In a rapid change era, the concept of business model innovation has emerged as a key strategy for maintaining a competitive edge and driving business growth. This form of innovation is crucial due to the drastically shortened lifespan of business models over the past 50 years, down from 15 years to less than five. Thus, it has become an essential capability for organizations seeking growth, revitalization, or defense against industry disruption. Our experts say that a single innovation can have 30 different models.
Business model innovation is the process of reconfiguring existing technologies, products, or markets to deliver enhanced value. This strategy involves subtle shifts that are often unnoticed by competitors, making them difficult to replicate. This transformative practice is not just about developing new products, but involves a systemic approach to enhancing profitability and productivity by modifying a business’s core decision-making processes. By reevaluating factors such as product offerings, decision-making procedures, and risk management, companies can effectively recalibrate their business models for improved revenue, cost-efficiency, and risk mitigation.
Determining the optimal mix of products or services is a critical aspect of business model innovation. Companies can adopt different strategies to address this challenge. They can choose to focus narrowly on a specific product or service, exploiting predictable demands and stable revenues. Another strategy involves identifying commonalities across products or services and utilizing shared components or capabilities to reduce demand variability and increase flexibility. In essence, business model innovation can be a game-changer, enabling businesses to thrive amidst uncertain demand and increasing competition.
Business model innovation empowers companies to emerge as significant and influential players, even if they are not creating something entirely new themselves. Instead, they can leverage innovations made by others to create and capture value. It’s about reshaping how business is done, introducing novel ways of delivering existing products or services that can drastically improve profitability and productivity. However, the question remains – how to create and capture value through business model innovation? The answer lies in understanding the current market trends, customer needs, and how the innovation aligns with these. It’s about creating a unique value proposition and effectively delivering it to the right audience.
Meet experts who can guide you on this journey and help your business succeed through strategic and impactful business model innovation:
Rita McGrath, Strategy Professor at Columbia Business School
Serguei Netessine, Professor of Operations, Information and Decisions; Vice Dean, Global Initiatives at The Wharton School
Shahzad Ansari, Professor of Strategy & Innovation at Cambridge Judge Business School Executive Education
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