Lead the Change: New Business Models

June 13, 2025 at ESP25

ESP25 Module 4: New Business Models

Reinventing how the business create and captures value

In a fast-changing world, companies can’t rely on product innovation alone. The most disruptive and successful organizations today innovate at the level of business models—rethinking how they create, deliver, and capture value. From digital platforms and subscriptions to circular models and decentralized ecosystems, business model innovation has become a core strategic imperative. Here’s a guide to understanding what a business model is, why it needs continuous reinvention, the most popular and emerging models, and how companies can build models fit for the future.

What Is a Business Model?

A business model defines the logic of how a company works:

  • How it creates value (products, services, experiences),

  • How it delivers value (channels, partners, operations), and

  • How it captures value (revenue streams, pricing, monetization).

Essentially, it answers:

Who is the customer? What do they value? How do we deliver it profitably and sustainably?

Why innovate your business model

The shelf life of a business model is shrinking. New technologies, shifting customer expectations, sustainability pressures, and regulatory changes mean that models that once worked may become obsolete—or even risky.

Companies must innovate their business models for several reasons:

  • Digital disruption: Platforms, automation, and data have transformed how value is delivered.

  • Changing customer behavior: Consumers now expect personalization, convenience, and ethical practices.

  • New value propositions: Entire industries are being redefined by software, AI, and sustainability.

  • Competitive threats: Startups often outmaneuver incumbents with smarter, more scalable models.

Business model innovation often leads to higher margins, recurring revenue, and stronger competitive advantagethan product innovation alone. It can open new markets, attract new customers, and fundamentally reshape industries.

Common types of business models

Over time, several business models have proven successful across industries. Here are key types and company examples:

1. Platform Model

Platforms connect producers and consumers, enabling value creation and exchange.

  • Examples:

    • Airbnb (connects hosts and travelers),

    • Uber (drivers and riders),

    • Apple App Store (developers and users).

  • Value comes from network effects—the more users, the more valuable the platform.

2. Subscription Model

Recurring revenue through regular payments for ongoing access to a product or service.

  • Examples:

    • Netflix (entertainment),

    • Spotify (music),

    • Adobe Creative Cloud (software).

  • Delivers predictable revenue and encourages long-term customer relationships.

3. Freemium Model

Free basic services with the option to upgrade to a paid version.

  • Examples:

    • Dropbox, Zoom, Canva.

  • Relies on converting a portion of users to paid tiers, often leveraging network virality and user-driven growth.

4. Direct-to-Consumer (DTC)

Brands sell directly to customers, often online, cutting out intermediaries.

  • Examples:

    • Warby Parker, Glossier, Allbirds.

  • Allows for control over customer data, experience, and margins.

5. Marketplace Model

A neutral space where buyers and sellers transact, often taking a commission.

  • Examples:

    • eBay, Amazon Marketplace, Etsy.

  • Requires trust, scale, and effective governance mechanisms.

6. Pay-as-You-Go / Usage-Based Model

Customers pay only for what they use—popular in cloud computing and energy.

  • Examples:

    • AWS, Twilio, Uber.

  • Attractive for flexibility and scalability.

7. Razor and Blade Model

Sell the base product cheaply (razor) and generate profit from ongoing consumables (blades).

  • Examples:

    • Gillette, Nespresso, HP printers.

  • Lock-in comes from ecosystem dependence.

8. Franchise Model

A business licenses its brand and systems to independent operators.

  • Examples:

    • McDonald’s, Subway, 7-Eleven.

  • Enables fast global expansion with local ownership.

New types of business models

The next wave of business model innovation is being shaped by technology, sustainability, decentralization, and social impact. Here are some of the most promising new directions:

1. Product-as-a-Service (PaaS)

Companies offer access to products without ownership—turning products into services.

  • Examples:

    • Rolls-Royce (jet engines as a service),

    • Philips (lighting as a service),

    • Caterpillar (equipment leasing).

  • Encourages circularity and ongoing customer relationships.

2. Circular Economy Models

Designing out waste and pollution by keeping products and materials in use.

  • Examples:

    • IKEA: buyback and resell programs,

    • Patagonia: Worn Wear platform,

    • Loop: reusable packaging system.

  • Aligns business growth with environmental sustainability.

3. Decentralized / Web3 Models

Blockchain enables new models of ownership, governance, and reward distribution.

  • Examples:

    • KlimaDAO: decentralized climate finance,

    • Helium: decentralized wireless network,

    • OpenSea: NFT marketplace.

  • Value is co-created by communities, not centralized entities.

4. Data Monetization

Companies leverage proprietary data as a revenue stream or business enabler.

  • Examples:

    • John Deere: monetizes farm equipment data,

    • Tesla: builds driver data into autonomous vehicle development.

  • Raises critical questions around privacy, ethics, and transparency.

5. Embedded Finance

Non-financial companies integrate banking or payment services directly into their offerings.

  • Examples:

    • Shopify offering merchant banking,

    • Uber with driver wallets,

    • Apple Card integration.

  • Creates new value streams and enhances customer convenience.

6. B2B Platforms and Ecosystems

Business ecosystems where companies collaborate and share infrastructure or data.

  • Examples:

    • Alibaba Cloud, Salesforce AppExchange,

    • Siemens MindSphere (industrial IoT).

  • Ecosystem logic supports scalability, modularity, and partner innovation.

7. Outcome-Based Models

Customers pay for results rather than input or service.

  • Examples:

    • Zipline (drones for medicine delivery—pay by delivery),

    • Energy-as-a-Service firms,

    • Healthcare providers moving toward value-based care.

  • Aligns incentives and shifts risk from customers to providers.

Innovating the business model

Business model innovation requires both creativity and discipline. Here’s how organizations can start:

  • Understand your current model: Map out how your business currently creates, delivers, and captures value.

  • Identify shifts in customer needs and technology: Look at what’s changing in your environment.

  • Explore analogies across sectors: Great business model innovations often come from other industries.

  • Prototype and test: Use lean startup methods to test assumptions before committing.

  • Involve diverse teams: Innovation often comes from cross-functional collaboration and outside-in perspectives.

  • Design for flexibility: Build models that can evolve as customer needs change.

Business model innovation isn’t a one-time event—it’s a continuous process of adaptation and exploration.

Business model advantage

In a world where products are easily copied, technology advances rapidly, and customers demand more than ever, business model innovation is the most powerful lever for sustained advantage. From platforms and subscriptions to circular and decentralized models, the companies that win in the future will be those that rethink not just what they offer—but how they offer it, who they partner with, and how they share value. Business models are the blueprint of modern enterprise—and reinventing them may be the most strategic decision a company can make.

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