Business Model Innovation

Business Model Innovation is the process of changing a company’s business model in order to create new sources of value and competitive advantage.

Business Model Innovation involves the development of new ways to generate value for a company. It can involve changing the way products are delivered, introducing new sources of revenue, or finding creative ways to increase efficiency. Business model innovation requires an understanding of customer needs, competitive landscapes, technology trends, and other market forces in order to identify opportunities for improvement. Companies must be willing to experiment with different strategies in order to determine which ones will create the most value. Successful business model innovations require ongoing testing and feedback from customers in order to refine their offerings and stay ahead of competitors. The goal is not only to create a successful product but also a sustainable business model that can outlast competition over time.

Business Model Innovation is key for organizations looking to remain competitive in today’s rapidly-changing markets. It offers companies the opportunity to differentiate themselves from competitors while creating long-term success. By taking risks and exploring different approaches, businesses can position themselves as industry leaders by offering unique solutions that meet customer needs more effectively than existing offerings on the market.

The type of innovation that is most likely to deliver competitive advantage to a firm, business model innovation is the simultaneous improvement of the product offering and the operational model of the firm and often means a strategic shift. If a company innovates its business model, this means they will look for a new way to create value for their stakeholders. A famous example of business model innovation is when Rolls Royce shifted their turbine aircraft engine sales model to a rental model, thereby retaining ownership and remaining responsible for the repair of the engines. This made the Rolls Royce service more affordable, allowing them to service low-cost airlines.

Related Keywords: Value Creation, Competitive Advantage, Customer Needs, Experimentation, Sustainability

More Innovation Glossaries

Innovation ROI

Innovation ROI is the financial return from investments in new methods, products, or ideas, relative to the costs of the innovation.

Vertical Integration

Vertical Integration is often referred to as a strategic move made by a company wanting to move from the production end to sales end.

Innovation-Led Growth

Innovation-led growth is business expansion driven by the strategic implementation of novel ideas and solutions.

Top Business Model Innovation Resources

Design Thinking + Business Model Innovation

Design Thinking + Business Model Innovation

Design thinking can be used to innovate business models. Discover, interpret, ideate, experiment and evolve.

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An image of an intricate network of abstract shapes connecting dots and lines, symbolizing complex systems integration.

The Understated Back-End of the Business Model Canvas.

The Business Model Canvas (BMC) is well accepted for startups and entrepreneurs but struggles to gain the same momentum in larger organizations due to lack of attention on the back-end. This article calls for a new depth in the visual tools needed to capture this side of the canvas.

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Business Model Innovation Strategy: Transformational Concepts and Tools for Entrepreneurial Leaders

Business Model Innovation Strategy: Transformational Concepts and Tools for Entrepreneurial Leaders

The most comprehensive, global guide to business model design and innovation for academic and business audiences.

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Business Model Generation

Business Model Generation

Read this handbook for visionaries and game changers to defy outmoded business models and design tomorrow's enterprises.

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HBR’s 10 Must Reads on Business Model Innovation

HBR’s 10 Must Reads on Business Model Innovation

Rethink how your organization creates, delivers, and captures value--or risk becoming irrelevant.

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Business Model Canvas

Business Model Canvas

Use this template to describe the details of how your organization creates, captures and delivers value to its customers.

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Social enterprise business models

Social enterprise business models

Virtue Ventures provides an excellent summary of the various types of business models that are summarized in the following table.

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