Reinvent your business model and meet the future

Today’s pace of change and the influence of converging megatrends— from technological disruption to climate change—mean that how businesses create, deliver, and capture value will need to fundamentally change too.

A business that keeps step with what customers want and need, or better still, invents the customer needs of the future will stay ahead of the curve.

Some CEOs will look back at the next few years as a formative time when they learned to adapt—and thrive—by radically transforming how they create, deliver, and capture value. Others will see their companies fall behind rivals, destined to play a frustrating game of catch-up. And some will inevitably look back and wonder how their once- thriving organisations became the answers to business trivia questions… and the one thing that would make the difference in these three scenarios is business model reinvention.

In our 2024 Annual Global CEO Survey, 45% of global CEOs believe their company will not be viable in ten years if it stays on its current path. This figure has risen from 40% of CEOs in 2023.

In Ghana, 42% of CEOs noted their concern that their businesses might not survive beyond a decade.

This is in spite of 70% of Ghana CEOs confirming that, over the five years preceding the CEO survey, they adopted new technologies that significantly improved the way their businesses create, deliver, and capture value.

Some of these CEOs in Ghana explain that they have already started to take steps to defend their companies from the short- and medium-term headwinds of an austere macroeconomic environment that is characterised by high inflation and a volatile currency.

Some of these steps they have started to take are also intended to strengthen their business models and give their companies better chances to survive the complex business environment being birthed by the convergence of the megatrends.

Creating value through business model reinvention Business model reinvention means “radically” transforming how a company creates, delivers, and captures value.

Or, put another way, it’s how a company “fundamentally” changes how it makes money, serves customers, or provides new products or services.

We use the words ‘radical’ and ‘fundamental’ on purpose. They help show how changing a business model is different from other important changes companies make. These words also remind us how big and urgent the challenges are.

According to our 27th Annual Global CEO Survey published in early 2024, CEOs feel the pressure from these challenges. When they think about the next three years, they see immense threats from new technology, changing customer needs, and competitors.

These are the main reasons they need to change their business models. And we advise on what CEOs must do: look outside your company; understand yourself; confront inertia; and take action.

Look outside your company

As the reinvention imperative motivates your company to consider its long-term viability, you’ll be tempted to start by looking at your own strategy or operating model. It will be beneficial to pay attention to them but resist the impulse.

To get your company ready for big changes, start by looking outside your business. Pay attention to your customers and how their needs are changing. Also, watch for big trends and events that could spark new ideas.

Finally, make sure you’re ready to work with others, as teamwork with outside partners is now essential. Let’s break down each of these points.

• Customers: Business leaders need to ask themselves important questions: Would our customer tomorrow be the same as our customer today? What do customers need that we aren’t providing?

How are their needs evolving? Are there potential customers we’re missing out on? By starting with these questions, businesses can better understand their customers and find new opportunities.

Additionally, spotting customer pain points—things that are annoying, costly, or time- consuming—can lead to innovative solutions or even new business models. This customer-centric approach helps businesses stay relevant and competitive.

• Monitor trends and triggers: Business leaders should be able to find means to take advantage of our rapid evolving environment. Times will constantly change and will have impacts on business operations thus, businesses will have to reinvent to adapt to these sudden changes.

PwC identified five megatrends that are poised to transform our world faster than we predicted. These megatrends are:

• Climate change: Atmospheric greenhouse-gas levels are worsening, global temperatures are rising, and extreme weather events—floods, droughts and fires—are becoming more frequent and severe.

Reports from COP29 cite that 2024 is poised to surpass previous records as the hottest year on record, driven by both rising CO2 emissions and the El Niño effect. Businesses should assess their vulnerability to extreme weather events.

In Ghana, the evidence of climate change is not lost on us. Over the past 12-18 months, more than expected rain in the northern parts of the country has resulted in floods that have threatened or destroyed critical infrastructure.

Life, property and livelihoods have been lost. Production sites, warehouses, and supply chains have been considerably affected, leading to disruptions to operations and economic activities.

• Technology disruption: Transformative technology, e.g. AI and GenAI, is changing the humanosphere in a fundamental way; it is indeed changing how we understand humanity. It enables huge value creation yet can have harmful consequences we must mitigate.

• Demographic shifts: Profound sociodemographic changes are impacting the nature of customers of the future. Ageing populations are straining the social safety nets of some countries; even as other countries— many in Africa—face socioeconomic destabilising threats from unemployment and emigration, as they grapple with teeming youthful populations.

Ghana, for example, has seen an increasing tendency of migration among young people seeking better prospects elsewhere. For CEOs, this could mean that their businesses would be faced with a relatively shrunken demand in the future.

Similarly, CEOs would have to confront and solve problems related to finding the right talent.

• Fracturing world: Nations are competing for influence in an increasingly multinodal world. Countries look inward, prioritising national resilience and localisation. The global landscape is becoming increasingly complex as geopolitical tensions continue to rise, leading to significant disruptions in trade and economic systems.

With ongoing conflicts such as the Russia-Ukraine war and a growing rift between major economies like the US and China, international collaboration is weakening, and long-established trade routes are becoming more fragile.

These pressures are forcing businesses, particularly those relying on global supply chains, to rethink their strategies. Also, a fracturing world is less likely to agree on commitments to slow down and reverse climate change.

• Social instability: Social economic polarisation, disruption, demographic change and eroding trust lead to greater social unrest.

• Collaborate to compete: The idea is that companies can achieve more by working together with other businesses in what are called ecosystems. These ecosystems help companies find new customers, gain valuable insights, and access new skills.

As competition in the future will be based on these ecosystems, it’s important for businesses to learn how to navigate them and find their role. When thinking about changing your business model, consider how these ecosystems can influence your decisions about what value you offer and how you deliver it.

Understand yourself

Now that you’re armed with a better knowledge of the business environment, it’s time to look inward at the capabilities you have, and need. Find potential blockers, i.e., those existing institutional processes and habits that could slow you down.

Understanding your business’s strengths and weaknesses is crucial. First, identify the skills and resources you have and those you need. It’s easy to plan a new business model, but making it work requires focusing on the right capabilities.

Decide whether to buy, rent, or build these capabilities based on your unique situation. Remember, your company’s culture plays a big role in this process. If your culture avoids risks, you’ll need to address that to embrace innovation.

Confront Inertia

Inertia, or resistance to change, is a common challenge for organisations. When a company is successful, it tends to stick to its current methods, creating stability.

However, this same stability can become a barrier when change is needed. Inertia can stem from several sources like confidence in the status quo, the costs associated with change, power struggles among leaders, and gaps in necessary skills.

These factors can prevent a company from adapting to new opportunities or threats. To overcome inertia, it’s crucial for management to focus resources effectively and dynamically.

This means not spreading resources too thin but concentrating them where they can drive innovation and growth. Successful companies regularly reallocate resources to stay agile and competitive, which is linked to higher profits and better adaptation to market changes.

Take action

In today’s fast-changing business environment, companies must act quickly to stay competitive. Waiting for perfect clarity can mean losing out to more proactive competitors. Instead, businesses should embrace uncertainty and treat reinvention as a series of learning steps. This involves using a Minimum Viable Product (MVP) approach to test and refine new business models.

By starting small and learning from these pilots, companies can adapt and scale successful innovations. It’s crucial to focus resources effectively, moving decisively to support promising initiatives.

Additionally, leveraging advantages like economies of scale, network effects, and reputation can strengthen a company’s position. Embracing change and being intentional about strategy, resource allocation, and capability development will help businesses navigate future challenges and seize new opportunities.

This article is from the Corporate Affairs Department of pwc