The primary goal of business model innovation is to realize new revenue sources by improving product value and how products are delivered to customers A business model is the conceptual structure supporting the viability of a business, including its purpose and its ongoing plans for achieving them.
At its simplest, a business model is a description of how an organization fulfills its purpose. All business processes and policies are part of that model. According to the late Peter Drucker, a leading management consultant educator and author, a business model answers these: Who is your customer, what does the customer value? And how do you deliver value at an appropriate cost?
A business model is similar to a business plan in its makeup and content. However, a business plan specifies all the elements required to demonstrate the feasibility of a prospective business, while a business model demonstrates the elements that make an existing business work successfully.
The benefits of business model documentation include maintaining a focus on corporate goals, reviewing operational practices and ensuring that the two are congruent. A representation of a company’s business model can be incorporated into digital and print materials which may be shared with customers and partners. A mission statement or vision statement may be included in a business model.
Business model innovation is about fundamentally rethinking your business around a clear — though not always obvious — customer need, then realigning your resources, processes and profit formula with this new value proposition. It’s not easy and can take decision-makers out of their comfort zones. But the results can be dramatic.
What successes or failures have you created or experienced through business model innovation?