The as-a-service revolution has turned value creation inside out, shifting the focus from companies to customers and from products to services. The implications are far-reaching and already being felt by communications service providers (CSPs) seeking new business models to carry them into the future.
CSPs are at a crucial juncture according to the April 2021 McKinsey article, A blueprint for telecom’s critical reinvention: “They can either tinker around the edges to achieve incremental gains or make a bold choice to reinvent their value-creation formula and bravely, firmly commit to that choice.”
Those who make the “bold choice” face the practical question of how to reinvent their business models. German researchers Oliver Gassmann and Karolin Frankenberger cracked that code in their 2014 bestseller, The Business Model Navigator. Studying more than 300 business model innovators, they found that the overwhelming majority—roughly 90%—recombined “previously existing concepts, ideas, or business models” to innovate successfully. Gassmann and Frankenberger determined that every business model has four parts: target customer, offering, value proposition and means of revenue generation. The secret of business model innovation, they said, is to change any two.
Digitally disruptive companies such as Netflix, Uber, Airbnb and Salesforce.com have demonstrated that “change any two” formula by rolling out new as-a-service offerings with the novel value proposition of delivering a desired outcome with minimal friction. The customer clicks and gets what they want: a movie, a ride, a place to stay.