How do small and medium-sized enterprises realize the innovation of business model?

Integrating resources around the core competitiveness of enterprises

Numerous cases show that SMEs can only succeed in product differentiation if they focus on building core competence and develop professionally. At present, many small and medium-sized enterprises are keen on fixed assets investment and blindly pursue enterprise scale, which leads to excessive dispersion and disorder of resources and cannot form core competitiveness.

Core competitiveness is also the key to the development of enterprises. As we all know, IBM sold the PC manufacturing department to Lenovo, retained the chip manufacturing, and changed from an IT manufacturer to a commercial solution provider. Those enterprises that focus on cultivating core competitiveness usually develop rapidly. Goldwind technology is an example. It focuses on the core business of generator design and assembly, control chip development and so on. In wind turbines, specialization and cooperation is adopted for generator parts and other parts (purchased parts account for more than 98% of the product cost), which greatly improves the core competitiveness of enterprises.

Business model innovation

If building core competence and improving management level are used to measure enterprise management from static and local aspects, then business model is more used to evaluate enterprise development potential from dynamic and overall perspective. The products and services provided by enterprises can be copied, but the business model is unique to enterprises. If there is a fatal flaw in the business model, then no matter how perfect the strategy is, how improved the management level is, and how seriously the plan is implemented, the enterprise is doomed to fail to achieve the expected success.

Three types of innovative business models

Through a large number of small and medium-sized business model case studies, we find that business model innovation can be divided into three types, namely, income model, industry model and collaborative model innovation.

Income model innovation mainly refers to the innovation realized by reconfiguring products or introducing new pricing models, and it is a model that uses customer experience, choices and preferences to innovate. This innovative way is generally related to the follow-up service of products.

The originator of adopting pricing model to realize innovation is Gillette Company. When Gillette was founded (about 1903), the retail price of a razor was set at 55 cents, which was actually less than 1/5 of its cost. On the surface, Gillette is doing business at a loss, but in fact, Gillette is making a lot of money. Because the "Gillette razor" can only use the patented blade invented by Gillette, customers have to buy a blade every time they buy a razor. Gillette priced the blade at 5 cents, but the actual cost was less than 1 cent. For customers, a blade can be used six or seven times, and the cost of shaving each time is less than 1 cent. It is the innovation of income model that has created Gillette's leading position in the razor industry. Some companies listed on the SME board also adopt revenue model innovation, such as Royal Bank, an ATM manufacturing company, to achieve revenue model breakthrough and innovation by intervening in ATM operations. Royal Bank was originally a manufacturer of ATM products, mainly focusing on the R&D, production and sales of ATMs. In 2002, the company began to intervene in ATM operation services and cooperate with banks. The company provides ATMs and provides card transaction services to cardholders through the banking network. The company charges the bank a handling fee according to the number of transactions provided by each ATM. In 2008, the income from cooperative operation services between Royal Bank and banks accounted for 39% of the total income.

Industrial model innovation refers to the industrial model innovation by transferring to new industries, redefining existing industries and creating brand-new industries. The typical company with innovative industry model is Apple, which was mainly engaged in the management of computers and digital products. Through the combination of iPod and iTunes, a brand-new industry has been created.

In the small and medium-sized board, Jiuyang shares are an example. Jiuyang Co., Ltd. combined with Chinese people's eating habits, integrated the functions of juicer and electric kettle, and established a new sub-industry of small household appliances industry-soymilk machine industry.

The innovation of cooperation mode refers to redefining the role and organizational boundary of enterprises in the value chain through specialized division of labor and value chain analysis.

For example, Metersbonwe Bang Wei Bang Wei focuses on fashion design, brand operation and channel construction, while outsourcing all production to other enterprises. Another example is Yue Medical, which outsources product design to a professional design company on the premise of maintaining its core capabilities such as product brand and sales channels, and controls costs while improving product quality and grade.

In recent years, some processing enterprises have extended to the front end of the value chain, such as research and development, design, and the back end of the value chain, such as channels and services, which is also the main form of collaborative model innovation. With the development of globalization and information technology, adopting collaborative model innovation will become the main type of business model innovation. Of course, in practice, the innovation of enterprise business model is more the organic integration of several ways.

Breakthrough business model innovation is often initiated by emerging enterprises, but in fact, enterprises have opportunities to change their business models no matter what stage or industry they are in. Only 20 years ago, Nokia was a group company that produced rubber shoes, tires, paper and electronic products. A forest industry enterprise from a small Nordic country with a population of 5 million has become one of the three largest communication equipment manufacturers in the world today. The secret of Nokia's success lies in grasping the changing trend of the market, adjusting the company's development strategy in time, and seizing the opportunity to innovate the business model. With the help of China's huge market scale, small and medium-sized enterprises in China have every opportunity to lead and promote the innovation of business model around their core competitiveness.