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New business models: "A culture is needed that allows for trial and error"

Digitization is changing the economy and business models along with it. In the following interview, strategy consultant Patrick Stähler explains how SMEs can adapt their business model and why employees will play a central role.

According to strategy consultant Patrick Stähler, employees should also initiate innovations
According to strategy consultant Patrick Stähler, employees should also initiate innovations

Patrick Stähler, how important is the right business model for the success of an exporting SME?
Very important. The right business model is based on a strategy that defines which products with which customers the company earns money, and why customers should love the company. A business model can be said to be successful when a company is able to set itself apart from the competition, when it is truly appreciated and loved by its customers, and when it earns money.

What role does digitization play in this process?
It's not enough for just the company to know that it's unique; customers have to be made aware globally. The first step to achieving this in the process of digitization is a website designed by the customer and optimized for search engines, although this doesn't quite yet count as digitization. In this case, the company has digitized a communication channel. Digitization, however, goes a lot further. By digitizing their production, companies can achieve greater consistency within their business. They can also network their production with their customers and thus offer their costumers completely new solutions. All of this is part of the trend known as Industry 4.0.
The interesting thing is that no one really knows exactly what digitization is. For me, digitization means experimenting with digital technologies and learning how they are changing our lives as well as our business. It is a trial and error of what’s possible. SMEs can do this relatively well. Employees are given creative leeway and told the following: "Do you have an idea? I'll give you the existing resources. You can work with them on the weekend and build a prototype and we'll see if it works."

Do SMEs need a digital business model?
There's no ONE digital business model, even though digital technologies will change all companies. There's no one-size-fits-all solution. Companies have to decide for themselves what digital media and technologies mean for them. They have to consider where they are as a company today and which assumptions are behind their business model. They need to realize that the only constant in digitization is the need to satisfy customers, and that completely new business models will be made possible through digitization. These will simultaneously replace existing business models. It's not enough to simply digitize current business models; this is merely optimizing the past.

As you previously mentioned, it has to be fun for employees of Swiss SMEs to try out new things. Do Swiss SMEs have a fundamentally different mentality? People are always quick to look at Silicon Valley.
Many Swiss companies have a more fun-based approach to innovation than do classic American companies. Silicon Valley is not America and Swiss companies should not be afraid to make the comparison with normal American companies. We have truly hardcore entrepreneurs. I always have to smile when I'm somewhere abroad drinking coffee out of a coffee machine made by Franke, Jura or Thermoplan. We tend to think that they haven't advanced very far in digitization. But when these machines are turned in for repair, the first thing that happens is a firmware update with a USB cable. The data shows how many cups of coffee the machine has already produced and whether it has been cleaned.
In certain areas and for certain products we have incredibly strong digitization. We put sensors in almost everything. The question is whether we are doing something intelligent with it. Are we using all of the data assembled in the machines to do something that makes sense for our customers? Are we going a step further? Are we networking all of these machines, gathering the data, analyzing it with artificial intelligence, using the ability of things to act in order to give the customer a new, exhilarating experience based on the findings? We still have a long way to go.

Who should initiate this change?
I am a huge fan of Swiss SMEs because they are often run by entrepreneurs. Let's take Belimo as an example. The company builds its drive and control units for ventilation in orange. Suddenly they see orange boxes hanging all over the world. This fills them with pride, and this pride motivates them to not settle for the status quo, but to always strive to be better.
CEOs have to create a company culture that allows for experimentation. Even interns should be given time by companies to try out ideas they have. If an intern has a promising idea, the company should support it with 75% of the time required, and the remaining time should come from the intern's free time.

So what should SMEs with limited resources do to create space for experimentation?
Companies should have curiosity for what's going on in the world and then test prototypes to see what works.

Including in employees' free time?
Yes, but not just in their free time. Entrepreneurs – and that could be any employee – never stop thinking. Being an entrepreneur means taking pleasure in tackling problems. Of course there has to be a good work-life-balance, but holding an annual ideas competition and giving the winner two weeks wouldn't cost much and employees would additionally invest a lot of their own time.

About Patrick Stähler

Dr. Patrick Stähler is a strategy consultant and founder of the think tank fluidminds – the business innovator. He looks at how entrepreneurs can develop better and more creative companies that focus on the customer. He is the inventor of the business model innovation concept, which he developed during his doctorate at the University of St. Gallen. Patrick Stähler is also author of the book "Das Richtige gründen: Werkzeugkasten für Unternehmer” and has been digital since 1995. He also writes about the innovation of business models in his blog.

“Exporter demain!” at EPFL in Lausanne on September 28, 2017

Do you have the right business model for your target markets? Innovative business models will be central to the discussions scheduled for “Exporter demain! 2017.” Don’t miss this major annual meeting with French-Swiss exporters! Find out more and register

Further articles about about this issue can be found in our dossier: Transforming business models

 

Patrick Stähler

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