Alex Osterwalder emphasizes how innovation spurs new business models in unexpected spaces. There are the new business models made possible by both technological innovation and innovative use of technology such as the asset-light business model used by Uber, and FaceBook. But then he reminds us that the point is not to follow or fall in love with a current trend, but to question our assumptions and current ways of doing things. He points to the powerhouse, Apple, which is asset heavy, where digital business is a component of their business.
Technology Innovation and New Business Models
So I think there are many amazing trend is going on and there are many different technologies innovations that you can use to create entirely new business models. And I think what we have seen in the recent years which you know, led to some of these crazy evaluations, you know can discuss if they are too big or not but is the scalability of these companies.
So if we take Uber as an example, I mean what’s amazing is they have relatively little physical assets. You know you take a taxi company as a comparison, the business model is night and day. Where they actually get others to do the work in their business model and the use other companies or other people’s assets.
So what that business model does is it intelligently, leverages the work of others and the assets of others. So some of these business models which have huge evaluations do that really well. Take Facebook, now, why is Facebook so valuable? Well because they have a changing content every day. People don’t come to Facebook for the platform, they come for the content of their so called friends. But you know, who creates that content? Well, it’s the free workforce of over 1.4 billion people today.
So, again it’s a business model that leverages other people’s work, other people’s assets and does that extremely well. So that then (interference in the sound?) Huge pool of data, but you know the content itself is very valuable not just how people you know navigate and behaves so you can sell advertising. But the content itself that was created for free, is a huge part of the business model
So what these companies do is they have they are very scalable.
So just to build on that I would still also you know not neglect the companies that do have assets. The thing is the most successful company in the world is Apple today and they are not just this kind of digital platform. It is one component of what they do, but they do have a lot of physical assets, and a lot of workers around the world, and that’s not likely to change. They’re not going to move towards you know a much lighter and more scalable model. So I think why we are focusing on that a lot is because it’s so new, and I think it’s always dangerous to say that there is this type of business model that is right or wrong.
Innovation will always give you new models in spaces where you would have never expected them and that could be you know, asset heavy or asset light. The challenge is you not always to question the fundamental assumptions and ‘okay, these companies have done it well that way. What if we actually did only assets?’ You know, who knows. You have to think, well you always have to be ready to question the fundamental assumptions rather than doing what others have done. So it’s great that you have fast followers that all want to be like Uber and uberization is a big topic.
But I think the greatest innovators are those that simply asked, ‘what’s the right way to do this?’ Then they just use others as inspiration rather than something they will copy. So while I am fascinated by these scalable business models, I do think it is always kind of dangerous to fall in love with one kind of trend, and we always need to consider that you know it’s about figuring out the right business model for the right contents.