Innovation around business models can be incredibly difficult. Why is it so hard? There are two fundamental problems. First, organizations and leaders don’t have much experience understanding the dynamics, interactions, and processes required to develop new business models. Second, surprisingly, few companies actually understand their existing business model deeply enough to know its strengths and limitations. This means that they don’t know when to leverage their core business or when to create a new business model.
Deep understanding of your current business model is critical – to know what drives value and when a shift to a new business model might be in order.
When it comes to disruptive innovation, a new model is often needed in order to to leverage a new technology. It’s almost always required when the opportunity addresses an entirely new group of customers. And it is necessary when an established company needs to fend off a successful disruptor with its own innovation efforts.