Business model innovation

What is business model innovation?

Traditional, purely product-oriented business models often no longer work in the age of digitization. Many companies that have been successful so far fail time and again for the simple reason that they do not adapt their business model to adapt to ongoing changes. There are now various new and digital business models. The special feature of a digital business model is that there is an exchange of a service and consideration via digital technologies describes.

The innovation of a business model in general is defined by the following aspects. On the one hand, through a changing the benefit proposition, eine changed utilization And on the other hand through a Adjustment of the underlying business model. With regard to the value proposition, changes may affect the choice of target segment, product or service offering, and payment model. Changes in consumption may relate to a one-time use, a possible subscription service or, for example, a pay-per-use model. With regard to the business model, the focus is on questions of how profitability, competitive advantage and added value can be increased by providing the value proposition.

A current and highly sought after topic

As digitization due to the pandemic is a get a significant boost has, the topic of business model innovation has also increasingly come to the fore. But if we take a closer look, we see that the topic has always been on our mind. In terms of technology and digitization, Google, Microsoft, Amazon, and Apple are probably the best examples of business model innovations. With the advent of Spotify and podcasts as well as social media, many new or adapted business models have emerged, which in most cases digitally focused are. Start-ups in particular are known for shaking up and disrupting industries and trying out and establishing new exciting business models. But more and more companies that are already on the market are seeing the young competition and are becoming active: for example in the shared economy sector, such as ShareNow from Mercedes and BMW.

The common motivation behind all of these business model innovations is that they are based on declining competitiveness answers from companies. This is due to the increasing volatility of the market and increasing customer segments. Because as a result, business models age all the faster these days — and if these new potential opportunities are not seized, companies are left behind. Especially in dynamic times like these, companies must be careful and React proactively. This also means that “old” business models are slowly dying out.

Prerequisites for business model innovations

Transformation doesn't simply mean using new technology or making a simple change in business. As a matter of priority, management must accept the idea of a business model innovation and let go of the old. As soon as a transformative mindset If available, this must be transferred to the entire management team and then to the employees. Because innovation and the associated mindset should ideally be understood and anchored throughout the company. As already mentioned in the articles Frugal innovation and Innovation without a budget described, companies do not necessarily need a huge budget to innovate. Even business model innovations do not necessarily require this and can often already scaled quickly and easily become. This is also shown by the numerous business model innovations in start-ups, which also had and still have little budget available.

How does a business model innovation arise?

From a methodological point of view, there are countless concepts and models to create a business model innovation. Presented here are the Business Model Canvas by Alexander Osterwalder and the Business Model Navigator at the University of St. Gallen.

Business Model Navigator at the University of St. Gallen

Here, a business model consists of 4 dimensions. When at least two dimensions are changed in a coordinated manner, one can speak of a business model innovation.

1. The customer: (Who) is the target customer and what are their needs
2. The value proposition: (What) is the value proposition and with which services (products or services) do we offer it
3. The value chain: (How) is the value proposition delivered or how is the service manufactured
4. The revenue mechanism: (Why) is the business model profitable?

Business Model Canvas by Alexander Osterwalder

Here is a business model structured in 9 parts:

1 key partners, 2 key activities, 3 key resources, 4 value proposition, 5 channels, 6 customers, 7 customer relationships, 8 costs, 9 revenue.

Each of the 9 parts is individually scrutinized and all thoughts are recorded in writing, so that a harmonious business model is created in the end. This can be done digitally as well as through crafts and with post-its. The method is extremely transparent, comprehensible, flexible and pays particular attention to customer experience (customer-centric).

Business model and open innovation

It is often the case that business models are developed or transformed by management. However, we also offer Helpful input for employees and customers, partners and research. Opening up to the outside world creates a differentiated view of the situation, the problem. Use your existing network and develop new business models together with partners and external parties. AnyIdea offers you everything you need for open innovation, digital Ideation, Co-Creation, and Intrapreneurship to enable and support you in finding and developing new business model innovations.