Big Risk, Big Rewards with Business Model Innovation
There is a lot of talk about business model innovation these days. Psion, the maker of mobile handheld computers has joined in and they aim high.
They want to no less than revolutionize the rugged mobile computing market with its move to an open innovation business model in which Psion will co-create mobile hardware, software and services, bringing together customers, partners and developers within the Psion eco-system. They call this approach for “Open Source Mobility”.
Psion has set some very ambitious objectives for this initiative. One is to dramatically reduce customer’s total cost of ownership and do this 30-50% better than their competitors over a five to ten year span.
Such ambitious objectives are not unusual when companies began to work with business model innovation. Dell became an 800-pound gorilla by changing how to order and build your own computer and more importantly by getting payments upfront while paying their suppliers 60-90 days later. The latter financed the growth of the company.
As a more current case, we can just look at Apple and how they are rewriting the rules in the industries they operate within. Business model innovation plays a big role in their success.
I have no doubt that Psion has a difficult task ahead of them, but as with the Dell and Apple examples, I think they touch on something important. If you really want to make a difference within an industry, you need to include business model innovation and get beyond products, technologies and services.
You also need to involve all business functions and to bridge internal and external resources while making this happen. This is no easy task, but if you have the potential to reap rewards similar to what Dell and Apple got, it could be worth the risk.
Several people have questioned whether business model innovation is more or less just corporate strategy. I think there is some truth in this and I think it is a good thing as it brings innovation up closer where it belongs; as a key strategic element of in any company.
There are a few observations that stand out for me when considering Business Innovation:
-Business model is a design within itself.
-The heart is its value is its appeal to the consumer and how it links, provides compelling alternatives or does challenge existing initiatives and what that will mean
-It is the point of departure where everything else follows in actions and decisions.
-The value has to be well articulated so its ‘disruptive’ aspects are seen and evaluated against existing models and quantified as best as possible.
-The key is identifying the new relationships and partnerships, otherwise it has a risk of not being seen as sufficently different
- It is strategic in its considerations and needs to be part of a conscious corporate strategy to be resourced and understood but it is not necessarily THE corporate strategy but getting you to a point through a business innovation approach.
This article reinforces the point that you need to be doing ideation sessions for products, services AND business models. You can't just look in one direction to be successful.
Great article, keep up the good work!