Winning in China with digital business models: How enterprises can innovate to thrive

Our world continues to undergo profound changes as Internet access and digital technologies have dramatic effects on individuals’ actions and companies’ business models. In 2009, China was home to an estimated 21 percent of the world’s Internet users – roughly 384 million – a number exceeding the total U.S. population. Greater connectedness means a greater volume of online interactions, as well as giving customers more flexibility and control. To survive and thrive, enterprises will need to innovate their business models, particularly in terms of customer interaction, products, channels and pricing.

Winning through new business models
In this highly interconnected, instrumented and intelligent environment, IBM analysis found that successful enterprises in China have designed and implemented one of four unique new business models, each incorporating digital elements and creating distinct new value. Understanding these models can provide organizations with a clearer path as to where to focus their innovation efforts:

1. Integrating physical with digital
2. Evolving digital offerings with customer demand
3. Direct and interactive Web channels
4. Flexible revenue and pricing models

The level of change required varies by business model, with integrating digital with physical representing the most comprehensive transformation across the organization. In addition, choosing the right model for expanding into the digital era depends on the nature of an organization’s business.

Business model innovation can substantially impact an enterprise. For successful transformation, an enterprise must take appropriate steps to prosper in a changing environment while avoiding negative impact on existing business:

Step 1: Identify potential digital transformation opportunities.

Step 2: Assess the impact of digital transformation to value chain.

Step 3: Design a digital era business model and implementation roadmap.

Step 4: Build operations and management processes required to transform.

Step 5: Continuously adjust and optimize offerings and related processes.

For more background on this research, please send an email to our China leader for IBM’s Institute for Business Value – Michelle Kam or contact our S&T China Leader, Steven Davidson.

If you are interested in learning more about our Global S&T capabilities in the area of Business Model Innovation, please feel free to contact any one of our leadership team members depending on your region.

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