1
What is Business Model
Innovation?
1What is Business Model Innovation?
"If you always do what you’ve always done, you’ll always get what you’ve always got.“
- Henry Ford
In recent years, the importance of business model innovations has become increasingly apparent in research and practice (see, among others, Amit/Zott (2012), Chesbrough 2006, Johnson/Christensen (2008), Massa/Tucci (2014)). Before the subsequent chapters with tips& tools explain in detail the development of successful business model innovations, the following section will briefly discuss what is meant by business model innovations, what relevance they actually have for business practice, and how an innovation process can look like in the overall picture. The latter is described step by step in the following chapters.
A business model is the description of the way in which a company creates value for certain customers, creates and delivers this value and generates sustainable revenue growth from it (see Osterwalder/Pigneur (2010), p.14). The business model is thus the implementation and concretization of a strategy and represents the link between strategy and the individual business processes (see Osterwalder/Pigneur (2010)).
In addition, the terms business idea, business model innovations and business plan are also to be understood as follows in the sense of a practice-oriented definition.
Thebusiness idea concerns only a part of the business model (such as an idea for a product or service innovation) and can at the same time be an impetus for a business model innovation (see below).
Unlike product, service, process and social innovations (see gray box below), abusiness model innovation should always involve changes to several building blocks of a business model at the same time (see Lindgardt et al. (2009), p.2), and always contain a certain degree of novelty - either in its individual elements or seen as a whole (see Björkdahl/Holmén (2013)).
Finally, thebusiness plan (at company level) orbusiness case (at project level) is the written documented concept of a business model and provides additional information about steps of implementation and financing.
What is meant by business model innovation?
Innovations can be differentiated according to their subject area. The following types of innovations are available here:
- Product innovations are innovations of a physically tangible product,
- Service innovations are intangible and represent changes in the service industry,
- Process innovations are planned changes in the process of manufacturing goods and creation of services, They serve to increase e,g, labor productivity (efficiency) and have a direct effect on the supply side,
- Social/organizational innovations include changes in the organization of work and in social issues, This type of innovation can also be found under the term"administrative innovation", Examples of this type of innovation are new remuneration or participation systems, expansion of tasks, bonus systems, social benefits and/or further training activities,
- Business model innovations are targeted changes to existing business models or the creation of new ones, They are about gaining a competitive advantage by differentiating oneself from competitors, A business model describes how the company can generate added value and benefits for the customer and where the success potential of a business idea lies in terms of sales, costs and earnings, Business model innovations are far-reaching, strategic innovations because they change the fundamental structure of a business,
Since, by definition, a business model always comprises a company in its entirety or at least an entire business unit, implementing several completely different business models would be a complicated and complex task, Only one bus
