Data-based business models

What is the challenge?

In the intense competition between companies, it is difficult to achieve competitive differentiation through products and their variants alone. The challenge for companies, then, is to identify new principles of value creation and harness them by adapting core components (customer groups, value propositions, value creation activities, revenue mechanics).

What data can help?

  • All conceivable data categories (e.g. market, customer, and product data)
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Use case category: data-based business models

How can companies use their data?

Introducing a data-based business model does not necessarily mean replacing the existing business model – typically, companies extend their existing core business with (a portfolio of) data-based business model(s). The benefits (e.g. reaching new customers, revenue increases, and growth) result from the paths chosen in each case. Conceivable are the extension of products with digital elements, use of connectivity, products as a service, applications and digital platforms.

Where is this use of data already being applied?

Deutsche Telekom is a telecommunications company. In addition to operating information and communications services, Telekom offers new data-based services. For example, it developed the game app “Sea Hero Quest” together with three research institutions (Alzheimer's Research UK, University College London, University of East Anglia) to diagnose dementia at an early stage with the help of usage data.

Alibaba is primarily a B2B commerce platform. However, the company is using the data generated from its business activities to expand their business model. For example, it analyzes transaction data, social media data and data from other areas related to internet services to better assess customers’ creditworthiness

Airbus’ core business is aircraft manufacturing. In addition, the company has built the “Skywise” platform for interactions between manufacturers, suppliers and airlines.

Vestas is a manufacturer of wind turbines. In addition, the company offers data-based operation of wind turbines. Vestas thus guarantees turbine availability and a specific amount of energy produced. The company is paid for achieving this guaranteed value.

The manufacturer of machine tools Trumpf has also expanded its business model. Customers are offered additional, data-based services, such as the “MobileControl” app, which helps operate and monitor machine tools. 

How does this use of data contribute to value creation?

Companies can use data-based business models to create entirely new value alongside or instead of their core business. The key change is the great opportunity for competitive differentiation.

Aim of data use

Sources: Deutsche Telekom (2017), Saranga, H. & Huang, Y., Harvard Business Review (2018), BDI e.V. (2020), FLYACTS GmbH (2016)