Business model innovation is a wonderful thing. At its simplest, it demands neither new technologies nor the creation of brand-new markets: It’s about delivering existing products that are produced by existing technologies to existing markets. And because it often involves changes invisible to the outside world, it can bring advantages that are hard to copy.
The world’s biggest online shopping platform, Amazon, started off in 1995 with the identity of the “world’s biggest bookstore.” Today, Amazon leads the pack among online marketplaces, creates amazing television shows and movies while continuing to deliver groceries to your doorstep. So, what exactly supported the growth of Amazon to the trillion-dollar organization it is today? The only answer to this question points out the continuous efforts of Amazon to innovate its business model efficiently.
Now, leaders all over the world are eager to discover more about business model innovation steps.
Many startups in the past developed solely on the foundation of the introduction of new technology. However, startups in the present times focus more on business model innovation rather than relying on technology innovation.
How Should You Approach Business Model Innovation?
Business model innovation points out the reconfiguration of a business as it continues delivering similar products to similar markets. However, business model innovation involves a different and unique approach for enhancing the value creation and competitive advantage of organizations. At the same time, business model innovation also brings promisingly supportive modifications in its operating model and the value it offers to customers.
Importance of Business Model Innovation
It is a unique approach focused on the delivery of existing products manufactured through existing technologies to the existing target markets. Generally, business model innovation includes changes that are not visible to the external world and could introduce prolific advantages.
However, the most prominent challenge emerges in context of defining the actual implications pertaining to business model innovation. The lack of a specific framework for identification of opportunities can create setbacks when you attempt to develop business model innovation.
Steps in Business Model Innovation
Successful business model innovation paths would focus on changes to the decisions. The four distinct paths for business model innovation emphasize,
- Decisions on offerings of the business
- Time of making decisions
- Authorities for making the decisions
- Reasons for the decisions
The successful implementation of changes in these aspects could play a crucial role in enhancing the company’s bottom-line pertaining to risks, revenue, and costs. Let us dive into an in-depth explanation of the four distinct paths to develop business model innovation with productive results.
Step 1: Decisions on Product or Service Offerings
One of the foremost aspects in answers for “How do you innovate a business model?” focuses on the product or services that you will offer in the new business model.
- Focus Narrowly
- Product Commonalities
- Create a Hedged Portfolio
Step 2: Time of Making Decisions
Decisions must often be made before you have enough information to make them with confidence. We have identified three strategies that, depending on the circumstances, can improve a business model by changing the timing of decisions.
- Postponing the Decision
- Change the Order of Your Decisions
- Split up the Significant Decisions
Step 3: Authorities for Decision Making
The answers for “How do you innovate a business model?” also draw attention towards the selection of authorities for making decisions. Many businesses have discovered radical improvements in decision-making in their value chains by simply changing the people responsible for making decisions.
- Appoint a Better-informed Decision Makers
- Select Decision Makers with the Best Possibility for Gains
- Select Decision Makers Capable of Managing Consequences
Step 4: Reasons for Decisions
The final addition in business model innovation paths reflects on the possible reasons for which decision-makers take certain decisions. The collaboration of decision-makers for creating value should also involve a focus on how they work towards their private objectives.
- Integration of Incentives
- Modification of Revenue Stream
- Synchronization of Time Horizons
Conclusion
Business model innovation helps a business adapt effectively to new changes in customer expectations and demands. With many notable examples of companies working through the business model innovation paths effectively, you could also do it. However, it is important to identify the suitable strategies within each path for business model innovation.
The shift in the business model requires changes in decisions on how businesses capture and create value. If you can define the decisions for changing products or services or the authorities for decision making, you are starting off in the right direction. Business model innovation also emphasizes the timing of decisions and motivations of the selected decision-makers.
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