What is Business Model Innovation?

What is business model innovation?

To define business model innovation, we have to define the term business model. A business model describes how an organization creates, delivers, and captures value. Business model innovation is a critical part of business strategy and is a way to create a system that produces more value for both businesses and customers. 

A business that doesn't focus on adapting and changing value creation by enhancing advantage can end up compromising a number of components, such as its strengths. If a business actively avoids innovation through its business model, it can start to stray away from what its customers need, which is where business model innovation comes in. Business model innovation involves reimagining the entire structure of how a company operates, as opposed to taking an innovative approach to products or services, exploring new ways to adapt to an evolving market.

Why does business model innovation matter?

Traditional business models can run the risk of becoming stagnant as customer expectations change, new competitors emerge, and technology evolves. This is why, in the realm of the intrapreneur, platforms like KICKBOX are invaluable in helping organizations achieve their goals, and can help revolutionize a company by utliizing the workforce’s current skills, identifies new business opportunities, and create a lasting impact, all through the process of business model innovation.

What are the advantages of business model innovation?

Business model innovation provides a framework to allow companies to adapt and grow in equal measure. It allows companies to:

1. Stay relevant

Business model innovation ensures companies can meet evolving customer needs and stay relevant despite an ever-shifting landscape.

2. Compete effectively

Younger startups can enter the market with a number of innovative business models under their belts. This means a greater degree of competition for those established companies who are too stuck in their ways, and using business model innovations such as disruptive innovation can shake up whole industries, such as how Netflix became a major player in the market by changing from renting out DVDs to focusing on streaming. 

3. Improve their bottom line

Rethinking the concept of value within an organization and how it is not just created but captured can result in improved profitability. As improving revenue is one of the top drivers for innovation in the modern day, a business must focus on providing value at every turn.

How can a business incorporate business model innovation?

As business model innovation is not a one-size-fits-all approach, any organization looking to spearhead change will need to undertake the following key steps:

• Identify the challenges and limitations of the current business model.
• Generate ideas or potential innovations through creative thinking.
• Evaluate the potential impact of each idea.
• Pilot new models by testing and gathering feedback and being willing to adjust according to the outcomes.
• Scale a successful model across the organization.