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Designing and implementing a new business model can be challenging. Factors that can get in the way of a successful future range from resistance to change to unforeseen market dynamics. However, leaders who recognize these obstacles as opportunities for growth and innovation can change the course of their organizations.
Here, 20 Forbes Business Council members discuss key challenges in adopting new business models. Read on for their strategies to overcome these barriers and get your team working together toward the same goals.
1. Change Management
Businesses often struggle with change management when implementing new business plans. Oftentimes, there is resistance from employees because change is uncomfortable. Leaders must therefore regard change as a process and not an event. It requires patience and understanding. Effective communication, active listening and addressing concerns are crucial for gaining the team’s acceptance. - Kehinde Nwani, Meadow Hall Group
2. Overpreparation
Many businesses overprepare. I believe you should have a vision and mission for the business and how you're going to drive revenue and fulfill the promise you made. Focus on driving revenue and the rest will be figured out along the way. Make sure to document what you think the new model will be and what it becomes, as it most likely won't be exactly what you expected. - Ryan Lucia, Such n Such Media
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3. Poor Product-Market Fit
When implementing a new business model, businesses should really nail the product-market fit. Experiment quickly with a minimum viable product to drill down on the initial sweet spot niche in the market. Validate that the pricing, profitability and resources all work. When this is dialed in, the successes really help gain buy-in from stakeholders who are resistant to change. - Rick Morris, Thrive Technologies
4. Resistance
One challenge is resistance to change. Make sure to communicate clearly and consistently, engage employees and stakeholders, provide training and support, lead by example and celebrate small wins, to name a few strategies. By addressing the natural resistance to change, leaders can create a more receptive environment for new business models to evolve and increase their chances of successful design and implementation. - Prakash Sadasivam, Sigmaways
5. Unwillingness To Embrace New Technology
The shift to a VR-first model at my company demonstrated its suitability for small, agile businesses with a strong innovation culture. While this strategic move enhanced team connectivity and delivered unique customer experiences, it first required a firm commitment from the entire team to embrace new technologies and adapt the culture of the company. It’s an ideal solution for companies looking to rapidly innovate within their domains. - Bruno Larvol, LARVOL
6. Lack Of Education For Employees
New business models require new ways of selling and go-to-market strategy. Never underestimate the power of continuous sales enablement and closed-loop learning processes, as these ensure that every employee rapidly understands customer learnings and product-market fit. - Aarjav Trivedi, Ridecell
7. Avoiding Risk
Evading risk is one of the greatest challenges during the execution of a new business model. The execution process involves several steps where each stage must be approached carefully to avoid long-term damage. Minimizing risk requires planning and analysis, a phased approach based on real-world feedback, continuous monitoring and evaluation to track success and investment in talent and training. - Dan Galorath, Galorath Incorporated
8. Lack Of Focus On The Consumer
Business models are about value capture. Businesses can often focus on maximizing value capture for new models with a short-term motive. The best business models are those that maximize value for both businesses and consumers. It is not a zero-sum game. To do this right, business models have to think about intrinsic and extrinsic value creation in their analysis. - Vibhor Kapoor, AdRoll
9. Buy-In
A common challenge in implementing a new business model is securing buy-in from those who will use the process. Leaders can overcome this by ensuring these individuals feel ownership of the change. Involving them early on in the design phase and considering their input creates a sense of shared responsibility, leading to smoother implementation and greater acceptance. - Hai Mag, Eva Commerce, Inc.
10. A Unique Vision
Creating a unique vision is key in a crowded market. Forge a personal plan and refine it, keeping true to your company's core values. There's no need to overspend on experts for initial ideas; authenticity breeds innovation. - Nathan Carlisle, TecTon Construction
11. Cost
A key challenge in implementing new business models is the opportunity cost associated with reverse engineering. It’s a matter of deciding whether to innovate or replicate existing models. Leaders should conduct thorough market and feasibility analyses, weighing the benefits of innovation against the risks and costs of replicating proven models. Strategic decision making based on data and trend analysis is crucial. - Dr. Malcolm Adams, Avid Solutions Intl
12. Fear
A new business model is akin to redirection in uncharted waters—a challenge met with fear of uncertainty. To overcome this, leaders must blaze the trail with confidence. They must exemplify the change they wish to see and encourage a culture of fearless innovation. Reminding everyone that each role in the hierarchy is specifically designed to reach a common goal can help steer the ship boldly. - Senton Kacaniku, Spore Finance
13. Cash Flow
When making changes in business, many leaders take their eye off of cash flow. So, while doing a ton right, payroll can all of a sudden seem like it is closer and not clearing by a safe margin. Making massive shifts in the business can take time to spool up new sales and, in turn, crunch liquidity. Preparation is key in making large changes to the company. - Joshua Steinberger, NextGen Restoration
14. Financial And Time Constraints
You can't flip a switch to a new business model, as it takes commitment and accountability from the top down. And it takes time. We started to adopt a new business model (EOS) in 2019 and it wasn't until we made the financial and time commitments to work on the business that we started seeing results. It took a combination of trust, conflict and focus for the whole team for it to all work. - Linda Varrell, Broadreach Public Relations
15. Employee Apprehension
One key hurdle in adopting a new business model is employee apprehension. To navigate this, leaders should cultivate an inclusive environment where team input shapes the change. Engaging in open dialogues, offering detailed and engaging training and highlighting the new model's positive aspects can transform uncertainty into enthusiastic support, smoothing the transition. - Leigh Burgess, Bold Industries Group, Inc.
16. Regulatory Compliance
Healthcare businesses often struggle with regulatory compliance when implementing new models. Leaders can overcome this by embedding compliance into the model’s foundation, consulting experts, providing thorough staff training, employing compliance-focused technology and fostering a transparent culture. Emphasizing compliance from the start ensures a smoother transition and establishes trust. - Jen Spencer, SmartBug Media
17. Too Much Change At Once
One challenge is deviating from what's already working and overloading the business instead of focusing on the main business model. When implementing something new, always do it in small steps. Keep your focus on what works, not on what's new. - Tareq Jomaa, salesHAX Consulting GmbH
18. Rough Patches
There will definitely be pros and cons to new business models. One common challenge is the same as what we encounter or experience with something new. Change can be rusty and gritty at the start but can also become smooth running through and through. What we can do, or what I would do, is assure the company that going through and learning the new business model together will certainly be a great outcome. - Tim Guercio, The Christmas Team
19. Skeptical Employees
One of the most common challenges can come internally from employees who are skeptical of new systems or methods. When navigating any significant change, be attentive to managing the perception, understanding and emotions of those around you. If you don’t take the time to guide your teams through the emotional and human aspects of change, your business model will not be consistent or effective. - Kent Ingle, Southeastern University
20. Misunderstanding The Market
A common challenge is misunderstanding the market. New implementations can sound bulletproof in theory, but factors like timing, audience preferences and even user experiences can present a very different reality. To remedy this, remember to never skimp on market research on your end users so you can confidently act on quantifiable data as opposed to assumptions and your gut. - Sean Shea, ViB
