Business model innovation

A business model innovation is a conscious change to an existing business model or the creation of a new business model that satisfies customer needs better than existing business models. Well-known examples of business model innovators are IKEA and Dell , both of which have changed the basic structures and competition rules of their industries; IKEA, by outsourcing some of the added value to the customer (transportation and assembly), and Dell, by eliminating middlemen and introducing a build-to-order process in production.

Business model innovations are always strategic innovations , as they change the basic structure of a business. While a business model in and of itself is not a strategy , consciously changing it in order to differentiate yourself from competitors is a strategy. Business model innovations are always about creating a competitive advantage by differentiating yourself from your competitors.

In general, innovations are the introduction of qualitative innovations with the intention of improving the economic situation of a company. Classic starting points for innovations are products or processes of a company (Utterback 1996). Companies try to increase their sales with product innovations ; Process innovations improve the efficiency of the company and thus serve to increase productivity . Other starting points for innovations can be all functional areas of the company (e.g. marketing with the establishment of a clear image for the product that makes the measurable product properties take a back seat, as is often the case with luxury watches or sports shoes, for example) , but also the entire value-added architecture of an industry.

The concept of business model innovation is relatively young. With the advent of the Internet , the concept of the business model has moved more into the focus of attention from business management experts, executives in companies as well as the business world, and consequently the concept of business model innovation. In a study by IBM, CEOs cite business model innovations as the most important type of innovation.

In practice, the term is used vaguely and is often used for incremental process improvements (cf.). Business model innovations in the strategic sense are rare and substantially change the rules of competition within an industry or even create completely new industries. In addition to the business models "buy" and "rent" as well as "hire purchase ", there was also purchase by credit card , from which a new industry developed.

In contrast to product or process innovations, business model innovations start directly on a company's business model. Roughly three classes of business model innovations can be distinguished:

• Value innovation
• Architectural innovations and
• Income model innovations

The distinction goes back to the three main components of a business model, the value proposition ( value proposition ), the architecture of value creation and the revenue model .

The fact that today in the internet and telecommunications-based industries, but also in payment transactions, innovation takes place primarily in the form of business model innovation is due, on the one hand, to the high degree of freedom in the choice of the revenue model as a result of almost zero distribution costs in the network. This results in the possibility of providing certain services (e.g. hardware that gives access to chargeable services) free of charge or serving customer groups (almost) free of charge in order to attract others. On the other hand, this is due to the high networking and combination ability of software and internet or telecommunications services.

Value innovation

A value innovation is a change in the benefit ( value proposition ) for a specific customer or supplier group that has not been satisfied by previous products on the market. Value innovations not only concern the satisfaction of needs that have already manifested themselves on the market, but not yet e.g. B. were satisfied at the desired price , but they mainly concern the satisfaction of latent needs. Value innovation creates new markets and is not in direct competition with previous providers (Kim & Mauborgne, 1997).

Every value innovation entails further changes in the business model. The value innovation has a direct impact on the product / market design, which is dependent on the value proposition. If there are major changes here, the architecture of the value creation also changes. However, a value innovation does not have to be associated with a fundamental change in the value creation architecture. In this way, existing products can be offered to a new customer group who derive a completely different benefit from the product than previous customers.

Example: eBay as a value innovator

eBay , the online auction house , has been a value innovator who has also built a new value-added architecture at the same time. eBay is a company that holds auctions between sellers and buyers of goods. Selling goods through auctions is very old and eBay did not invent auctions. Due to the Internet, eBay has managed to establish a new value proposition compared to traditional auction houses like Christies. While the classic auction houses have created a liquid market for very sought-after goods , eBay has created a liquid market for goods that previously only had a very illiquid market or no market at all. Before eBay, a potential demand could not even find the offer. EBay's value proposition is the provision of liquidity for all kinds of exchangeable services.

See also

• Servitization

literature

• W. Chan Kim, Reneé Mauborgne: Blue ocean strategy: how to create uncontested market space and make the competition irrelevant. Third expanded edition. Harvard Business Review Press 2015, ISBN 978-1-62527-449-6 .
• Daniel Schallmo et al. (Ed.): Compendium Business Model Innovation: Basics, current approaches and case studies for successful business model innovation. Springer Gabler, Wiesbaden 2014, ISBN 978-3-658-04458-9 (collection of articles).
• Daniel Schallmo et al. (Ed.): Digital Transformation of Business Models: Basics, Instruments and Best Practices. (Series of publications: "Focus: Business Model Innovation") Springer Gabler, Wiesbaden 2017, ISBN 978-3-658-12387-1 (collection of articles).

Web links

Explanatory video: What is business model innovation

Remarks

1. ↑ Compare with the following text available on the Internet: Definition of business model innovation. business-model-innovation.com internet portal (fluidminds GmbH, Patrick Stähler), 2020, website accessed on March 8, 2020. The online text is an excerpt from a book, namely: Stähler, Patrick: Business models in the digital economy ; Characteristics, strategies and effects , 2nd edition, Eul-Verlag, Lohmar-Köln 2002, pp. 77–87.
   ${\displaystyle \bullet }$
   

Individual evidence

1. ↑ Utterback, James M. (1996), Mastering the Dynamics of Innovation, Harvard Business School Press, Boston
2. ↑ IBM Global CEO Study 2006 ( Memento of the original from June 2, 2007 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.  
3. ↑ From vision to innovation, report from IBM (PDF file; 551 kB)
4. ↑ Ralf Peters, Internet Economics , Springer Verlag Heidelberg / Berlin 2010