BTM Conference 2016
November 24–25, 2016
Schlossplatz 1, 10178 Berlin
Cost Traps in Innovative Business Models
Firmly established B2B business models are becoming obsolete, as we have been witnessing now for several years. This has forced business leaders to fundamentally revise the way their companies function and produce value. Some have decided to pare down their premium products to compete against low-price competitors, whereas others have expanded their portfolios by adding complex service solutions. Some have accomplished a turnaround by selling the use of their products rather than the products themselves. Others have responded to the surge of digitalization and acquired state-of-the-art technology enterprises, trusting that these will bring about the sophisticated new offerings that the market is demanding.
But redesigning a company’s architecture is not without hazards; it requires a sound understanding of whether the costs involved will improve the structure or damage it for good. Very often, though, managers pay more attention to the measures required for achieving the desired revenue goals than to the risks involved in the necessary expenditures. But when entering a new area, there should be an awareness about where cost traps may be hiding.