Could your company benefit from a new business model? Consider these six questions.
Companies are increasingly turning toward business model innovation as an alternative or complement to product or process innovation. This article defines a company’s business model as a system of interconnected and interdependent activities that determines the way the company “does business” with its customers, partners and vendors. In other words, a business model is a bundle of specific activities — an activity system — conducted to satisfy the perceived needs of the market, along with the specification of which parties (a company or its partners) conduct which activities, and how these activities are linked to each other.
Business model innovation can occur in a number of ways: (1) by adding novel activities, for example, through forward or backward integration, (2) by linking activities in novel ways, or (3) by changing one or more parties that perform any of the activities. Changes to business model design can be subtle; even when they might not have the potential to disrupt an industry, they can still yield important benefits to the innovator.
The article offers a number of examples of business model innovation and poses six questions for executives to consider when thinking about business model innovation.
2 Comments On: Creating Value Through Business Model Innovation
New business model? Yes, business models need to swing; literally, meaning, models need to be organized like a jazz ensemble and need to be able to break down to smaller segments to enhance performance (a quintet, sextet, septet, etc). Flexibility, nimbleness is key. As a large configuration, the model needs to demonstrate interconnectedness and synthesis. In this way, models are resilient and best prepared to face inevitable change.
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The seventh question to be asked is the impact on the ecosystem and how do organisations simultaneously engage with the community and gain its support. this is required to develop the interdependencies (for co-creation of value) and also to sustain such interdependency. The model shall demonstrate the value of co-creation before any investments are made for its scale.