Evolution and Revolution: Disrupting Business Models

By Charly Kuecks

Ed Butler of the BBC interviewed Bill Ribaudo, the managing partner of Deloitte Risk and Financial Advisory’s Digital Risk Venture Portfolio. In a session titled “Investors Redefine Value: Impact on Public Policy and Education Content,” Ribaudo outlined his theory of four business models. He discussed how these models differ in both how they’re valued on public markets and how they affect the trajectory of the nations that adopt them.

Ribaudo shared the following framework, which formed the basis of his analysis. It is illustrated in the image below.

Source: Wall Street Journal

Ribaudo and his colleagues collected 40 years’ worth of data on the performance of S&P companies.

They grouped the first two business models, Asset Builders and Service Providers, into industrial and backward-looking models. They grouped the latter two, Technology Creators and Network Orchestrators, into information-driven models, which Ribaudo said were the types of businesses most likely to have success in the future, given that they create much more value for their stakeholders.

Ribaudo thought of the business model evolution in terms of revolutions, namely, the industrial, services, information, and network revolutions.

“Whose pictures are on the covers of magazines?,” Ribuado said.

He illustrated how this answer has changed, from Carnegie and Rockefeller at the turn of the twentieth century, to Steve Jobs and Bill Gates a century later, up through thirtysomething tech billionaires today.

This means that over time, successful businesses leverage different assets, moving from purely physical assets, to human and physical assets, and finally to value based on interactions.

He elaborated on ridesharing as a service that has been ripe for disruption, leading to legal and philosophical disputes between more-established taxi services and app-based ridesharing services. Ribaudo believes that not only is technological change inevitable, but also that it leads to much higher growth in the nations that support such change.

Ribaudo said, “Value has shifted from owning factories and producing stuff to controlling eyeballs.” With over ninety percent of business education at top institutions focused on teaching old-school industries, Ribaudo believes that there is a lot of room for disruption in training the next generation of business leaders to move their firms towards more valuable investments.

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