Time For Business Model Innovation?
The answer is yes, it might be. Why? Because a lot of changes are going on in your business environment. Maybe the changes generate new opportunities, maybe they cause threats to surface. Who knows? Well, you must know if you want to make sure that your company is not rendered obsolete and – sooner or later – goes out of business.
But why not traditional product innovation? Because in most industries the customers don’t look for products that are slightly better – the products are already good enough. Sure, if your competitors introduce new products you will have to follow suit. Or do you? Maybe, and perhaps even likely, you will do better if you innovate your business model rather than your products.
In many ways this is actually similar to a blue ocean. Product innovation is red ocean because your competitors will soon imitate what you have done. Business model innovation has the potential to be blue ocean because it’s more fundamental and has a wider scope, which makes it more difficult to copy.
Industry evolution can be unforgiving and change can happen much faster than expected, making timing very important. So when is it a good time to consider innovating your business model? Here are some of the signs you need to look out for:
- Your products have been commoditized
- Your industry faces declining margins
- Your metric “Sales attributed to new products” is decreasing
- Your customers are being over served
- Your industry changes faster than you can keep up with
Are you watching out for these changes? Or will they come as a surprise to you? Come they most certainly will. And when so, will your response be related to technology? There are plenty of new technologies like drones, blockchains or autonomous cars. They all have the potential to disrupt a vast number of industries, and as a consequence many companies have started to consider how they can take advantage of these cool technologies.
Smart move, but not enough. Your competitors are doing exactly the same. So going into product innovation mode simply isn’t enough. You need to think at a higher level – your entire business model. Who is your target group? What is your value proposition? How will you deliver on your value proposition? And why would your target group pay for it? These are the questions to ask yourself. Because change is needed. This has been expressed very well by the American inventor and futurist Richard Buckminster:
“You never change something by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
Innovation is closely linked to providing solutions to your customers' problems, frustrations and challenges. But how do you identify these customer pain points? Our free mini eBook is concerned with detecting opportunities for growth by pinpointing the challenges your target group face, allowing you to provide the solutions they need. Please click on the link above to download your free copy.