One, static business model can no longer retain market leadership for long. Most enterprises have one (or a small number of) relatively static business model that is/are internally created and controlled.
New business models are a foundation of digital business transformation. It’s not digital business without business model innovation. Looking to the future, the ability to maximize relationships with things and smart machines will be a foundation for algorithmic business. An important question becomes, “How can CIOs use technology to enable business model innovation and therefore digital and algorithmic business transformation?”
Digital transformation requires business models that are dynamic, dispersed, opportunistic and shared to keep up with the rapid pace of disruption and change. Algorithmic business will require the widespread creation and availability of goal-seeking and self-optimizing algorithms. Business models and algorithms could be dynamic, dispersed, opportunistic and shared through marketplaces if they become programmable.
Programmable business models use API-enabled platforms to disaggregate business functionality and make it available for consumption by an outside entity through a marketplace. Programmable business model platforms let people/developers dynamically create, manage and retire their own algorithms and business models. Developers that use the programmable business model platform include individuals, consumers, customers, employees, partners, vendors — and even competitors.
In the future, smart machines and autonomous things will use the programmable business model platform to leverage or create their own algorithms and business models. For example, vending machines may eventually become their own profit and loss center, or in other words – an autonomous business. A smart, connected, autonomous vending machine may leverage a cash dispensing algorithm from a bank in order to become a vending machine and an ATM.
Precedence for programmable business models already exists. Many enterprises have begun to adopt more open approaches to their business models. For example, Citi, NASA and others are using hackathons to generate new ideas and prototypes. Apple, Google, Amazon and others use APIs to let developers build mobile apps or access products/services through channels. The programmable business model platform expands beyond code, apps and channels and lets people and smart machines leverage or create their own algorithms, business moments and business models.
Gartner clients, you can read more about programmable business models here.