How New Technology Changes Business Models

Whenever a new technology appears, almost everyone claims it will be “transformational.” Usually, that claim is too vague to be useful. A company may adopt a technology, launch a feature, or improve a few internal processes, all of that without materially changing its business. A more useful question is: What fundamental constraint does the technology remove? I use this question to classify the impact of new technologies on companies, products, and business models. The framework A new technology can affect a business model in five distinct ways. Classification What constraint the technology removes No Material Impact It removes no constraint that materially affects the business model Existing Model Leverage It removes a constraint that limited the performance of an already viable model Economic Enablement It removes a cost constraint that prevented a technically possible model from being viable Technological Enablement It removes a capability constraint that made the model technically…