Business model experimentation

A while ago, I wrote about business model experimentation as one of the requirements for Business Model Management (see this post). It is advisable to experiment with new business models first, to test them and to try out different models and variations. One of the advocates of business model experimentation is Chesbrough in his discussion of open business models.

In a recent HBR article (Feb. 2009) titled 'How to Design Smart Business Experiments,' Davenport argues that managers should follow a more rigorous approach to business experiments. He promotes decision-making based on scientifically valid, quantitative methods made possible by new, broadly available software and some straightforward investments to build capabilities. Davenport also states that the scientific method is not well suited to assess a major change in business models. It is more suited for strategy execution than strategy formulation.

Still, I am already looking forward to seeing paradigm discussion emerge in the board room. ;-)

Service Innovation and Business Models

Western economies are highly dependent on service innovation for their growth and employment. An important driver for economic growth is, therefore, the development of new, innovative services like electronic services, mobile end-user services, new financial or personalized services. Service innovation joins four trends that currently shape the western economies: the growing importance of services, the need for innovation, changes in consumer and business markets, and the advancements in information and communication technology (ICT).

See the publication in the business model book for mobile services here.

Design Trade-offs for Electronic Intermediaries

Electronic commerce offers intermediaries new opportunities for facilitating the transfer of information, goods and services between business customers and suppliers. Designing exchanges is a complex undertaking because of the many design options on the one hand and the diverse, and sometimes conflicting, interests of customers, suppliers and the intermediary to be considered on the other. Our research provides constructive support for balancing interests beyond simple prescriptions like 'creating win-win situations.' We developed an exchange design model and patterns focusing on trade-offs for electronic intermediaries based upon four in-depth case studies.

See the publication in Electronic Markets here.

Reinventing Your Business Model

A new HBR article(Dec 2008) on business model innovation. "Why is it so difficult for established companies to pull off the new growth that business model innovation can bring? Here's why: They don't understand their current business model well enough to know if it would suit a new opportunity or hinder it, and they don't know how to build a new model when they need it."

Update: Also watch a video interview with Clayton Christensen on the link between disruptive innovation and business model reinvention.

Google Chrome: A small step for ...

Google just released its web browser Chrome. Google has steps in the browser business with a new concept as the Web is moving from pages to applications (with, of course, Google as an important player with Google Aps). The first impression is to perceive this as a direct attack on both MS Internet Explores and Windows. But is Google really interested in head-on competition?

In Nicholas Carr's opinion Google is motivated by something much larger than its congenital hatred of Microsoft. 'It knows that its future, both as a business and as an idea (and Google's always been both), hinges on the continued rapid expansion of the usefulness of the Internet [...]' In line with this, Iyer and Davenport published not too long ago (April 2008) an interesting article about 'Google’s Innovation Machine.'

'Engagement Advertisements’

One of the interesting development with respect to social networking is how the companies providing the platforms will make money ('monetization'). One of the most innovative companies in this area is Facebook (see also its business solutions page targeted at advertisers), which was discussed in an insightful article on CNN Money called 'the Facebook economy'.

Forrester Research analyst Jeremiah Owyang discussed on his blog the launch of a a new product called ‘Engagement Advertisements,’ which should integrate with natural user behaviour. These engagement ads should encourage members to interact with the ads by leaving comments, sharing virtual gifts, or becoming fans.

Osterwalder: Why Business Models Matter

Alex Osterwalder has an interesting blog on business model design and innovation and also shares his slides on this topic on slideshare.net. His latest contribution is "why business model innovation maters," with which he entered the "world's best presentation contest." Thumbs up for Alex.