Saturday 26 November 2011

Business model innovation and ten business models that rocked!

A business model is a simplified description of how a company does business and makes money. It describes the value an organisation offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value.

Business model innovation involves modifying one or more of the nine dimensions of the business model to increase value, can result in the reinvention of a business and thus a business model innovation.

These dimensions include:

1. Core Capabilities – An organisation’s key activities in relation to its products and services
2. Partner Network – The business alliances and collaborations that an organization establishes
3. Value Configuration – The resources the organisation requires to deliver value to the customer.
4. Value Proposition – The differentiated offer of products and services that an organisation provides to its target customers to deliver value.
5. Target Customer – The group of customers targeted within a market segment.
6. Customer Relationship – The links and relationships established between an organisation and its customers.
7. Distribution Channel – The means by which an organisation delivers its products and services to the target market segment.
8. Cost Structure – The costs associated with delivering products and services.
9. Revenue Stream – The way an organisation generates a variety of income flows.

The AIC assists companies to innovate in a number of ways; including innovating through business model innovation. Recent examples include:

• Cost effective ways of access to customers – For example one company has looked at developing more cost effective channels to market, thereby reducing overheads and increasing margins
• New sources of income from existing customers – B&C Plastics have put processes in place to identify new opportunities and to take advantage of different types of revenue streams. They have also partnered with an industrial designer to create new products.
• New product  and value proposition, accessing new customer segments, channels and partners - Klein Architectural has used the value of partnerships to access new markets and networks to grow the sales of their new product.

New business models are being created all the time and a range of really interesting business models identified by the Board of Innovation can be viewed below:
 

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