10 recommendations to innovate your business model
Following on from previous posts on business model innovation (Copycats will not be successful, The Goal Post have moved and Confrontation or Similarity the following is a round-up of 10 top tips in innovating a business model. Remember it’s all about beating your competitors without trying to beat them.
1. Get top management support – you are in luck here if it’s your own business – if it’s not then:
a. Raise awareness for the business model innovation topic by highlighting the benefits new business models can have for your company
b. Refer to best practice cases of business model innovations from within and outside of your industry – vivid examples can serve as an important eye opener.
c. Be persistent – an understanding of the importance of business model innovation is unlikely to be established overnight.
2. Set up a diverse team – an interesting challenge if it’s your own business. If it’s you and a few staff involve them. If it’s just you then involve family, friends or even your friendly business advisor.
a. Business model innovation is a cross functional topic – try to integrate employees with different backgrounds and from different departments
b. Make sure to bring everybody on the same page with regard to the meaning of a business model. It defines the what, the who, the how and the why of a business.
c. Don’t forget to integrate outsiders as well – nobody will challenge the orthodoxy of your industry more effectively.
3. Be prepared for change and be open to learn from others. Keep in mind: the future is already here: it is just unequally distributed.
a. A little paranoia doesn’t do any harm – always question the pillars of today’s success.
b. Embrace a “proudly found elsewhere” attitude within your organisation to get rid of the “not invented here” syndrome.
c. Constantly monitor and analyse the changes within the ecosystem of your business – are there any signs that your current business model may be put into question in the future?
4. Challenge the dominant logic of your business and of your industry by using the many different business model patterns outlined by The Business Model Navigator.
a. Apply the similarity and/or confrontation principle to use the business model patterns in a structured way.
b. Try close patterns, but also confront your business model with more distant patterns.
c. Keep on trying. At first it seems impossible to learn something from industry outsiders, individuals with a profound background in the existing industry, have difficulties overcoming the dominant industry logic.
5. Create a culture of openness – again easy if it’s just you. If it’s not
a. Avoid negative judgements towards ideas for innovative business models in an early stage of an ideation session – it is too easy to kill any idea right in the beginning
b. Be aware that innovation is a process naturally covered with some failure and risk – provide your employees with the necessary freedom to bring up new ideas and allow them to fail.
6. Use an iterative approach with many loops – verify assumptions
a. Carefully decide when to change between divergent and convergent thinking; managing the balance between creativity and discipline requires some experience.
b. Don’t expect to come up with the most brilliant idea right at the beginning; innovation requires hard work, many iterations and time like any other process.
c. Verify assumptions right away and don’t wait too long
7. Don’t over calculate the business cases – typically they are totally wrong in the early stages
a. No business plan survives first contact with the customer – this is even truer for necessarily fuzzy business model cases.
b. Think in different scenarios in order to be prepared for forthcoming changes
c. Define thresholds your business model needs to achieve in order to be successful.
8. Limit risks by prototyping, storyboarding or other ways to test the value propositions
a. Prototypes can be a detailed presentation, storyboard or cereal box to gain rapid feedback on the business model
b. Use the insights gained throughout the pilot project to re-adapt your business model accordingly. Try to fail fast and early!
9. Give your new business model the necessary context to grow successfully.
a. Ensure a protected environment for the business model
b. Give the business model team freedom at the beginning and set clear goals later on.
c. Ask for long term benefits instead of short term results.
10. Actively manage the change process.
a. Be a role model for your employees regarding forthcoming changes and set incentives to enhance their motivation.
b. Promote understanding within the company for business model innovation
c. Ensure a change process that is fair and transparent.
d. Develop skills that are lacking within your organisation.
e. Ensure a positive mind set towards business model innovation.