CREATING A ROADMAP
FOR THE FUTURE
Well, the toolbox is actually a layered set of thinking, analysis
and modeling tools that help to articulate the emerging strategy
and evolving states. These approaches include: Business Model
Innovation, Business Architecture and Target Operating Models.
Also critical at the cusp of change is Business Capability Modeling,
as it becomes imperative for organizations to rethink their value
chain for better alignment.
Business Model Innovation
Business model innovation differs from traditional product and service
innovation. It focuses on creating a new value proposition, which
at times can also become a game changer, and as such positions
organizations proactively.
They always say
time changes
things, but you
actually have
to change them
yourself.
Andy Warhol
As it often involves more than a snappy new product design, it can
bring a fundamental shift in how the organization (and sometimes the
sector) operates. Because of this, business model innovation hits at
the heart and soul of organization.
Now part of business legend, everyone is of course familiar with
Apple’s business model innovation. While not the first to the market to
offer digital music players, other companies focused more on product
innovation (i.e. the device) rather than the more comprehensive
business model.
Examples of business model innovations can also be found in other
sectors such as with retail discounters like Wal-Mart and Target. As
well, major airlines that had to scramble from their high cost models to
respond to the threat of low cost carriers, have also had to adjust their
business models.
When disruption hits, the knee-jerk reaction is to rationalize
operations and increase product cycle development. However,
business model innovations are complex and often need to address
many aspects of the organization.
In 2010, Alexander Osterwalder and Yves Pigneur co-authored
Business Model Generation – A Handbook for Visionaries, Game
Changers, and Challengers. In this unconventional business book,
Apple’s Business Model Innovation
In 2003, Apple introduced the iPod
with the iTunes store, revolutionizing
portable entertainment, creating a
new market, and transforming the
company. In just three years, the
iPod/iTunes combination became
a nearly $10 billion product,
accounting for almost 50% of
Apple’s revenue. Apple’s market
capitalization catapulted from
around one billion dollars in early
2003 to over $150 billion by late
2007.
the authors propose a business model prototyping tool named
The Business Model Canvas. It provides a shared language for
describing, visualizing, assessing and changing business models.
The canvas walks stakeholders through key aspects of the business
model including - customer segments, value propositions, channels,
customer relationships, revenue streams, cost structures and key
resources, activities and partnerships.
This is a good team tool for front end business model design – the
stage when ideas of the new model are still essentially fuzzy.
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