To help entrepreneurs identify innovative business models that can disrupt traditional industries, we asked 16 CEOs, founders, and other industry leaders for their insights. From researching platform entrepreneurship to trying the sharing economy model, discover the top 16 business models these experts recommend for breaking new ground in your industry.
- Research Platform Entrepreneurship
- Examine Virtual Activity Models
- Leverage a PaaS Model
- Utilize a Saas Model
- Offer Done-For-You Solutions
- Implement Social-Environmental Models
- Embrace a Subscription-Based Model
- Use AI-Based Creative Platforms
- Explore Biotechnology Subscription Services
- Consider Data Trusts for Disruption
- Practice Usage-Based Pricing
- Apply a Pay-for-Outcomes Model
- Streamline Services With AI Tools
- Look Into the Gig Economy Model
- Adopt the On-Demand Approach
- Try the Sharing Economy Model
Research Platform Entrepreneurship
One innovative business model that entrepreneurs can use to disrupt traditional industries is “platform entrepreneurship.” This involves creating an online platform, application, or marketplace that connects buyers and sellers of goods and services.
For instance, OpenFoodFacts is a unique example of this concept; it’s an open data platform where users can contribute food product information from around the world and share how they rate these products as sustainable or ethical.
The result is a reliable database for consumers that allows them to make informed decisions about what foods they purchase, revolutionizing the grocery industry.
Examine Virtual Activity Models
One innovative business model that entrepreneurs can use to disrupt traditional industries is virtual versions of activities and services. Our organization adopted this model out of necessity during the pandemic, as did many other companies.
However, as the world becomes more global and online, there is an ever-present need for online services, especially ones that connect folks across long distances. Businesses that have traditionally operated in person, even small businesses, can diversify their revenue streams by taking some business online.
Examples include breweries offering at-home tastings and art studios offering paint-along virtual classes. Home services can offer virtual reality tours and online consultations. One major benefit of this model is that you are not limited by geographical footprint and can potentially capture clients from all around the world.
Leverage a PaaS Model
One innovative business model that entrepreneurs can leverage to disrupt traditional industries is the “Platform as a Service” (PaaS) model. This model involves creating a digital platform that connects buyers and sellers, facilitating transactions and interactions within the industry.
By providing a centralized marketplace, PaaS enables businesses to reach a wider audience, reduces overhead costs, and fosters collaboration and efficiency. Examples of successful PaaS models include Airbnb, Uber, and Upwork, which have revolutionized the accommodation, transportation, and freelance industries respectively.
This disruptive approach challenges established players, creates new value propositions, and transforms the way industries operate.
Utilize a SaaS Model
Software as a Service (SaaS) is an innovative business model that entrepreneurs can leverage to disrupt traditional industries. By offering software solutions through a subscription-based model, entrepreneurs provide accessible and cost-effective alternatives to on-premises software.
SaaS eliminates the need for upfront investments in hardware or software licenses, offering greater flexibility, scalability, and seamless updates for customers. This disruptive model democratizes access to advanced technologies, enhances user experiences, and delivers agile solutions that adapt to market needs. By embracing SaaS, entrepreneurs can challenge established players, introduce innovation, and create new opportunities within traditional industries.
Offer Done-For-You Solutions
Today, it’s all about providing comprehensive solutions to customers. For a service-based business like ours, a “done-for-you” model works. The model removes the burden on clients because you perform the tasks for them. It’s not necessarily carrying the burden for them but leveraging the skills and expertise you’ve gained over the years.
Because you’re more knowledgeable about the processes and have proven results, you can help the clients avoid making mistakes. You can also personalize the solutions for your clients. Your hassle-free solutions help set you apart from traditional industries.
Implement Social-Environmental Models
Innovative social and environmental business models create value for customers while also creating or preserving social and environmental benefits. While I would like to say that circular business models are disruptive, I don’t believe this is always the case because they are too prescriptive, designed by consultants, and promoted from the top down, so not really in touch with user needs.
In the Nigerian context, I believe the most innovative business models are those that successfully deliver public goods such as health care, education, and sanitation through the private sector.
There are some great examples such as Pakam, a waste management and monitoring app, and Mitimeth, a company that valorizes water hyacinth. However, figuring out product and payment systems that can really engage low-income users and remain profitable is extremely tricky work.
Embrace a Subscription-Based Model
As a serial entrepreneur, I believe that one innovative business model that can disrupt traditional industries is a subscription-based model. This model involves charging customers a recurring fee for access to a product or service, rather than a one-time payment.
The subscription-based model has already been successfully implemented in industries such as entertainment, software, and e-commerce, but there are many other industries that can benefit from this model.
For example, in the transportation industry, instead of owning a car, customers could pay a monthly fee for access to a fleet of vehicles that they can use whenever they need to. This would reduce the cost and environmental impact of car ownership, while also providing customers with more flexibility and convenience.
Use AI-Based Creative Platforms
One groundbreaking business model that has the potential to disrupt traditional industries is the use of AI-based creative platforms. In the digital marketing landscape, we have seen a considerable surge in such technologies since the start of 2023—reshaping the way businesses approach branding and content creation.
A personal experience that highlights this innovation is when our agency used an AI tool to create ad campaigns. To our surprise, the AI developed an entire marketing strategy within minutes that otherwise would have taken weeks of manual effort.
It not only created compelling content but also optimized it for different social media platforms, essentially transforming our efficiency and cost structure. This experience underscores the disruptive power of AI in traditional industries.
Explore Biotechnology Subscription Services
One innovative business model that holds immense potential to disrupt traditional industries, particularly healthcare, is biotechnology subscription services. It is a company that offers a monthly subscription for personalized medicines, curated based on continuous data analysis from wearables.
Heart rate, sleep patterns, physical activity, and blood sugar levels are tracked in order to tailor medications and treatments. I once interviewed the CEO of a startup that is making strides in this space. He narrated a compelling story about one of their subscribers. A middle-aged woman, with a history of heart disease, had her life transformed.
Her wearable detected anomalies in her heart rate, and the company promptly adjusted her medication dosage. She experienced significant improvements in her health over the following months. This innovative model is truly making healthcare personal and proactive.
Consider Data Trusts for Disruption
Data Trusts are an innovative business model that entrepreneurs can use to disrupt traditional industries. Think of it like a communal data bank, a collective where individuals and organizations contribute data, which then gets anonymized, analyzed, and utilized in a secure and ethical way.
The beauty of this model is that it democratizes access to valuable data and promotes a more equitable distribution of its benefits. I witnessed a friend’s small-scale agriculture business leapfrog in efficiency when they joined a Data Trust focused on agricultural analytics.
By using the insights collected from a larger pool of data, they were able to optimize their crop yield, drastically cut wastage, and pivot swiftly in response to market trends.
Practice Usage-Based Pricing
One business model that you should consider is usage-based pricing. This model is particularly effective in industries traditionally dominated by fixed pricing structures. Instead of a flat rate, customers pay only for the amount of service or product they actually use.
Take cloud services for example, where the pay-as-you-go model allows businesses to scale their server needs up or down depending on their current demands. This model is attractive to consumers as it offers greater flexibility and cost-effectiveness.
For the business, it creates a more aligned value proposition, and often, a more predictable revenue stream. It’s a win-win situation that can significantly disrupt and revolutionize traditional industries.
Apply a Pay-for-Outcomes Model
An innovative business model with disruptive potential that entrepreneurs should consider is the pay-for-outcomes model. Traditional industries often charge customers for best effort, sometimes under-delivering on promises. Entrepreneurs aiming to break into such markets need to offer something fresh.
While product differentiation and effective sales and marketing are important, your business model can also make you stand out. An outcome-based model where you tie your product or service to a specific, measurable, and high-value outcome for customers, such as increased revenue or waiting list sign-ups, can be a game-changer.
This outcome-based model is like a golden ticket to success and is a concept worth exploring for modern entrepreneurs looking to make a difference.
Streamline Services With AI Tools
One business model that I’m excited about is taking hands-off traditional business services like accounting, taxation, or marketing and streamlining the entire process through digital apps or AI tools, which can complete these tedious tasks in just a few clicks.
With the rampant technological advancement that AI is bringing, a business model that can capitalize on the current trend and introduce a product/service that eliminates the need for traditional business tasks, which are usually outsourced, will do well in the long run. We often see accounting firms and marketing agencies charging high prices for their services while delivering mediocre results.
In this technological era, a SaaS product that can complete these outsourced tasks either in a digital-hands-off way or through AI will receive massive appreciation from businesses that can no longer afford outside agency services.
Look Into the Gig Economy Model
Through digital platforms, the gig economy platform model connects freelancers and independent workers with employers. Companies such as Upwork and Fiverr have disrupted the job industry by offering a large pool of talent and allowing for flexible work arrangements.
This strategy provides corporations with on-demand expertise while giving individuals more choices over their careers. Platforms for the gig economy expedite talent acquisition, minimize overhead costs, and generate new income prospects.
Adopt the On-Demand Approach
The on-demand approach makes use of technology to give customers quick access to goods and services. DoorDash and TaskRabbit, for example, have disrupted the food delivery and gig economy sectors by connecting consumers with service providers in real time. On-demand models thrive on speed, convenience, and tailored experiences, catering to the needs of busy people looking for quick fixes.
Try the Sharing Economy Model
As an experienced entrepreneur, one innovative business model that I’ve found to be exceptionally disruptive in traditional industries is the sharing economy model. I remember in the early days of our business, we observed that many potential customers were hesitant to make the substantial upfront investment required to install solar energy systems.
To mitigate this, we adopted a shared ownership model to provide our customers access to solar power without the hefty initial costs. They became part-owners of a large shared solar farm, gaining access to clean energy while sharing the costs with other users.
This innovative model transformed the way people viewed solar energy, making it more accessible and affordable. It effectively disrupted the traditional energy market, reinforcing the notion that sometimes, the key to innovation is not just a new product, but also a novel way of selling it.
Ben McInerney, Founder and Director, GoSolarQuotes