New business models changing the Caribbean economic landscape

Across the region, companies are finding new ways to unlock value through the pursuit of new business models that can provide better blueprints for creating value, which economies and societies can use to tackle the challenges they face and allow them to flourish.

ACCA’s new joint report with the Economic and Social Research Council (ESRC) titled Business models of the future: emerging value creation has uncovered six business models and assesses their characteristics and the world in which they operate providing a global view of the models and their future potential:

• Platform-based businesses – digital marketplaces which match buyers and sellers, such as AirBnB. AirBnB is transforming the tourism market worldwide. Last month saw Curacao become the third tourism-intensive Caribbean destination to forge an agreement with home-stay provider, alongside Aruba and Jamaica to address issues including taxes, accommodation standards and regulations. The platform already offers 1,000 Airbnb listings across the island and average hosts earn $4,400 per year, showcasing its growing potential to further improve Curacao’s economy and create new jobs with the sharing economy.

• Mass customisation 2.0 – ‘On-demand’, local manufacturing services which enable customers to engage with companies to self-build highly tailored products, such as clothing brand Levi Strauss. Levi Strauss, an early innovator using the concept in 1994 with its “Original Spin” jeans for women, leveraged technology to measure customers in its stores and send their details electronically to its factory.

• Frugal –reimagined R&D processes that open up new market segments for low cost, high quality products and services such as Renault’s Indian-designed Kwid. Launched in 2015, Kwid was the culmination of a frugal innovation challenge to design and build a car in Chennai, India, for the highly competitive Indian compact-car market. Renault adopted much of the learning from its experience of developing the Logan to keep the costs down and produce a desirable vehicle.

• Modern barter - platforms that enable the exchange of goods and services with fellow users, often through digital or online currencies, such as online time-banking community TimeRepublik. TimeRepublik is an online timebanking community. Users earn ‘timecoins’ for completing a task which they can then spend on services that they desire.

• ‘Pay what you want’ – where customers can pay what they think is right, offered as part of tiered or ‘freemium’ deals such as video game download service Humble Bundle. At the checkout, customers are given a range of suggested payment options, for example, $1 and over, $5 and over and $10 and over. Each tier accesses a larger bundle of games. Customers are then able, via a set of sliding bars that they control, to allocate the amount of money they wish to distribute between the game developers, a chosen charity and to Humble Bundle itself.

• Mega-hyperlocal – companies that flourish because of their deep connection with the community in which they operate such as Kernel Brewery. Based in central London, the Kernel Brewery, a pioneer of a micro-cluster of London breweries based on the banks of the River Thames, values its position in the community over scale. Its founder has remained resolutely connected to the firm’s roots and has resisted expansion to larger premises even though demand has outstripped its over 10,000 bottles per week sales showcasing where it is from is what matters.

Companies engaging with new business models require technical support from professional accountants in addition to relevant, strategic advice that helps them face current and future challenges. Across value proposition, value creation and value capture, professional accountants can provide a multidimensional set of skills that enable the opportunities to be realised.

Regulation and governance, technology, the expectations of stakeholders and globalisation have also been identified as the four critical areas that are likely to have a significant impact on professional accountants in the future. Recent rulings around the world against a variety of companies powered by new models highlight the degree to which they still come up against traditional regulatory barriers. For example popular platform based business UBER launched in Trinidad and Tobago last month, however Works and Transport Minister, Rohan Sinanan, has said their operation in the country is illegal.

In the rise of new business models the rise of platforms, the changing nature of work, the means by which services are provided and the digitisation of manufacturing are just some of the shifts in the economy that technology is making possible. But technology is only part of the story. It is also about the ability of entrepreneurs and innovators to access new networks, capital and ecosystems amidst a challenging economic climate and in doing create new sources of lasting value.

Finance professionals are at the heart of their success or failure. As more of these businesses take over, accountant’s unique vision of how a new business model can create value for a company, coupled with their responsibilities to provide strategic forward thinking, actionable advice will see them needed more than ever across.