Innovator’s Dilemmas: business vs. technology innovation?
“I’ve spent most of my life thinking that value was generally created by technical innovation (…) I’m not talking about ‘financial engineering’ here, but plain old business model and revenue model. (…) many companies have come to dominate their space simply by reworking the way they make money (…) model innovation is particularly effective when attacking an existing industry because the incumbents often cannot match the change because doing so would require massive organizational changes.”
Read Adam Messinger’s post, “Innovation in Business Models” , on O’Reilly Radar.
“Over the years, entrepreneurs have been mostly known for technical innovations. And there are many great companies that have been built on top of technical innovations like Intel, Cisco, Oracle, Apple, and arguably Microsoft (…) I wonder if business model innovation isn’t as powerful, maybe a more powerful opportunity to build a new business. If you think of Federal Express, Google, Netflix, these companies were built on business model innovations.”
Read Fred Wilson’s post, “Technical Innovation vs. Business Model Innovation“, on A VC.
Some new technologies drive business model innovation…
Most of us can talk about new technologies which happen to be game changers by enabling business model innovation. Amazon has pioneered quite a few initiatives of this kind. Just recently, the company launched the Kindle, an electronic book reader which retrieves content wirelessly over a cellular network without users receiving a monthly bill from a phone company.
While some other do not…
It should be noted that the rollout of a new technology does not necessarily imply the need for a new business model. As an example, a bit more than a year ago I bought a Toyota Prius, a hybrid car which most regard as an engineering innovation. There was nothing different about my buying experience (e.g. same sales and pricing tactics) when compared with other cars I purchased years ago. The only remarkable exception would be the tax rebate granted to the purchase of an energy efficient car.
And there are new business models which are not necessarily born from breakthrough technologies…
There are innovative business models and marketing practices which are not strictly related to engineering breakthroughs. In quite a few cases, new business models involve existing products which leverage innovative processes (not necessarily new technologies) and more cost effective ways of managing the value chain. Business model innovation can be about new ways of reaching customers, distribution channels, partnerships, and pricing strategies for all kinds of products and services. It so happens that technology has become pervasive to a point at which both conventional and innovative business models happen to rely on it.
The following is a presentation from Cap Gemini which I have come across on SlideShare:
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| J. de Francisco |  |
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| New York, 22 April 08 |  |
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