A business model for the new economy

The new economy brought with it a new approach to designing business models. Not too many years ago the familiar organisation structure was dominated by a traditional view of managers that was based on asset ownership and vertical organisation structures. The prevalent view was that ownership enhanced control and profit margins. More recently flexibility, co‐operation and collaboration have become important features for success. The success of organisations such as Dell and the move by some of the largest corporations in the world towards a model within which assets are managed rather than owned has led to significant changes not only in structure, but also in attitudes and managerial behaviour. As a result the “new business model” has five common attributes, the firm should: be cash flow driven; focus on return on investment; function with distributed (leveraged) assets or low capital intensity; do so with a single minded view on core assets and distinctive capabilities; and develop competitive advantage by relevant positioning within its industry value chain. Reviews these developments, using the Australian wine industry as an example of the new business model.