Organisations that fundamentally renew their business model see their revenue grow

This is evident from new PwC research among 1,843 large enterprises. In the study, we examined the developments prompting organisations to reinvent, the most common forms of reinvention, and the subsequent financial results. This revealed that the financial benefits do not materialise immediately, but that there is first a transition period during which organisations adapt their way of working and build new skills. Adapting the business model is therefore not a quick fix, but an investment that takes time to pay for itself.  

Is your business model still suited to the market dynamics of tomorrow? 

The pressure on companies to rethink their business models is mounting. Technological developments, changing customer behaviour, and increasing competition mean that the way in which organisations create, deliver, and capitalise on value is no longer self-evident. Optimisation helps organisations keep pace, but when the underlying logic of the business model is challenged, that is no longer sufficient. The key question for executives is therefore not whether change is needed, but whether the current business model is still suited to the market dynamics of tomorrow.   

How is reinvention different from transformation?  

Not every strategic change is a reinvention. Organisations introduce new products, enter new markets, or improve processes, but these changes do not necessarily alter the fundamental way in which they create and generate value.  

Reinvention occurs when several fundamental components of the business model change simultaneously. These are changes that determine where value is created, how it is unlocked, and what role the organisation plays in this process. Reinvention thus alters the logic of how an organisation competes.  

Precisely because this type of change is so far-reaching and does not occur very often, we wanted to gain a better understanding of when organisations opt for it, what forms these changes take, and what they ultimately achieve.  

The key drivers of reinvention  

Reinvention rarely stems from a single cause. In practice, various external developments tend to reinforce one another. Nevertheless, three factors clearly stand out.  

• Technological disruption. Technologies such as AI, the cloud, data analysis, and connected devices are enabling the development of new products, services, and revenue models.  
• Changing customer behaviour. Customers expect greater convenience, greater speed, personalisation, and an integrated digital experience.  
• Competitive pressure. New and existing players are harnessing technological opportunities to redefine markets, forcing established organisations to rethink their business models.  

Technological disruption and changing customer behaviour together account for 55 per cent of all identified triggers for reinvention. Competitive pressure often follows as a result, when new propositions and players disrupt the market. Sustainability and regulation also play an important role, particularly in sectors such as energy & utilities, construction and mining or resource-intensive industries. However, they are less likely to be the direct catalyst for fundamental changes to business models. 

Reinvention is not the same everywhere  

Although every organisation chooses its own path, we see seven recurring archetypes of reinvention.  

• Changes to the value chain
  Organisations change their position in the value chain by divesting, adding, acquiring, or vertically integrating their activities more closely. Value-chain shifts is the most common archetype, accounting for almost four in seven archetype mentions and appearing in around three-quarters of reinvention events.

• Digital products
  New digital products, services, platforms, or data-driven propositions.  

• Direct customer channels
  Direct relationships with end customers, less reliance on intermediaries.  

• Everything as a service (XaaS)
  Products are turning into services; one-off transactions are becoming recurring revenue streams.  

• Circularity
  The business model is restructured based on reuse, recycling, and circular value chains. 

• Ecosystems and platform models
  Value is created through collaboration with partners within a wider network.  

• Connected physical products
  Physical products are linked to software, data, and digital services, generating new revenue streams.  

‘It is worth noting that organisations rarely apply a single archetype in isolation', says Barbara Baarsma, chief economist at PwC Netherlands. ‘Value chain changes, in particular, often go hand in hand with digital products, circularity, or direct customer channels. Furthermore, the choice of archetype is closely linked to the underlying reason for reinvention.’  

Which trigger leads to which type of reinvention?  

Not every form of reinvention stems from the same challenge. PwC’s study shows that certain triggers are more frequently associated with specific archetypes. Technological disruption and changing customer behaviour, for example, are relatively often accompanied by changes in the value chain and digital products. Organisations then change both their position in the value chain and their product range.  

Pressure to be sustainable tends to lead more often to circularity models. Regulatory and policy changes, on the other hand, are more often accompanied by changes to the value chain, whereby organisations restructure their activities or adjust their position within the chain to adapt to new market conditions.  

What are the benefits of reinvention?  

The financial results are clear, but they are not immediately apparent. In the first few years, organisations mainly invest in new technology, capabilities, and ways of working.  Barbara Baarsma, chief economist at PwC Netherlands: ‘Reinvention works like an investment: first come the costs and adjustments, and only then growth. It is only after the business model and capabilities have been restructured that the returns become apparent. Anyone who sees it as a quick fix will be disappointed. But the returns are real: after a transition period, organisations achieve, on average, 21 per cent more turnover than comparable companies, rising to  36 per cent over five years'.  

That does not mean that every reinvention is automatically successful. Not every organisation makes the right choices or implements the change effectively. But on average, organisations that fundamentally reinvent their business model show significantly stronger revenue growth. 

What does this require of executives?  

For executives, the key question is not which solutions they should implement, but whether their current business model is still suited to the market of tomorrow. This calls for a different approach to strategy: starting not with solutions, but with changes in the market and their implications for the business model.   

Ask yourself the following questions:  

• Are customer expectations changing faster than your organisation can adapt?  
• Are new competitors emerging with a fundamentally different revenue model?  
• Does technology enable new business propositions that are difficult to implement within your current business model?  

If you recognise some or all of these warning signs, it may be time to look beyond process improvements or new technology alone. It is then not just one part of the organisation facing pressure, but the viability of the business model. It is precisely at that moment that reinvention becomes relevant. Reinvention is not an end in itself. It is a response to specific strategic pressures. That does not mean that every organisation must completely reinvent itself. It does, however, mean that executives must constantly evaluate whether their business model still aligns with the way in which value is created and earned in the market.

Veronique Roos-Emonds, chair of the board of management PwC Netherlands: ‘Organisations that reassess their business model in good time do not wait until change becomes inevitable. They recognise which developments are putting pressure on their market and use those insights to adjust their strategy in good time'.  

Reinvention as a growth strategy  

Not every investment changes the way in which organisations compete. Our study shows that it is precisely those organisations that fundamentally reinvent their business model that are better positioned to achieve growth and unlock new value. Reinvention is not a quick fix, but an investment that takes time to reap rewards. Organisations first build new capabilities and adapt their way of working before the benefits become apparent.  

For organisations that successfully take this step, reinvention can be a significant source of growth in the long term. We help organisations to reassess their business models, so that they can respond more effectively to changing market conditions and capitalise on new opportunities.