Business Model Innovation
Business model innovation may be one of the most important types of innovation, as companies battle increasing market pressures and struggle to keep up with rapidly evolving technology.
This increasing speed of change makes it difficult to compete at a product level –products in almost any industry are copied or incrementally improved on as soon as they are released to market.
Ulises Pabon, Chief Innovation Officer at consulting firm QBS, says this pace can be addressed through innovation as long as it is focused on serving core business goals.
“Innovation is not an end. Innovation is the means to the end.” Pabon said.
At QBS, Pabon and his team of economists, psychologists and other professionals have seen a change in innovation demands. For the past 5-8 years more companies have looked to his team for help in redefining how they approach their business.
Here are some common things Pabon looks at when changing a business model.
- Blockbuster and Borders failed because they were locked into a single business model that was upended by market newcomers Netflix and Amazon, respectively. Pabon said senior leaders need to shepherd flexibility in a company’s business model (beyond just products) and also buy into the change process.
- “Understand where you fall in the marketplace,” Pabon says. By understanding what are your customers are demanding from the organization an innovation leader will help his or her company develop a path toward competitive advantage.
- Ask yourself: How should the innovation take place? An organization might launch a parallel operation running outside the organization or experiment with a new process inside the organization.
- Create the roadmap for implementation: What will be the steps for implementing the new business model? Where will it get tough?
For example, QBS worked with an insurance company to go from product-selling to solution-selling. By establishing networks with tow truck owners, repair shops and car rental services, the insurance company helped clients get their car repaired and have a loaner car at the ready after an accident.
In order to change your business model you need to start with a single step. Rethink your business mission first before you rethink your business model. Once you know where you stand, you’ll easily identify where you want to go.