Starcher Group

Open Book
Keyboard
MacBook
Crocus
Blueberries
Light Bulb
Reed

Demystifying Business Model Innovation

The reality of doing business model work is complex yet business model innovation can be reduced to 2 activities.
Demystifying Business Model Innovation

The volume of posts, articles and books on Business Model Innovation has increased significantly over the past year. It is often positioned as the holy grail of value creation, attainable through thinking orders of magnitude more complex than strategy and business models. The reality of doing business model work is still complex yet business model innovation can be reduced to 2 activities.

Looking at Business Model Innovation from a market perspective, it is rare to see business model innovation applied to an existing business. Most often, business model innovation happens with new businesses, whether inside a firm or a new start up.

Market Perspective

Looking at the issue from the company’s perspective, an existing business can evolve their business model or they can launch a new business with either an existing or new business model. The number of companies who organically innovate their existing business model is exceedingly rare. When it does happen, it is with business models where units are run relatively independently of each other e.g. Amazon, ITW, Danaher, early days at HP, …

BMI 2

To further simplify the thinking around business model innovation, you can leverage a traditional growth strategy framework and add a business model dimension. This is helpful to help uncover new opportunities and make visible the greater risks involved with leveraged and new business models.

Business Models and Growth Strategies

In summary, business model innovation can be reduced to 2 activities:

Evolving existing business models for existing businesses
Defining and evolving business models for new businesses