How to Do Business Model Innovation for the Established Firm

This article provides a systematic framework for helping executives of large, established organizations identify opportunities for business model innovation and organize themselves to pursue these opportunities. While also applicable to start-ups, this article focuses primarily on how to define, challenge, and revamp the business model of an existing business or organization.

 

In nearly every industry tried and tested business models are coming under attack at an unprecedented rate:Pharmaceutical companies are searching for alternatives to the blockbuster model. Banks are looking for innovative ideas to make up for lost fees and revenues due to new regulations. A drop in advertising revenues and circulation pushes newspapers towards new sources of income. Traditional brick and mortar bookstores are losing out to online competitors that are not encumbered by pricey real estate. Software providers are being threatened by cloud computing. The common root cause at the heart of the problem:a once successful business models.

“Changing a business model of an established organization is difficult – the gravitational pull of the existing business is hard to overcome.”

What is a business model, anyway?

A business model describes the logic behind how an organization communicates, creates, and captures value. Henry Chesbrough in his book “Open Innovation” suggests that a business model has six functions:

  • Articulate the value proposition – the value created for users by the offering based on the technology.
  • Identify a market segment – the users to whom the technology is useful and the purpose for which it will be used.

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How To Become A Business Model Architect

Our first article in this series, titled “Include Business Model Review as a New Year Resolution”, described a method to reveal weaknesses in your business model. So, what do you do next after you complete your business model assessment and find weaknesses in one or more of its cornerstones? You find Value Accelerators (VA)™! VA’s are specific and market-proven ideas, assets or strategies that directly accelerate revenue and profit growth. This article discusses how to develop, assess and prioritize the best VAs to strengthen weaknesses in your business model. It also gives you a link to download an example of a scorecard to help prioritize the VAs.

People, like companies, have problems they cannot solve alone. Frequently, the sufferer feels the pain and recognizes the onset of symptoms, but cannot find practical solutions. The sad part is that there are likely to be proven solutions for their specific condition – the sufferer just does not know how to find them. This describes the struggle a company faces with business model weaknesses. Diagnosing such problems is difficult (symptoms are frequently misread) and a reliable cure is hard to find.

A quick history of our experience with Accelerators (VA)™

From 1989 to 1995, I worked with a team involved in researching how companies in different industries use variations of the same process innovations in new product development, customer acquisition, production, distribution, and other major processes.  In other words, we were hunters – looking for solutions proven by others to improve our own processes

These gems were easy to find – the popular business press covered them, and we visited top companies to speak with executives who were happy to discuss the smart things they had done. Our team developed a series of analytical “lenses” to clarify the value and portability of these gems that helped us curate them. We started building a catalog of valuable, highly adaptable, portable innovations.

Here is not the end….To view the full Article about How To Become A Business Model Architect visit Innovation Management. Also visit our various programs of Online Learning Innovation Programs and also get updated with our latest Articles.