Contributed by: MIT Sloan Management Review
Business models matter because they define how businesses make money. But the way a business model works in the material world does not translate to how it will work in the digital world.
You can think of business in the material world as a kind of pyramid: at the top is content (information and products); in the middle is context (format, packaging, community tools); and at the base is the platform (infrastructure, technology, know-how). But when we shift to a digital model, the pyramid gives way to a different structure—as Peter Weill, Senior Research Scientist at MIT Sloan School of Management and Chairman of the MIT Center for Information Systems Research, told a group of executives attending Revitalizing Your Digital Business Model, an MIT Sloan Executive Education program.
Three Digital Focus Areas for Executives: Content, Experience, Platform
Weill offered three straightforward ways he and Stephanie Woerner have developed to help executives to think about how companies interact with their customers in the digital world. First, focus on Content, Experience, or Platform. Second, know your competitive advantage. Look at the three areas in point one: content, experience, and platform. And third, improve customer relationships.
Weill ended by encouraging executives to think critically about each of the three areas. For content, think about what is consumed digitally: products or information? For experience, think about how offerings are packaged. For platform, both internally and externally, ask how offerings are delivered to customers.
Answering these questions effectively can yield better online profits (content), online revenue (experience), and profit margins (platforms). Who doesn’t want such results from their online business?
For more on Weill’s research, see his article in MIT Sloan Management Review’s Spring 2013 issue, “Optimizing Your Digital Business Model.”
Peter Weill, Senior Research Scientist at MIT Sloan and Chairman of the MIT Center for Information Systems Research, teaches in the executive education programs, Revitalizing Your Digital Business Model and Essential IT for Non-IT Executives.