What is Business Model Innovation?
Business model innovation and business model development are hot topics in almost every company. The challenge for executives is how to align the various parts of their business models. A business model describes the rationale of how an organization creates, delivers and captures value. It is a simplified representation of how the business makes money.
Our world is changing. Faster and faster every day. Society is becoming more and more complex. Be it through globalization and new technologies. In a disruptive age, traditional business models are under attack.
Regardless of whether the firm is looking for investments, submitting a project proposal for board approval, running a strategy-development workshop or introducing the business to colleagues and friends, executives must be able to describe the business model in a short and precise manner. They need to be able to explain how the various parts connect, how the ends meet and how the entire business model is aligned.
There are numerous definitions of Business Model Innovation – one of the definitions is: Creating value for companies, customers and society, replacing outdated models that respond to emerging user needs and environmental concerns.
The digital age has become an impetus for business model innovation, as technology has dramatically changed how companies operate and deliver services to customers.
95% of all new products introduced each year fails.
This gives existing products and services good conditions on the market. Not by doing like everybody else in the industry but by creating an innovative business model to differentiate and get out of the red ocean (Blue Ocean Strategy).
Only 43% of the companies in the top of Fortune 500 in 1995 still existed in 2015.
Changes in the Fortune 500 are happening at an increasing pace. This means that in 10 years from now, we will not recognize most of the companies leading the world. It is important to keep focusing on your customer, to keep evolving, to compete cooperatively, to create a great place to work for your employees and to have a more gender balanced top management.
Developing new, unique concepts
Business model innovation is the development of new, unique concepts supporting an organization’s viability and the processes of bringing those concepts to fruition. The primary goal of business model innovation is to realize new revenue sources by improving product value and how products are delivered to customers.
Business model innovation is also about gamechanging.
It should be seen as a proactive need for all to explore new avenues of growth and opportunity before others steal in and take the space from right under you.
The starting point of a new business model is to know what the customer needs – what are they trying to do that they cannot do as effectively as they would like to today. This can be recognized through in-depth observation (Design Thinking) to discover the opportunities that are presently not being served correctly.
Existing products or services often over-serve the real need of the customer. The critical aspect here, however, is that it must deliver something the consumer wants resolved – not what you might just think from your own internal perspective. It requires identification and then validation. If you can identify these correctly, then you have a potential innovation match that might need a new business model to support this.
For incumbents, this kind of innovation is hard. Some struggle merely to recognize the possibilities, others struggle with culture and business practices. Should it be so difficult for established companies to innovate in their business models? What approach would allow incumbents to overturn the conventions of their industries before others do?
How exactly do new entrants achieve their disruptive power? What enables them to skirt constraints and exploit unseen possibilities?
Inspiration from the innovators
|EXPLORE||Change your market Make markets in your vision tribal and problem solving, emotional and distinctive|
|DISRUPT||Change your strategy Strategy disrupts the future, pivoting transformationally|
|INSPIRE||Change your brand Brands capture bigger ideas about people and their aspirations, platforms for collaboration|
|DESIGN||Change your business Innovate the business model driven by human opportunity, dynamic, creative fusions|
|RESONATE||Change your story Engage people on their terms, on demand, time and place, topical, authentic, experiential|
|ENABLE||Change your experience Engage and enable to become participative and personal, relational, circular, enduring|
|MOBILISE||Change your relationship Relationships between people, loyalty built on community, collaborative and sharing|
|IMPACT||Change your results Long term value creation; sustainability drives growth, enlightened value|
|AMPLIFY||Change your potential Innovate and amplify|
|THINK||Change your vision Be guided by inspiring purposes, driven by audacious ideas|
Business model canvas
Alexander Osterwalder is one of the leading international authors on the topics of business model and business model innovation and known for the development of the Business Model Canvas. He is also the author behind the bestseller book Business Model Generation and Value Proposition Design.
The business model ‚Business Model Canvas‘ is a template for strategic management, which is useful to develop or identify a company’s business model. The business model is built around nine building blocks. Here is an example of Skype’s business model.
GERBUS Academy – Executive Education Programs
GERBUS Academy provides business innovation Programs targeted at executives and topmanagers across Europe, who wants to learn more about business model innovation and innovation driven growth.
The GERBUS “Gamechangers Germany” executive program enables the participants to develop the right strategy, smarter innovation and winning business, applied to their industry and their company. It is fast, detailed, facilitated and practical, applied to the best opportunities to help the participant’s own business innovate and grow, and for them to lead and create their better future.
The Gamechangers Germany Program is a 2 module (of each 2 days) with Prof. Peter Fisk, taking place in Hamburg. Peter Fisk is professor at IE Business School and best-selling-author. He features on the Thinkers 50 “Guru Radar” as one of the world’s top business experts and was described by Business Strategy Journal as “one of the best new business thinkers”.