What is a Transformative Business Model?

The Transformative Business Model was proposed by Ladas Kavadias and Christoph Loch (2016). It outlined 6 characteristics or elements of a transformative business model. 

• Providing a more personalized product or service offering that is better tailored to customers’ individual and immediate needs by utilizing technology at competitive prices.
• Replacing a linear consumption process with a closed loop, which enables a reduction on overall resource costs.
• Sharing costly assets to unlock value for both ends of a two-sided online marketplace and increasing entry barriers to the industry.
• The pricing strategy is usage-based instead of product-based. The customers tend to use the product or service as they pay only when it generates value for them.
• Building a more collaborative ecosystem with supply chain partners, making cost reductions possible by allocating business risks more appropriately.
• Making decisions that better reflect market needs and allow real-time adaptation to market changes, thus creating even greater value for customers.

Related Topics

• 3 Dimensional Business Model
• What is Strategy?
• What is Business Strategy?
• What is Management Strategy (Strategic Management)?
• Types of Business Strategy?
• Competitive Advantage
• First Mover Advantage Definition
• Organizational Dynamics
• Synergy - Definition
• Business Model Overview
• Business Model Canvas - Explained
• Razor Blade Business Model
• Click and Mortar Model
• Transformative Business Model
• How Management Develops a Strategic Plan
• Mintzberg's 5 Ps of Strategy