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Business Model Innovation – act disruptively and with customer focus

Business Model Innovation Header

The word innovation can be found at least once in almost every business presentation or annual report. In the meantime, the word innovation is almost used in an inflationary sense, even if in the narrower sense it is only an innovation when new products, services or processes are implemented that actually find successful application.

We want to take you on an in-depth exploration of business model innovation, in a specific context for better customer relationships, and a powerful tool, the Business Model Canvas.

How Business Model Innovation leads to sustainable customer relationships

A business model itself basically describes the logical connections how a company generates value or benefits for its customers and itself.

In terms of the economy, Joseph Schumpeter, one of the first evangelists of the entrepreneurship context, introduced the notion of innovation. In the process, a process of change is to take place towards something first-time and new. Enforcement of new combinations may involve different things. A new product, a new production method, a new market, new sources of raw materials or a new market position.

Schumpeter already writes in his book "Business Cycles" from 1939: "Where innovation needs to be innovated, a creative destruction must take place". In this context I was inspired by Susanne Weber's scientific work "Questions about a guiding concept of modern economic strategies".

A business model innovation is thus deliberately changing an existing business model or creating a new business model to better satisfy or delight customers' needs than existing business models have previously created. The natural result: more sustainable, real customer relationships.

What makes entrepreneurs so innovative?

When it comes to designing innovative business models, the inspiring entrepreneurs typically do not want to breed (in the words of Henry Ford) the faster horses, but want to make the real leap from 0 to 1.

The following characteristics distinguish innovative entrepreneurs (from Thai Nguyen's 10 Traits of the Most Innovative Entrepreneurs):

  • Always looking for patterns
  • Are brilliantly lazy
  • Almost obsessively writing down
  • Preach the profession, but practice progress
  • Team up with their fear
  • Do not wait for something to break
  • Have an understanding of the creative process
  • Track multiple currents
  • Have a healthy arrogance
  • Adopt absurd thinking

Agile methods and tools for customer centric innovation

Agile methods are essential in dealing with innovation today. For example, methods and tools such as Design Thinking, Business Model Canvas, Value Proposition Design, Minimum Viable Product, Rapid Prototyping, and many more, are extremely popular when it comes to Customer Centricity.

Within innovation management these methods can make the competitive advantage within your industry to make your value proposition for your customers outstanding, leading to success in growth as well as in revenue.

Thus organizations like Apple, Amazon and Netflix managed to deliver with an actually very lean innovation process at core.

Business Model Canvas

One tool that has whirled through the old, dusty world of business plans in the past few years is the Business Model Canvas. Developed by Strategyzer (Alexander Osterwalder et al.), this tool gives you and your team the ability to capture, discuss, and optimize business models at a glance.

So the right hand side of the customer segments, the customer relationships, the channels and the value proposition are the ones that now contribute to a deeper understanding of what customers want.

Do you want to go deeper into the understanding of the customers? Then read in our article "What customers want".


Disruption in business model innovation

Many pitches in the global startup scene include at least one times the fashionable word "disruptive" in some form. The theory of disruption, one of the most discussed management theories in the last 20 years, is provided by its developer Professor Clayton M. Christensen, but probably understood quite differently than many think. For example, in a Harvard Business Review article, he said that, for example, the company, so often referred to as disruptive, does not impose any disruption on the transportation market.

The typical way of companies that disrupt is usually to address the lower customer segment or unavailable consumers. Only then do they target the mainstream market. But Uber has chosen exactly the opposite approach. "First, the company has built a strong position in the mass market, only then has it targeted previously unobserved segments."

Christensen speaks at Uber but also competitors such as MyTaxi of so-called sustaining innovations. Typical of this type of innovation is the backlash of established market participants. They then use new technologies to make it easier for customers, for example, to order a taxi and rate the service.

Update your business model

Many companies, especially small and medium-sized enterprises, remain for years, some for decades with a product or service, which has established itself in a completely different time. This strategy of focusing is often synonymous with product focus.

Put your current business model to the test, possibly with the help of the Business Model Canvas. Invest intensely in the position and situation of your customers and develop an update or a completely new version of your business model, so an innovation.

Do you want professional support? Then feel free to contact us.

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André Wehr
André Wehr
As a founder and entrepreneur, I experience every day how important Traction and Customer Centricity is. It makes the difference between a nice idea and a viable business.

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