Why Ecosystems Will Become A Key Ingredient For Successful Fitness Business Models

By: Corey Benish

The ingredients for business success are evolving as we continue to shift from an industrial based economic era to a knowledge-based economy. This shift is impacting the fitness industry in a variety of ways, and the bottom line is that health clubs, gyms, and fitness studios need to continue to evaluate not only how they operate in order to stay competitive, but the very foundation of their business models now and for an emerging changing world in the future.

The speed in which technology, heightened member expectations, competitive business models and markets transform, requires companies to innovate faster. Investing in innovative technologies is no longer enough to succeed or grow. It demands innovation in business models. This innovation is necessary to satisfy member needs in creative ways, and defend from low-cost disrupters.

Traditional business models were operated under the assumption that competitive advantage resulted from quality services and products, in-house technology innovation, and careful management of scarce resources and supply chains. When resources were expensive and scarce and the value did not lie in the digital domain, this view served industries well. That paradigm, however, is no longer as effective.

In their Harvard Business Review article "Reinventing Your Business Model" Johnson, Christensen, and Kagermann, shared a thesis that business models need to be changed to: address competitive positioning, fill career gaps, disruptively exploit new markets or technologies, and protect from low cost disrupters. They also address how disruptive technologies make complex things simpler and more affordable and that business models which emerge to take advantage of these disruptive technologies can have a distinct advantage.

Watch Clay Christensen explain how to reinvent business models in this HBR interview.

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 Christensen isn’t the only business thought leader to address what is happening in the evolution of successful business models. In his book The New Age Of Innovation the renowned business professor C.K. Prahalad explains his concept of new successful business models as follows:

“N=1 states that "value is based on unique, personalized experiences of consumers." That is, even companies serving 100 million consumers need to focus on individuals. R=G, meanwhile, argues that since no company can hope to satisfy the varied expectations of so many consumers, it must diversify how it operates. "All firms will access resources from a wide variety of other big and small firms—a global ecosystem," write Prahalad and Krishnan. In other words, companies' internal focus should be on gaining access to resources, not necessarily owning them.”

In the knowledge-era economy, companies can succeed if they embrace new business models that address changing customer expectations and take advantage of new ways of getting things done.

So how can every player in an industry like fitness embrace a new way forward in their businesses ? The ingredients for successful business models today are based on two main factors :

  1. Addressing the shift in what is valued by consumers.
  2. Leveraging ecosystems to innovate and scale.

As to what health club and gym members value, hyper personalization, convenience, reward systems, and omnipresence are some major components. To deliver consumer needs economically, however, demands relying on quality ecosystems.

A business ecosystem has many advantages. Small competitors can get the edge they need to fight larger companies. Larger companies can use unique knowledge and abilities of smaller companies as well. This “ecosystem” offers access to research, business, technology, and marketing in multiple regions and industry sectors. The fitness business is no different and in order to meet consumer needs and heightened personalized expectations, “N=1” the most successful operators must rely on the ecosystem, or as Prahalad terms it, “R=G”.

At ABC Financial we pride ourselves on being at the center of creating a reliable quality ecosystem through our Integration Marketplace. We also support and work with organizations like REX Roundtables, IHRSA, FIT-C and others who create ecosystems that provide resources, tools and know how to help fitness business operators meet the evolving demands of members.

Business ecosystems offer a superior value propositions by welcoming a market pull model instead of the conventional push model. The push model needs a single company to advertise and offer their products and services, covering all of the costs on its own. An ecosystem offers the possibility to address customer needs in a better way, as it can offer a diverse set of skills and innovation for faster time to market.

Ecosystems are excellent in offering agile and effective collaboration and knowledge-sharing efforts to assist commercialization. In the fitness industry tapping into ecosystems is a must to meet the needs of the customer today and in the future. They are essential to every business model today.

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Corey Benish serves as President of ABC Financial Services. He has over 20 years of experience guiding companies through critical transitions while achieving strategic goals and rapid growth. Corey is able to translate corporate missions and visions into organizational strategies and projects to foster growth and operational efficiency. Having worked in private equity and public company environments across a number of industries, including fitness and health clubs, he has been able to build high-performing teams based on trust, integrity, and an unwavering focus on customer experience. You can follow Corey Facebook, Twitter and Instagram .