Saturday, March 14, 2009

Business Model Innovation

Business Model Innovation is a hot topic today. In its bi-annual CEO study, IBM concluded in 2008 after interviewing 1130 CEOs in 40 countries across 32 industries, that two thirds of the companies are implementing extensive innovations in their companies, especially around their business models.

In the last decade new technology has enabled close to zero cost of reproduction, storage and delivery of everything that can be made digital. It has enabled business model transparency, ways to interact and communicate with external actors, and tools to collaborate and globally distribute innovation and value creation. The increased transparency together with a cultural change, forces companies to not only focus on increasingly demanding customers, but on all affected stakeholders. Companies are bombarded by change, and business models need to be adjusted for companies to keep up. Important to keep in mind is that business models change but economic laws do not. For tips on how to approach business model innovation read 10 Tips on Business Model Innovation.

Three tools for Business Model Innovation

The Business Model Innovation Matrix
The matrix, that has recieved some great attention, consists of 40 principles developed to solve complex inventive problems on the vertical axis, and 8 business model components on the horizontal axis generating 320 areas for Business Model Innovation.

The Value Proposition Hierarchy Explorer

The basic idea underlying the tool is to identify assets and capabilities that are really valuable and identify how value could be created by combining own and external assets and capabilities into new value propositions.

Business Model Innovation using Ideality
Ideality is a simple yet powerful tool to generate new ideas for business models. It is a tool that instead of starting from current business model and current value propositions, starts from the theoretical ideal situation.

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