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David Wong

Innovation myopia – even the king needs some smart clothes

Posted By David Wong

04 February 2013

Saul Kaplan’s article in The Guardian hits the bull’s eye on why companies fail at business model innovation. Many of the points raised in the article resonate with our work on business models at the Big Innovation Centre. I just thought one issue is particularly worth highlighting.

For many, ‘innovation’ is by and large about technology and products, and to a lesser extent services. Few can see beyond these. Or as Kaplan implies, sometimes senior executives simply don’t want to see beyond these. Yet the best cutting-edge technology, or product, might not necessarily take off unless it is wrapped in a clever business model.

As I often explained to novices using the most common example on this subject, Apple didn’t invent digital music, or the digital music player for that matter. The world’s first commercial mp3 player was the MPMan by Saehan Information Systems. Heard of them? But Apple stole the thunder. Its lock-in business model based on the iPod and iTunes took the world by storm. The rest, as they say, is history.

Some business readers will be familiar with the case of Xerox and its copiers. Although Xerox’s Model 914 was very much a radical innovation based on then state-of-the-art electrophotography technology, it never took off until Xerox invented a clever leasing business model that we are all familiar with today.

Products are great. Products built on useful technology are phenomenal. Products built on useful technology and captured in an attractive design are fantabulous. But product life cycles are shortening at alarming rates. Companies wishing to always be ahead of the curve will be constantly under intense pressure to deliver fantabulous products. Business models have relatively longer life cycles. An innovative business model can enable the company to steadily harvest its best products for a longer period before the next cycle of reinvention dawns.

Is it any wonder then that even the king (read ‘product’) needs some smart clothes?

But the failure to see beyond just technology and products is without doubt a key stumbling block to business model innovation. In fact, it is probably the chief of all impediments – that is before one can be bothered to discuss culture, structure, reward systems, human capital and dynamic capabilities issues. No wonder some complain their supposedly brilliant invention, as evidenced by the impressive collection of patents attached to it, never saw much success.

This is partly why our forthcoming The Innovator’s Column project, in association with The Guardian, will review the most innovative companies holistically – which includes considering how innovative their business models are.

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