If you attended our Convergence Summit this year, you’ll know already that there are different approaches to business model innovation. We know we all need to evolve to disrupt, because let’s face it: shift happens.
Business model innovation is defined by Boston Consulting Group (BCG) as being:
“The art of enhancing advantage and value creation by making simultaneous and mutually supportive changes both to an organisation’s value proposition to customers and to its underlying operating model”
Organisations typically fall into one of three different types of business models:
- The Innovators
- The Transformers
- The Improvers
We’ve created a fourth:
- The Enablers – the ones who help others get things done!
Through a series of articles, we’re going to explain what makes each business model different and the benefits (and downfalls) of each type. Discover where your business lies and what you can learn from the other types of business models.
The Innovators: Who Are They?
Essentially, the innovators are the first movers in transformation. They lead the market and create the necessity, paving the way for the competition to transform and improve on their ideas.
Karl Benz invented the very first true automobile way back in 1886. That’s why in the automotive industry, Mercedes-Benz can be regarded as the innovator.
In today’s business, technology is taking a key role in what makes innovators, well innovative. From the way services are delivered, to how the technology improves the customer and employee experience.
“Every company is now a software company”
Satya Nadella, CEO, Microsoft.
Take Napster for example, they were actually the first to innovate online music services. Founded in 1999, Napster’s technology allowed people to easily share their MP3 files with other members on the software. Enabling music to be shared and listen to easily. The premise is not about technology, but sharing and listening to music easily; however technology is crucial to this business operating model.
Why it’s Great to be an Innovator
Innovators are first to market. Being the first means your company is able to properly establish itself. You can build strong brand recognition and a loyal customer base before competitors enter the industry.
Some innovators also benefit from first-mover advantages like patents and copyrights helping make them untouchable by competitors.
Imagine if Blockbuster had moved on from their innovator business model and become a transformer, like Netflix. The likelihood is they would still be around, and quite possibly, be the leader in the video streaming market. Or at least, better off than they are now, with just one store left in the entire world.
Netflix didn’t kill Blockbuster… Blockbuster killed Blockbuster. Their failure to innovate their business model to continue to meet the needs of their customers left them with dwindling market share and resulted in liquidation.
Where the Struggle Lies
Behind every good innovator are even more transformers and improvers working to do what the innovator is doing, but much, much better. You might be the market leader, but the real struggle is keeping it that way. Failure to do so is fatal to business.
Sadly, a lot of innovators fail to transform. Yahoo, Taxi Magic and Friendster are all good examples of why you cannot afford to stand still, even if you were the first to make a move.
However, innovators aren’t always the losers in the world of digital transformation. Some are able to understand the notion that shift happens and they need to successfully innovate their business model, or risk falling behind. Apple were first to innovate a phone that offered the full, un-watered down version of the internet. Launched 29 June, 2007 the iPhone has been one of the market leaders ever since. It’s fought off competitors such as Blackberry, due to the iPhone’s ability to create a need for its customers – and massive brand loyalty. Although in recent years Samsung, who subsequently launched their very first smartphone exactly two years to the day Apple launched theirs (29 June 2009), are starting to take the lead, Apple are still very much in the game.
They have understood the need to move on from just being the innovator in order to remain relevant in the smartphone market.
You can’t Stay Here
Being the innovator is great, don’t get us wrong, but, you cannot stay this way forever. If you enter the market as an innovator, you need to then give yourself room to grow into a transformer or improver; you need to learn the art of business model innovation.