insights! #28: success factors in business model change

Uwe Graf is responsible for the development and implementation of services in the Lightning division. TRILUX is a globally active, 100-year-old company headquartered in the Sauerland. TRILUX is present in Europe, Asia and the Middle East and manufactures luminaires in Germany and Spain. Despite various challenges, the company has transformed successfully. TRILUX has developed services around its core competence of lighting. These competencies range from consulting to financing lighting systems and maintenance models. Uwe Graf firmly believes that services are, and will increasingly become, a revenue driver for the core lighting business. As a result, the business model had to be adapted to market and customer needs, leading to a vertical integration.

Through verticalisation of the business model, not only TRILUX but also other manufacturers, as well as retailers,

• Take control of several steps in the value chain, enabling them to guarantee higher quality and efficiency. This allows a company to strengthen its market power and improve its competitive position.

• Achieve synergy effects and thus save costs.

• Increase customer value and gain a better understanding of its customers' needs, as well as offer them greater added value.

• Open up new business opportunities and expand the portfolio.

Changing a business model requires a lot of time, persuasive power and a certain amount of risk. Beyond the necessary courage and drive for implementation, there are several factors in business model change that indicate the change was successful. These include, among others, the following success factors:

• A change in business model should lead to an increase in revenue, either by opening up new markets or by improving the company's efficiency across the entire value chain. According to Uwe Graf, services are a driver of this.

• Ideally, the change in business model should demonstrably have increased customer satisfaction and should be continuously tailored to customer needs.

• Another success factor is improving competitiveness. Not only are customer needs continuously evaluated, but also those of the market, so that market power can be strengthened.