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 , 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 .
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 .
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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