Currently I am working our upcoming book “Business Model Generation” on a section about ideation: the art of generating innovative business model ideas.
While working on this section I realized that ideas were not necessarily the problem. They exist in abundance within a company or an industry. I’ve experienced this with multiple organizations. The issue is selecting the right ideas, turning them into something implementable and then actually DOING them.
Regarding the first issue, selection, the biggest problem is that today’s organizational and management structures don’t allow good business model ideas to become visible. Interesting business model ideas can come from anywhere in a company. Operations, client services, finance… Yet, they have to be selected by management in order to maybe become real options. More often than not they stay invisible. I’m pretty sure that there were many smart folks in record companies that had good busines model innvation ideas. However, the management of these companies preferred to stick to the status quo… and ultimately become disrupted by illegal downloads and challenged by iTunes.
A solution to this is to put a multi-disciplinary business model innovation task force together. One that has the sponsorship of top management and the board. The task force should be composed of people from various levels of hierarchy, from different age groups, with diverse levels of experience, from different business units and with mixed expertise. The diversity will help ideas to emerge, to be discussed, improved and then selected for implementation.
The implementation issue is more challenging. It requires the willingness of top management and the board to experiment and allow for bottom-up ideas to emerge. Unfortunately, it also requires taking some risks to play with new ideas in the field. But if you look at the major record companies today, the risk of inaction is even bigger. I would argue for maintaining a portfolio of business models of which some may even cannibalize the existing main business model.
A great example of a business model portfolio can be found within Nestlé’s coffee business. While the Swiss multinational became big in coffee with Nescafé it’s current growth engine is now Nespresso. Nespresso sells espresso machines and pods to the high-end of the market. What is impressive is that Nestlé is internally challenging its new multi-billion espresso-pod money-making machine. They expanded their business model portfolio in coffee with Dolce Gusto, a Nescafé sub-brand targeting the lower end of the market. Dolce Gusto’s business model is quite similar to that of Nespresso with some tweaks. Nespresso sells to the higher end of the market, while Dolce Gusto sells to the lower end. Nespresso doesn’t sell pods through third party retail, while Dolce Gusto does. Though they are both targeting different customer segments, Dolcé Gusto is still cannibalizing Nespresso to a certain extent. Respect for Nestlé that they allow for this internal competition!
I fully agree with you Alex. Interesting business model ideas can come from anywhere in the company but there is often no process or system to systematically collect, evaluate, manage, and execute the ideas.
We have been working for a while with multi-disciplinary task force groups to develop better IA and IP strategies and practices in companies. How should the R&D organization know what is really valuable in R&D projects without constant evaluation of developed assets from other perspectives than technical? How can the IP team design patents without knowing the business strategy to be applied? How can licensing decisions be made on technologies and IP, relating to core products on the market without extensive knowledge on the impact from different perspectives? How will partaking in a standard affect R&D, IP and the Sales organization?
Multi-disciplinary task forces are needed for IA/IP strategies and business model innovation, and marketing strategies, and…
…perhaps it’s not a dream team you are looking for, but a new way to organize companies.
The problem is not finding some business model innovation but the right one that can disrupt your industry, create a blue ocean and let you earn money.
And as you said diversity in the team helps. I have a very impressive example during a lecture I gave. The team with just one woman did not find a creative solution since they stuck to the traditional way of thinking in the same dimensions. The team with half women/ half men come up with the disruptive innovation. I wrote down the story at http://blog.business-model-innovation.com/2009/03/diversity-and-mental-models/
Hi,
I agree with Alex that “the biggest problem is that today’s organizational and management structures don’t allow good business model ideas to become visible.”, as well as with Anders that “there is often no process or system to systematically collect, evaluate, manage, and execute the ideas.”.
Proposed solution (to “put a multi-disciplinary business model innovation task force together) is first step in right direction. Point is to have “whole system in the room”, ie. to recognize and include all key stakeholders.
But, as BM is dinamicaly, socially and generatively complex problem (see. Claus Otto Scharmer U THEORY and P. Senge et alt. PRESENCE) it will be necessary to use different process (i.e. “U process” to create new BM.). During this process participants (ie. managers/leaders) will change the ‘place’ from where they act, and create different organizational and management structure.
As A Einstein said “We can’t solve problems by using the same kind of thinking we used when we created them”.
So, in order to change way of thinking it will be necessary that members of this BM innovation task force learn some new skills:
* seeing larger systems
* cooperate
* create vision of desired futures.
I certainly agree with this Alex.
One of the issue I find interesting is that organizations are starting to re-think their model with input not just from the excecutive and sr.management level, but from a collective of ideas from line workers line workers working backwards to R&D, development production etc (Diversity). In this case they are building backwards starting from the customer taking a holistic view.
Similar to the lean/6 sigma approach.
Innovation ideas should be the mainstay of any organization.
Great comments from all of you. Of course coming up with new business models is a complex play between structure and people.
I usually refer to Gary Hamel’s “Future of Management” to illustrate that management innovation and new organizational structures are necessary to cope with innovation (and other issues of importance in today’s organizational word).