How technology will continue to power business model innovation

According to HSBC’s Trade Pulse Survey, more than three quarters of corporations are re-evaluating their long-term business models in response to today’s shifting trade environment. The survey also indicates that this pressure is a catalyst for innovation. Nearly 9 out of 10 companies report that they are already taking steps to enter new markets and develop new products, or are planning to do so.¹

Adopting new business models can take many forms. Some organisations adapt existing operations to be future-ready and capitalise on the latest technology. Others are creating entirely new business concepts, to respond rapidly to customer demands and leverage new ways of interacting with them.

This trend is a continuation of a long-established pattern. The gradual but ultimately universal adoption of internet technology enabled the first wave of transformative business models in the last 20 years. Many of these models were based on the reconfiguration of traditional purchases of products or services into digital form, often through subscription services.

A prime example is China’s Tencent, which has transformed itself over the past two decades from a niche gaming and chat platform into a broad business with activities including entertainment, computing, and financial services.²

This transformation was driven by Tencent’s desire to provide an extensive ecosystem of products and services to its customers.³ The company’s success relies on subscription services that offer a variety of services to customers, including video and music streaming, cloud computing services, and development tools.

Today, the subscription model has been extended into all aspects of business and lifestyle products and services. Businesses across various sectors are adopting this model to create predictable income streams, reducing their dependence on intermittent high-value sales.

Software-as-a-service or cloud computing services utilise hybrid clouds, which enable organisations to leverage their own data in a private cloud environment, while connecting to public clouds hosted by global players like Google⁴, AWS⁵, IBM⁶ or Microsoft⁷. These services are increasingly enhanced by artificial intelligence (AI).

AI is also helping to power the personalisation of financial services, in both banking and insurance. In commerce, AI drives phygital experiences that blend online and offline shopping, used by brands such as Apple⁸, Nike⁹ and Sephora¹⁰.

New business models are also being created by new forms of intermediation, made possible through operating new digital platforms. Uber¹¹ and Airbnb¹² are examples of asset-light business models that bring together service providers and customers, earning commissions in the process.

Internet access via smartphones has been fundamental to the operation of many such business models, demonstrating how new types of service can rapidly emerge with the adoption of new hardware.

Once a service is widely adopted, it can be seamlessly scaled across other segments and offerings. Uber’s existing network of drivers enabled it to easily add new services like food delivery and freight.¹³

Businesses that operate in this manner frequently navigate complex and evolving regulatory environments globally, sometimes necessitating variations to their business models. In the UK, for instance, Uber had to adjust its business model in 2022 after a High Court ruling that determined that passengers would now contract with Uber directly, rather than with drivers.¹⁴

An important step in the development of many new business models today has been the adoption of the “outcome as a service” (OaaS) approach, pioneered by General Electric (GE) nearly a decade ago.¹⁵ GE used OaaS to disrupt its traditional business and apply a new digital layer to its existing infrastructure management services.¹⁶

GE leveraged the Internet of Things technology to develop its Predix platform, which collected and analysed data from customer infrastructure to create a predictive maintenance and remote monitoring solution.¹⁷

GE’s digital solutions business became a critical element of GE Vernova, a sustainable energy business that was one of the three entities formed during the split of GE in 2024.

Today GE Vernova uses its SmartSignal Predictive analytics software to deploy Digital Twins that are powered by artificial intelligence and machine learning to help customers manage their infrastructure assets.¹⁸

New business models are increasingly leveraging the vast data processing power of sophisticated artificial intelligence and machine learning models.

The rapid pace of computing progress means that the primary challenge for innovators is not a technical constraint, but a cultural one. Digital transformations must be embraced as a continuous way of doing business, not as a one-time fix.¹⁹

Academic research into corporate best practice finds that in order to be successful, such transformations must involve a change in mindset across an entire organisation.²⁰ Change management and education are therefore as important as any strategic or technological innovation.