Business Model Innovation Essay

1073 words - 4 pages

Introduction

The ever-decreasing length of product lives has diminished the role of new technologies as a source of satisfactory profit and sustainability, as in today’s economies they become commoditized in a growingly fast manner. Nowadays, innovation must include business models rather than just technology and R&D (Chesbrough 2007), and with the greater frequency of disruption and dislocation in many industries, business model lifecycles are shortening as well.
Because of its intrinsic connection to the concept of a Business Model, Business Model Innovation is often a topic found deeply intertwined within strategic management, business strategy, entrepreneurship, business model design, value creation and the ideas of innovation, strategic renewal, growth platforms and an overabundance of related fields of study.
Business Model Innovation as a research field and practice, offers a way to think about renewing competitive advantage and bolter growth in an increasingly challenging environment. Developing a successful business model is insufficient to assure competitive advantage as imitation is often easy: a differentiated (and hard to imitate) - yet effective and efficient business model is more likely to yield profits. Business model innovation can itself be a pathway to competitive advantage if the model is sufficiently differentiated and hard to replicate for incumbents and new entrants alike (Teece 2010). Moreover, studies on the topic have shown that firms that were financial outperformers put twice as much emphasis on business model innovation as underperformers (Giesen et al. 2007) and a better business model often will beat a better idea or technology (Chesbrough 2007).
The terms “business model” and “business model innovation” have since the late 1990s in the context of the information technology boom, had a surge in academic research and business management attention, and a huge volume of theory has been generated in the field that suggest different ways to be successful in applying these concepts to increase enterprise performance. This plethora of literature on business models and business model innovation creates a several problems in terms of convergence and homogeneity within the field, which will be further addressed in this paper.
Definition
Chesbrough (2007) rightfully states that in order to innovate your business model, a clear understanding of it is necessary, in order to examine the possibilities for improvement. However, the term business model innovation, like the business model, has yet to achieve a common definition in academic literature.
Following the Boston Consulting Group business model ontology, Lindgardt et al (2009), states that an innovation becomes a business model innovation when two or more elements of a business model are reinvented to deliver value in a new way. As we can see, there are disagreements on what business model innovation is and what role it has in markets.
In a working paper from 2009...

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