Saturday, July 11, 2009

Critical success factors for business model innovation

Okay, you have a fantastic idea and managed to translated that into a superb business model design. The hard work is done, or not?

The need for deconstruction

Business model innovation, as a form of radical innovation, requires ‘creative destruction’ that challenges the certainty of current core competencies and revenue stream in favor of uncertain future competencies and revenue stream. This requires vision and risk-taking, something that is often discouraged by corporate incentives and institutional arrangements.

The ability of to execute

Translate a high-level business model into a more detailed operational model and implemented that model in a way that stays consistent with the original concept. A few small compromises here and there (in particular, in performance indicators and incentive schemes) can easily result in a flawed business logic in the operational processes.

Challenge you own innovation

Do not get too attached to the first idea or implementation, how good and promising it may seem. Built in feedback loops and monitor early warning signals to explicitly challenge your original concept and be willing and able to completely change it, if required.

Note that this kind of explicit learning is facilitated by a consistent implementation of the original concept, as described above. Otherwise, it is unclear how to interpret feedback, is it caused by the original concept of by the implementation.

The role of timing

You cannot be too early, but certainly not too late.