride ourselves on transparency and honesty. We won’t string you along if we can’t see a future for your product or project, whether due to a high cost, considerable risks, or low demand. 

This is the only way to maintain integrity, foster trust in our partnerships, and provide our company and clients with a sustainable future.