Sustainable Business Development Of Commonwealth Bank - An Essay.

Discuss about the Sustainable Business Development of Commonwealth Bank.

The aim of this paper is to harp on the concepts of business model and disruption of the business model. The paper also discusses the threats and opportunities ushered in by the smart-connected devices by delving into its impact on Commonwealth Bank, Australia. There are discussions on the Osterwalder and Pigneur’s business model in contextualizing the disruptive business model of Commonwealth Bank and further discussions on the two perspectives of business model.

Business model comprises of three elements that define the structure and goals of the business (Tidd, Bessant & Pavitt, 2005). These three elements are profit formula, value proposition and the key processes and resources. Customer value propositions deals with the notion of fulfilling the task are meant for the better experience of the customers (Chesbrough, 2010). The notion of profit formula is concerned with the strategies that the company has employed in generating a lucrative deal. Third notion of the key processes and key resources indicates the processes imperative for the delivery of the proposition.

Disruption in business has become the trend in contemporary phase of business. The term disruption refers to the drastic alteration in the landscape of the traditional business model of the company. Companies have adopted the disruptive model to bring innovation in their business. Some of the illustrations are that companies have disrupted the business model by converting the necessities into shipping products and subscriptions (Commonwelath Bank of Australia, 2018). Companies have tapped the advantage posed by the revolution in internet speed the mushrooming of the mobile device that would stream high-quality content in exchange of monthly subscription. Another illustration of innovation would be Netflix. The company has ensconced a strong position by continuously innovating its business model. This is done through renting the DVDs and therefore changing the fate of blockbusters. In 2007, the company incorporated the streaming service and has over the years built a reputation. It has also branched out into the sector of original content. Currently, Netflix has become the contributor in cord-cutting phenomenon that has posed a threat to the cable companies. Another illustration of disruptive business model is Amazon. The retail giant has been consistently focussed in elevating the experience of shopping for the consumers. It has placed 500 products in the market that would be available at the fingertip of the customers. Recently, it has launched that app that has led to a sweeping increase in its sales. To stay ahead in the business, the company innovated convenience that includes the facility of Amazon Prime for its customers. Along with that it has granted access to the customers  membership to two-day shipping and has allowed them to access millions of products including the benefit of music libraries and video. Disruptive business model has incorporated drop box for the purpose of communication. This had led to the enhancement in participation, accessibility and productivity. Another feature of disruptive model is that it has led to the building in of gamification that has led to the enhancement in engagement with the customers.

Disruption in business

The eruption in technology has led to the radical automation in the service of the Commonwealth Bank (Porter & Heppelmann, 2014). The company has introduced a range of smart machines that interact with humans and has led to the generation of GDP. Smart-connected devices and service has altered the business model of Common Wealth Bank as envisaged by Dilan Rajasingaham, the Head of the CommonBank’s Emerging Technology team (Welcome to the Machine-to-Machine economy, 2018). The company has introduced machine-to-machine economy the feature of which is that machines can eliminate the tasks that are otherwise boring, tiring or onerous. The company is planning to introduce automated machines that can look after it, in other words it can do self-monitoring and are capable of taking orders and making decisions on insurance. Machines will perform these functions and will open a new door in terms of providing smooth service to the customers and ease their pain. The technology partner of Commbank Emerging Technology has collaborated with public and private tech partners and the academic community who would be able to experiment with technology. The focus areas of Commonwealth Bank are big data analysis, blackchain, smart machines and cyber security (Reinventing Your Business Model, 2018). The team of CommBank is committed in preparing a future based on experimentation, education, adoption of new technologies and learning. Whilst, these were the opportunities, the threats are also quite prominent. According to a survey conducted by the Mobile Ecosystem Forum, 60 per cent of the population were worried about the proliferation of the connecting devices, and 62 per cent of the population was of the opinion that privacy was a real concern that was being hampered by the smart-connecting devices (Commonwelath Bank of Australia ,2018). It was reported that 21 per cent of the sample population conceded that internet of Things (IoTs) poses a real threat (How Smart, Connected Products Are Transforming Competition, 2018). The advantage lies in gaining or securing the trust of the customers in the management of transactional data. CommBank is committed to innovating in the space of payment technology. The company has constructed a network that would enable in the innovation of the business through a decentralized structure and distribution. The broader aim of the company is to work its privacy protocols that would underpin the transaction banking of CommBank.

An analysis of Commonwealth Bank’s disruptive model with the framework of Osterwalder and Pigneur is imperative. It has been found that the bank is committed towards building on its customer relationships and the value proposition. In terms of value proposition, the company believes in making transaction smoother for the customers, in terms of customer relationships, the company believes that smart-connected device would cater to the growing needs of the millenials for whom everything is just a click away and finally in terms of channels, the company is planning to reach to the potential customers via notification through mobile phones (Osterwalder & Pigneur, 2010). 

Business model as a set of capabilities- This refers to the ability of an organization to recognize and build on the right kinds of capabilities. This capability provides the opportunity to translate the strategy into actionable tasks and ensured that it is executed in the business areas (Zott & Massa, 2011).

Business model as profit formula- Business model as a profit formula refers to the four aspects of business. These are cost structure, target unit margin, revenue model and the velocity of the resources.

Conclusion

Therefore, it can be stated that smart-connected products in the form of machine-to-machine economy will make it easier for the customers to make transactions. It will also transform the landscape of the banking sector. This is an illustration of disruptive business model for CommonWealth Bank.

References

Chesbrough, H. (2010). Business model innovation: opportunities and barriers. Long range planning, 43(2-3), 354-363.

Commonwelath Bank of Australia (2018). Disrupting beliefs: A new approach to business-model innovation. McKinsey Quarterly, 3, 66-75.

How Smart, Connected Products Are Transforming Competition. (2018). Harvard Business Review. Retrieved 19 April 2018, from https://hbr.org/2014/11/how-smart-connected-products-are-transforming-competition

Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming competition. Harvard Business Review, 92(11), 64-88.

Reinventing Your Business Model. (2018). Harvard Business Review. Retrieved 19 April 2018, from https://hbr.org/2008/12/reinventing-your-business-model

Tidd, J., Bessant, J., & Pavitt, K. (2005). Managing innovation integrating technological, market and organizational change. John Wiley and Sons Ltd.

Welcome to the Machine-to-Machine economy. (2018). Commbank.com.au. Retrieved 21 April 2018, from https://www.commbank.com.au/guidance/newsroom/corporate-travel1-201711.html

Zott, C., Amit, R., & Massa, L. (2011). The business model: recent developments and future research. Journal of management, 37(4), 1019-1042.