Digital Business Models: This Is How Companies Master The Pandemic Balancing Act

Numerous companies had to face new challenges as a result of the corona pandemic. They can now use digital measures to maintain their business capability, compensate for lost sales, and set up a “New Normal” business model.

The restart after the corona lockdown leads to a fundamental question for companies: How do you succeed in compensating for already incurred and future sales losses, for example, by aligning existing core competencies to new customer segments and markets or developing new products and services for existing customers? Digital business models can offer a way out here.

Many companies try a balancing act here: They are trying to enable old business digitally and are doing a lot to take advantage of new business opportunities: For example, the mechanical engineering company DMG Mori is examining the production of fuel cells and new business opportunities in the medical technology or semiconductor industry to avoid lost sales to compensate in automotive, aerospace.

Digital Business Models: Development Of New Products And Services

Other companies have quickly developed new products such as hygiene, protection, spacing, labeling, pharmaceutical, and software products and services. For example, the Optima packaging group GmbH has adapted proven, fully automatic manufacturing machines to produce FFP respiratory masks and packaging systems for the packaging of disposable protective covers.

Other companies have aligned digital sales and service channels to new customer needs and increasing customer use of digital offerings. An already existing digital infrastructure, digital work skills of employees such as remote working, and, in some cases, the mastery of agile forms of work were beneficial.

With virtual machine acceptance tests, Optima ensured that systems were delivered on time despite travel restrictions. More than 30 employees of the customer from the USA followed every step of the virtual factory acceptance test every day. This is part of the remote service offering for everything to do with the life cycle of Optima systems, which have proven themselves in the pandemic.

Digital Business Models As Drivers Of Digital Business

Most companies have a strategic challenge and follow several strategic drivers that contain digital business models, such as C0 2 accounting and reduction, climate neutrality, circular economy, electromobility, the energy transition, opportunities, and risks of the pandemic or digitalization.

For example, Lorenz GmbH follows a sustainability strategy and recycles old water meters. On the other hand, the company has implemented a digitally controlled production of intelligent wireless water meters with an IoT platform, digital guidance and line system, digital twin, and an augmented reality solution and achieved a significant leap in profit.

Climate-Friendly Technology Offers Enormous Sales Potential

A new study by the VDMA and Boston Consulting shows a sales potential of up to ten trillion euros worldwide for climate-friendly technology by 2050 for the machine and plant industry. Digital enablers are therefore not necessarily required to revitalize old economies, business models. In many cases, they are used as support, for example, for recording, analyzing, and limiting CO 2 emissions.

For example, the SAP Product Carbon Footprint Analytics application has recently become available as the first solution in the SAP Climate 21 program. The solution uses data from SAP and external sources and calculates this information in SAP Analytics Cloud. This enables customers to understand their CO 2 emissions better and analyze and reduce their greenhouse gas emissions. Automobile manufacturers, in particular, have proclaimed climate neutrality for the next decade and will include the automotive supplier industry within the scope of Scope 3 emissions.

Digitization Through Cloud-Based Collaboration Platforms

Owing to the corona emergency “social distancing,” companies have pushed digitalization in the form of cloud-based collaboration platforms for hybrid home offices by leaps and bounds, but mainly without a collaboration concept. For example, the potential of Microsoft Teams is significantly higher than just using video conferences and chats. Therefore, in a second wave, productivity increases will be necessary beyond collaboration concepts that focus on the purpose and benefits of the teams and the desired business model.

In a third wave, significant increases in efficiency along customer-oriented end-to-end processes can be achieved by automating work processes and repetitive activities, for example, through the Microsoft Power Platform. Best practice standard processes can be adapted via a productivity library. In addition, goals such as higher self-service and the reduction of office space and travel costs are being pursued.

Siemens is currently rolling out an office app for more than 100,000 employees to implement a hybrid “New Normal Working Model” (“Work From Anywhere”). The office app can determine from the home office whether there is still an office space available. With the next update, it should be possible to reserve a room or a desk. Siemens wants to position itself as an attractive employer and is also offering the app to customers.

Experience in the Corona crisis clearly shows that digital solutions and work models offer extensive advantages to cope with this and similar situations in the future. Therefore, different digital business model patterns should be developed in portfolio development.

Digital Business Models: Revitalizing The Old Economy

Top management in companies is required to develop a portfolio of business models and test them for scalability. On the one hand, to manage the lifecycle of mature business models actively and, on the other hand, to make targeted use of growth opportunities with new business models. Very few companies have so far formulated digital business models professionally or do such a portfolio policy exists.

Digital strategies and business ideas can be developed very well using digital business models. The digital business model should be developed iteratively in the triangle between digital enablers, customer benefits, and revenue/business models:

  • Digital enablers open up the scope for design to create new customer benefits and, at the same time, to be successful based on new revenue/business models.
  • Customer needs can lead to the search and development of digital solutions and new revenue/business models.
  • Successful business model patterns can lead to the search for digital enablers and the discovery of the target customer group.

The tense situation in many companies requires two-handed management: on the one hand, adjusting costs and, on the other hand, leading new, digital business models to success.

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