FT.com: Business Model Innovation

Note; 

This article by Dr. Oliver Gassman was so spot on, we just had to share it….. A very precise, brief explanation of business model innovation. Thanks FT.com! 

The danger in missing the innovation moment

Companies fail to identify future opportunities because they do not have fresh business models

Have you ever wondered why hyper-successful companies like Nokia or Kodak suddenly lose their edge? How companies such as Commodore Computers, Grundig, Nakamichi, Newsweek or Polaroid could possibly fail?

They all had abundant research and development resources, top employees and a profound knowledge of their markets. But they had another thing in common: they all missed the moment when they should have left their successful path to rethink their business models. They missed out on radical innovation because they were too busy managing daily business and serving current clients – instead of looking for future opportunities.

 

ON THIS STORY

It seems the business model

Products and companies do not differentiate winners from losers; it is the right business models that do. Of BCG’s 25 most innovative companies in 2013, 14 are business model innovators. For example, Apple became the biggest music retail seller without selling one CD; Netflix reinvented the video business without operating a single video store. Google continues to attack new industries with its data-based services and devices; Google’s products from glasses, to self-driving cars to smart thermostats are just a means for increasing and leveraging Google’s data-based consumer insights.

Business model innovation is more profitable and more sustainable than product innovation and is badly needed in Europe today.

How are we addressing this issue in business schools? Too often business schools preach interdisciplinary research and team thinking while teaching in functional silos such as strategy, marketing, operations or finance. Global competition requires a more holistic approach to business development that typically reflects business model thinking.

Managers taking a business model view ask who-what-how-why questions for every new product, for every new company and for every new process they develop. Who is our target customer? What are we offering our customer? How do we deliver the value proposition? And why does the business model generate profit? These questions are interdependent and often touch the dominant logic of an industry.

Business model innovators like Google, Amazon, Nestlé, Hilti and Daimler revolutionised their industries by overcoming its dominant logic. Amazon has become the biggest bookseller in the world even though it does not own a single brick-and-mortar store; Skype is the largest telecommunications provider worldwide even though it does not own any network infrastructure.

But overcoming the dominant logic of their industry remains the biggest barrier for experienced managers. Some innovators do it accidentally, some intuitively, but rather seldom as a systematic leadership task.

Compare this to engineering and engineering schools. Every engineer learns design rules for new product development in their first year, but business schools do not teach how to design new business models. Business engineering still seems to be an art that only a few gifted entrepreneurs such as Steve Jobs and Larry Page have mastered.

There are design rules and patterns for business model innovation, but they are rarely actively developed and taught. Developing a business model is a craft that can be learnt.

Research at St Gallen on more than 350 of the largest business model revolutions within the past 50 years found that 90 per cent of all business model innovations are based on 55 core patterns.

For example, when Nestlé invented Nespresso capsules in 1986 it revolutionised the coffee market and today 5bn capsules are sold annually. Nespresso’s strategy of selling its coffee machines for very little, while charging €80 per kg for coffee is based on Gillette’s razor-and-blade business model. Nestlé combined it with a lock-in pattern, where customers cannot switch to competitors’ cheaper products.

Executives, business engineers and innovators have to learn systematically how to develop new business models. Our action research as well as in-house company projects shows that executives can learn these patterns by being confronted with concrete and challenging questions. For example, how would Nespresso run your business? It is amazing how creative managers become once they begin to think in this way.

The biggest challenge is learning how to unlearn. This is a challenge that should be taken up by business schools.

The author is professor of technology management at the University of St Gallen

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Welcome Inger Hanne

Welcome, Inger Hanne

It’s a sincere pleasure to welcome our latest team member, Inger Hanne Vikshaland. She joins us from the position as Social Media Manager from the start-up IT-consultancy, Peanuts – by brilliant people. She’s joining Engage // Innovate to strengthen the company’s international growth.

Inger Hanne Engage Innovate

Big ambitions – and even bigger expectations
Since day one, Engage // Innovate as always been about “Dreaming Big – and execute successfully”. Today we are shifting gears and accelerating further. During this month’s strategy seminar in Brazil, we’ve developed our “9 Ambitions”, our call to action for developing a series of highly diverse business models. Our “Strategy as stretch” is highly motivating and gives us tons of energy.

In this driven, high-performance environment, we hold huge expectations of Inger Hanne. This is not a job, it’s a 24/7 lifestyle. “Perhaps, the most challenging job you’ll ever hold”, we once discussed.

Multiple role ….and Head of global events

Inger Hanne will have multiple roles at Engage // Innovate. Primarily, she’ll be working on our consulting projects for clients both locally and abroad. Here, her focus will be helping our clients increase innovation and drive strategy and change. This also includes a strong focus on marketing, social media and digital business model innovation.

One of Inger Hanne’s strengths is her natural talent for speaking and workshop facilitation. She’s a natural facilitator, handling both large and complex groups with ease. As Engage // Innovate runs a large number of in-company and open strategy & innovation workshops every year, this is one of our core company skills and will be put to good use in the coming years.

Second, in line with our international expansion, she will be heading up our global marketing and events. Starting late 2014, Engage // Innovate will launch a series of open workshop and events on strategy and innovation. Oslo, Dubai and Copenhagen are the first cities we are looking at. She’s also leading up the work for our Strategy Summit, taking place in Stavanger, Norway in January 2015. Over the following months, she’ll also be heading up our upcoming “Banking Innovation Workshop” and “Digital Business Model Innovation seminar”, both taking place in 2015.

As a core part of our growth strategy, she’s leading our work with global speaking agencies. We are currently represented in the US by Speaking.com. In Europe by Speakers Academy and in Scandinavia by Athenas. Working with speaking agencies is a great way to reach interesting audiences around the world, and Inger Hanne is actively growing our network of partnerships around the world.

 

A great start – in Italy

While planning for the future, she’s already hands-on with several clients. During her on-boarding period, she’s been deeply involved with our work for Reckitt Benckiser in Venice, Italy. Her insights and case studies on digital and social marketing was a perfect fit for our client looking to grow their digital business.

“Case Study and examples opened our mind to the digital business world: Alibaba, Twitter, Klout, You tube, Google+, Pinterest, Facebook shall be included into our thinking while working on projects’’, and, “Eye-opening examples and high quality time spent with the team creating many digital ideas”, were just two of the feedbacks she got after the client workshop.

Engage Innovate Italy

Fantastic speaker

Inger Hanne is also a superb speaker, speaking on marketing, social media and leadership of Generation Y. ‘’My real passion is engaging with large audiences’’, says Inger Hanne. This fall she’ll be speaking at public events in Bergen, Haugesund, Stavanger. While she’s scheduled for a Vienna event in February 2015.

Inger Hanne Speaking ONS

 

We are very much looking forward to getting her on-board and up to speed at Engage // Innovate.

You can follow Inger Hanne:
on Twitter at @vikshaland
On Instagram @ingerhanne
On Linkedin @Ingerhanne

On Tesla’s TV

It’s kind of cool to get picked up and featured on Tesla Motor’s internal tv stream.

Earlier this year we held the Strategy Summit: Learning to Work Differently with Strategy.
29 CEO’s and business leaders gathered in Stavanger, Norway for a full day of hands-on strategy tools and strategy cases. One of these tools, and one of these cases was Tesla Motors.
We used the company as a case study on the “Three Levels of Business Models” tool.

Today, we noticed Tesla Motors is running this on their company internal smart tv solution.
Cool.

A must-read; The Capitalist’s Dillemma

The June issue of HBR carries an article that will resonate around the globe and impact business thinking and education for decades to come.

A fantastic piece of work (and crowdsource) by Clay Christensen and Derek van Bever, plase enjoy the The Capitalist’s Dilemma or watch the early video below.

 

 

Workshop slides from FEI Venice 2014

The Hand-out toolkit can be found here

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Workshop pictures from FEI Venice

This gallery contains 18 photos.

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Photos from Learning to Work Differently with Strategy Workshop

This gallery contains 14 photos.