Business Model Innovation – Amazon, Spotify & Tinder

Why is Amazon such a successful company how come tinder disrupted the overcrowded online dating market and how did Spotify manage to make people pay for music again. Well let me give you some quick answers here. In the promo video so you understand what this course is all about. Since the beginning Amazon based its whole innovation strategy on constantly disrupting the sales and delivery channels.

Which are just one part of a business model of a company. They started by disrupting channels for the book's market instead of going to a library to buy and pick up your physical books you would order them online and get them delivered by post directly to your home so that it was Channel innovation and Amazon kept doing this ever since by selling more and more products online. When they created the Kindle it became yet in use sales and delivery channel for books. You can both buy and receive books on your Kindle. And now Amazon is experimenting with drone delivery which is yet another delivery channel and they also introduce the echo device. Who is Alexa and the Dasht buttons which are both new sales channels. So instead of going on Amazon Dot Com to order something you can now tell Alexa to do it or press your dasht button. So both these devices are innovated sales channels as you can see. Amazon is mainly innovating in one single area of the business model which is the sales and delivery channels. Spotify is doing the same but in another area of the business model which is the revenue models.

If we go back to the CD era you needed to pay a big sum of money for a whole album even if you only liked a few songs on it. Then Apple came with iTunes and disrupted this market by allowing people to pay for each song individually. Well that was the first massive revenue model innovation in the music industry but illegal downloading was still a big problem and music revenues were going down. Eventually Spotify came and proposed a streaming model where you could listen to music for free but with advertising and the ad revenue was distributed among artists. So this was once again a revenue model innovation for the music industry more and more people downloaded the app.

But still it didn't make enough money for the artists. That's why Spotify later introduced a paid version of its app without advertising and with better features. So the whole revenue model became what we call a freemium one. That's when you have both three and users and Spotify managed to reach a stunning 25 percent conversion rate. It seems that finally the music industry has reached the right pricing and revenue model. So the success of Spotify is largely based on its disruptive revenue model in the music industry and once again this is just one block of their business model. And finally tinder are dramatically disrupted that overcrowded online dating industry by innovating on design. Yes just the design of their app and service.

Instead of feeling a complex form on an online dating Web site about your body measurements eye color income interests etc. to be matched with the person that corresponds to you. Tinder went all the way back to the roots which is the looks of a person look at a picture. Do you feel attracted to the person you see. Yes. No. Then swipe right or swipe left. Super easy. And as long as the other person didn't swipe back at you you can't contact them. So girls can't be harassed any more and don't need to filter through dozens of guys writing them and so they are more willing to use the service. All of this is design innovation both the visual design of the app but also the design of the service how it works compared to the competitors and design. It's right here the value proposition of the business model. Another company which is successful thanks to design mainly is uber but I'll stop here for now. There are many other areas of the business model where companies innovate.

Some become successful by innovating on their target customer others by disrupting the customer relationships and their marketing strategies. Yet others do it by optimizing their processes and costs and become much more efficient than most of their competitors. So this course is about disruptive innovation. If all what I said sounds interesting to you then go ahead and check out the free previous Of course especially the introduction to know more details. What we're going to cover it if you are interested in business innovation and technology. I guarantee that you will love this course.

StartupRunner Team

September 4, 2017

Channel: Entrepreneurship