Business Model Innovation

It isn't enough to have an innovative idea or a great product. To make that idea or product a reality, you need an innovative business model. Business model innovation is the work to improve existing business models or the work to create entirely new business models. But what's a business model?

Professor Clayton Christensen defined a business model as the resources, processes, and priorities that deliver a profit model. Alex Osterwalder of Strategyzer defines a business model using nine interrelated elements demonstrating desirability, feasibility, and viability and represented visually using a canvas. 

For incumbent organizations, the easiest way to develop a new business model is to acquire it. However, most organizations fail to realize the value of the acquisition by integrating the new business model too deeply into the traditional one, thereby stifling the unique value of the new model and "killing the goose that lays the golden egg." The best resource on how to prevent this is an MIT Sloan Management Review article by Professor Clayton Christensen and Derek van Bever entitled The Hard Truth about Business Model Innovation.

The harder way to develop a new business model is to create it using existing resources within the core business. That is difficult work because the temptation is strong to create the new model in the image of its maker. What's needed is for the organization to create an entirely new and separate business outside the core business that may draw upon the resources of the core business only if and when needed. The guide for this work is elucidated in the book Dual Transformation.