How can Digitalization Improve Business to Deliver Create and Capture Value in COVID-19 for Fitness Industry?
The COVID-19 crisis has overwhelmed the lives and livelihood of individuals around the globe for a short duration of time. It has affected the health of individuals and the economy. The crisis stands out due to the size and speed in which it is unfolding. For most vulnerable individuals and the customer teams that serve them, it has necessitated a change intact in their interactions. Among the response measures that have been adopted by several enterprises include the digitalization of operations. Most enterprises have digitalized at least some part of their business to protect their employees and serve clients that could be facing mobility restrictions due to the COVID-19 crisis. Enterprises that had not automated their operations should be keen on embracing innovations that deliver, create, and value amid the COVID-19 crisis. Failure by enterprises to innovate their approaches in carrying out daily activities could hinder their ability to withstand the impact of the coronavirus pandemic to the social and economic order in the community. Empirical evidence points out that many companies develop excellent and technologically sophisticated technologies and products that aim at creating and delivering value to their clients. The coronavirus pandemic is sufficient motivation for companies to modify their business models to align with various recommendations that enhance the safety of their employees and clients. A recap of significant developments and disruptions in the economy points out that firms that fail to adjust their business models to suit the changing patterns often close shop or bask in the past glories of success. For instance, firms such as Kodak, Nokia, and Motorola were once influential firms that disappeared from prominence after years of successful trading. Similarly, firms such as fitness centers that will not modify their business operations in response to the coronavirus pandemic risk being faced out of business.
Problem Statement
The coronavirus, which was first detected in China, has affected operations in more than 188 countries across the globe. The spread of the virus has left businesses across the world, counting losses. The proposed guidelines that aim at controlling the spread of the virus have hurt the operations of most enterprises. For instance, in countries that implemented lockdowns, retail stores that relied on traditional brick and mortar stores incurred substantial losses. Besides, there have been significant shifts in stock markets. For example, during the onset of the pandemic, the FTSE, Dow Jones Industrial Average, and Nikkei witnessed massive falls as the number of covid-19 cases increases.
Delimitation
There is hope for enterprises that have embraced digital business models in capturing, creating, and delivering value to businesses in the time of coronavirus. The paper focusses on the BellaVita Fitness and Wellness Center in New York. The enterprise has been temporally closed following the outbreak of coronavirus. Several other wellness and fitness centers in the United States and other countries adversely affected by the coronavirus pandemic have been forced to close their premises to protect the employees and clients. The digitalization of operations at BellaVita Fitness and Wellness center presents an opportunity to create and deliver value for the enterprise.
Short Methodology and Research Design
The primary research paradigm for the study is constructivism, where several solutions could be fit for the enterprise. No single approach may appear appropriate for all wellness and fitness centers in the digitalization process. The study acknowledges that different perspectives exist in attaining the digitalization of processes and activities at the fitness center. Different interpretations may exist concerning the proposed measure by past studies.
The study embraces a qualitative research design, which aligns with the objectives of the study. The study aims at uncovering how digital business models can contribute to value creation for enterprises in the times of coronavirus. The study examines the perceptions of different scholars in the digitalization process for operations in various enterprises. Besides, the study compares the viewpoints of multiple scholars by examining secondary sources. The choice of secondary sources was accomplished through the use of keywords such as business models, innovation, and digitalization in search engines such as Google Scholar. Recent articles were picked due to their relevance to the topic and the possibility of them capturing contemporary issues in the digitalization process for business enterprise. The study further relied exclusively on peer-reviewed sources to enhance the validity of the research findings. However, there are concerns about the aspects of the generalization of the study.
Theoretical Discussion
Business models have, for long, been touted as an instrument of value creation by fostering the use of ideal technology in the operations of an enterprise. Besides, the business models are a vehicle for innovation. The premise perception that business models can be used as strategic tools relies on the premise they operate as a link between the strategies and operational processes (Teece, 2010). It facilitates the conversion of business strategies into a working model for an enterprise.
Most academic authors perceive the business models as structured and analytical models that are used in the creation, delivery, and capturing of customer value. A useful business model facilitates the simplification of several variables that have an impact on the structuring of the business. Correct use of a business model ensures that decision-makers describe and analyze their business operations while considering all the constituent parts that empower success in daily activities (Teece, & Linden, 2017). Besides, it facilitates the consideration of third parties and other stakeholders in a language that can be used by all stakeholders.
There have been several attempts to classify how business models can be classified along with typical and generic instances where they can be applied to firms in different industries. The grouping makes it feasible to generate insights that are useful to the entire industry from a single unit of analysis. The dimensions that can improve the status of the whole sector include value networking, creation, proposition, delivery, and appropriation (Cortimiglia, Ghezzi, & Frank, 2016). The element of value creation considers the resources, processes, and activities that influence the nature of value in an enterprise. The dimension of value delivery covers how business activities are articulated to reach potential clients and business partners, such as those involved in the distribution and delivery channels (Cortimiglia, Ghezzi, & Frank, 2016). The aspect of value proposition summarizes the compelling offerings in the form of products and services. Besides, it puts into consideration the activities that are related to the selection of customers, segmentation, and acquisition. The element of value networking relates to how relations between the internal and external stakeholders are governed in an enterprise. It further values the resources and competencies that come from outside the firm (Cortimiglia, Ghezzi, & Frank, 2016). Lastly, the element of value appropriation explains how the business captures value and generates profit.
Fig.1 Business model conceptual framework (Cortimiglia, Ghezzi, & Frank, 2016).
The above figure offers a snapshot of the different elements of the business model conceptual framework.
Existing studies point out that business models further double up as objects of innovation. Notably, there are no precise definitions of business models and their impact on innovation. However, it is widely acknowledged that elements of design and development are indispensable in fostering innovation. An understanding of the prevailing situations, trends, and patterns in consumer tastes and preferences is vital in facilitating innovations that sustain the creation and delivery of values to enterprises (Spieth, Schneckenberg, & Matzler, 2016). However, changes in the business model are not always a result of deliberate management actions. Instead, rapid events in the environment are a catalyst for change. For instance, in the case of coronavirus pandemic, the modifications in the business models for most enterprises would not be attributed to deliberate actions by the management. Instead, they will be necessitated by the need to keep business operations afloat (Foss & Saebi, 2017). The primary mandate of the administration is to facilitate the identification of uncertainties that impact the business model. Besides, the management is involved in the examination of the possible consequences of external and internal changes in an enterprise. Such an approach facilitates the development of strategic activities that enable an enterprise to survive turbulent economic times.
Effective adjustment to the changes in the operating environment for an enterprise is pegged on the use of a business model navigator, which is an action-oriented methodology that permits any company to break with its dominant industry logic and innovate its business model to suit changes in the operating environment for a business enterprise. A business model navigator is competent in all sorts of industries, organizations, and companies that aim at modifying their operations in a strategic approach. It relies on the logic that useful business models can be developed using creative imitation and recombination. The business model navigator entails series of activities in different stages of its development. In the first phase, initiation, the set of actions are geared towards a proper analysis of the ecosystem, where it examines the agents that are responsible for facilitating change in the operations of an enterprise (Gassmann, Frankenberger, & Csik, 2014).In the case of activities in wellness and fitness centers, the primary driver of change is the novel coronavirus and the implemented regulations that aim at protecting employees and clients. Such measures necessitate a paradigm shift in how enterprises carry out their operations. The second phase of the business model navigator covers the ideation process where an enterprise adapts to the prevailing patterns in the environment (Gassmann, Frankenberger, & Csik, 2014). It could take the form of learning through trial and error, where a firm experiments with different strategies. Currently, most wellness and fitness centers in areas that have been worst hit by the pandemic have opted to close shop and wait for the epidemic to subdue. However, with the increasing cases of individuals contracting the virus, it is uncertain when the pandemic will be contained. Digitalization of operations can salvage most enterprises that traditionally relied on individuals developing close contact. Digitalization refers to a means of capturing and providing information through digital processes and creating value in electronic form. The last element of the business model navigator pertains to integration, where proposed changes form an integral part of the new business model
Fig.2 simplified business navigator. (Gassmann, Frankenberger, & Csik, 2014).
The above figure presents a simplified business model navigator.
Canvas Business Model
The canvas business model reflects systematically on the business model so that an enterprise can adopt the necessary measures to improve its operations. Some significant components that build up the canvas business model include critical partners. Such a dimension explores the key partners/suppliers and the motivations for the formation of partnerships. In the case of BellaVita Fitness and Wellness Center in New York, critical partners in digitizing its operations to respond effectively to the coronavirus pandemic include technology service providers. The partnership is motivated by the desire to attain digital platforms that will enable the enterprise to reach out to its clients. The second element of the business model relates to critical activities. It further determines activities that are essential in customer relations and those that enhance the creation of business value. In the case of BellaVita, it would be necessary for the enterprise to digitalize its operations. For instance, the enterprise should consider offering live streaming services to clients that would make it possible for people to access the group’s workout online anytime from the comfort of their computers, tablets, or smartphones. The coaches and trainers will have exclusive access to workout data from anywhere and offer quick feedback and tips to guide them along their fitness journey. The third element of the model relates to the value proposition, which covers the needs among clients that an enterprise is satisfying. Concerning BellaVita, the enterprise seeks to avail fitness programs to consumers. Other elements of the model include customer relationships, which, in the case of BellaVita, will entail the creation of an online community. The ideal customer segment for the enterprise keen on maintaining mental and physical wellbeing. Essential resources that will be utilized in the digital model include human resources and various technology platforms. The main distribution channel would be online platforms such as the company website and different social media platforms such as YouTube. The most substantial cost for the enterprise would be gathering the necessary resources to facilitate the online streaming of fitness programs. Possible revenue streams for BellaVita include subscription fees for various online packages offered by the enterprise.
DNA Model
A close examination of the DNA model for BellaVita points out that it favors being a resilient organization, where it places weight on flexibility in responding to changes in the external environment (Boons, & Lüdeke-Freund, 2013). The digitalization process would not change the nature of services offered by the enterprise. Instead, it would avail a different approach towards the delivery of fitness programs to ensure the sustainability of operations in the corona times. A resilient organization is famed for availing the necessary resources that make it possible for the management to take the required measures in responding to changes in the external environment.
Triangles
The magic triangle enhances an understanding of the customers, the value created, and the avenues for value creation. In the case of BellaVita, the digitalization process aims at offering wellness and fitness services through various online platforms, where the trainers will have access to the physical wellbeing of participants. The value created is the provision of virtual physical and mental wellness programs to clients who primarily constitute of residents of New York that had initially subscribed to services offered in various physical locations.
Fig. 3 Business Triangles (Böhm, Weking, Fortunat, Müller, Welpe, & Krcmar, 2017).
The above figure portrays a generic triangle for various business models.
Conclusen
Conclusively, the coronavirus pandemic has affected the health of individuals and further affected the global economy. Most of the regulations that are implemented to curb the spread of the virus discourage operations in enterprises that offer services that require close contact between clients and employees. For instance, most fitness and wellness centers have resorted to closing their physical stores to protect their clients and employees. Such measures have resulted in losses for most companies. However, the digitalization of the business models presents an opportunity to capture, create, and deliver value for clients and enterprises. For instance, BellaVita Fitness and Wellness Center has resorted to the creation of an online community where it streams various physical fitness programs. Such an approach generates revenue for the enterprise and further enhances the delivery of value to clients interested in maintaining physical and mental wellbeing amid the coronavirus pandemic.
References
Böhm, M., Weking, J., Fortunat, F., Müller, S., Welpe, I., & Krcmar, H. (2017). The business model DNA: Towards an approach for predicting business model success.
Boons, F., & Lüdeke-Freund, F. (2013). Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner Production, 45, 9-19.
Cortimiglia, M. N., Ghezzi, A., & Frank, A. G. (2016). Business model innovation and strategy making nexus: evidence from a cross‐industry mixed‐methods study. R&D Management, 46(3), 414-432.
Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: How far have we come, and where should we go? Journal of Management, 43(1), 200-227.
Gassmann, O., Frankenberger, K., & Csik, M. (2014). The business model navigator: 55 models that will revolutionize your business. Pearson UK.
Spieth, P., Schneckenberg, D., & Matzler, K. (2016). Exploring the linkage between business model (&) innovation and the strategy of the firm. R&D Management, 46(3), 403-413.
Teece, D. J. (2010). Business models, business strategy, and innovation. Long-range planning, 43(2-3), 172-194.
Teece, D. J., & Linden, G. (2017). Business models, value capture, and digital enterprise. Journal of organization design, 6(1), 1-14.