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The Digital Business Model

The digital business model enables various forms of asset use and monetization. By leveraging new digital technologies, companies can measure consumption and monetise it. Car sharing, for example, bills its users for their rental and return of a vehicle. Machines can be billed based on the number of units produced or other data they gather. In this way, they can benefit both the owner and the consumer.

Digital business models are born out of interaction between customer needs and available technologies. These models are developed using innovation management methods. Prototypes of digital products and services are created and validated in the market. They are not perfect from the beginning, but they are characterized by loops and iterative development. Innovation software can support the idea generation and roadmap development process. It is possible to develop a digital business model using an innovative innovation management tool, such as Innolytics.

A systematic analysis of the sources of disruption helps organizations understand potential threats and identify new opportunities. It is especially useful in situations where companies are unsure of their own ability to compete and understand the impact of new technologies. McKinsey’s digital business model research report aims to help executives find opportunities and prepare for disruptions. The authors acknowledge the help of Chris Bradley, Martin Hirt, Chris Wigle, and Jacques Bughin.

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