In recent years, a number of leading companies worldwide have been shaken by newcomers to the scene. Ignoring the writing on the wall, these market leaders failed to rethink their once successful business model and now they are too late. As of 2015, just 12% of 1955’s Fortune 500 companies in the US, which include IBM and 3M, remained on the list. Another example of this failure to adapt is highlighted by Research in Motion (Blackberry), when just seven years after making the top 10 of Fortune’s 100 Fastest Growing Companies it has dropped from the list.
As Richard Foster of the Yale Entrepreneurial Institute notes, “The average lifespan of a company listed in the [Standard & Poor’s 500 Index] has decreased from 67 years in the 1920s to 15 years today.” The global economy has undergone a series of drastic changes, and these shifts aren’t over yet. Therefore, companies need a successful revenue model that evolves with the changing climate.
Drastic Economic Changes That Led to Shifts in Business Practices
You are probably familiar with some of the most drastic economic changes of the last decade. Some of these include:
- Moving from the physical to the virtual. With the rise of popular online retailers like Amazon and Alibaba, shopping has shifted to the online sphere. While online businesses thrive, many “brick and mortar” giants, like RadioShack and Chapters, failed to adapt their business plans and were forced out of business. Wal-Mart, on the other end, managed to capitalize on this trend and is now one of the top 10 online retailers in the world.
- Ownership to sharing assets. Using shared assets, companies like Airbnb have taken over an entire sector of the holiday rental market. Today, Airbnb reports over $10 billion in annual revenue, which exceeds that of large hotel chains.
- A renewable energy economy. With sustainability becoming an increasing concern, the focus is starting to shift towards renewable energy. In 2015, electric car manufacturer Tesla was rated the 10th most valuable global car brand, tied with Porsche and beating Lexus. Today (January 2020), Tesla is the most valuable car company in the world.
- “Everything” matters. The Montreal Transport Society (STM) recently started to implement bus telemetry to provide exact bus location and arrival times for smartphones, allowing for 20-30% travel time reduction for passengers. Buses are just one example of “things” that communicate. We are entering a new era of the “Internet of Things” (IoT) where “things” will communicate with people or with other “things” to monitor health, energy consumption, and maintenance while they automate daily processes.
While these are just a few examples, in order to make this article as concise as possible, we’ve intentionally held back from listing many other trends.
Do You Need to Reassess Your Business Model?
Stay on top of the trends that are relevant to your business to ensure a continuously profitable model.
Re-evaluate your business model. Maybe you’ll see the need to create a new plan or to adjust your existing model. After all, you don‘t want to find yourself in the same situation as the taxi drivers when Uber rolled into town!
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