Why business model innovation fails to deliver new growth
7 pitfalls to avoid
Business model innovation is the new buzzword when it comes to creating new growth for the company. And for many companies, it can. But many companies struggle to achieve real growth. Here is what we encounter as the top 7 reasons why:
- Lack of buy-in from senior management in the process; real business model innovation eventually means Change. As business model innovation will touch many aspects of the organization, it will impact the people and its way of working and sometimes, even the culture needed. Many leaders underestimate these aspects of business model innovation and have therefore not necessarily committed to these.
- Inability of the team assigned to execute the end-to-end innovation process; attending a workshop on business model innovation simply isn’t enough to build a real skill!
- Groupthink in the creative process; thinking differently and challenging the status quo is a trait that is undervalued in many organizations. But when it comes to creating new business models, this is crucial to come up with new ideas. Instead, many, teams tend to validate each others idea, leading to teams working in harmony. But not automatically working on the best ideas.
- Lack of real customer insights; especially (but not exclusive) corporate development teams tend to rely too much upon their own insights of the market and the industry. This leads to an inability of real and radical business model innovation. It is no surprise that many disrupters are new in the industry.
- Lack of resources and time for the ‘discovery process’; there is little chance of getting your business model ‘first time right’. As with start up companies, a totally new business model will need some learning and adjustments to work. Business model innovation must therefore be considered a journey, instead of a project that leads to a new strategy.
- No translation of business model innovation into an execution strategy; often the result of a business model innovation workshop or process is a shining new strategy presented in a Powerpoint. But in the end an idea without perfect execution will lead to nothing.
- Do it yourself mentality; speed of execution is a highly underestimated aspect of new business models. Too many people will regard a new business model in terms of what their organization can or will do themselves. And then try to build that capability. Instead think of what other companies can do parts of the execution already and try to establish a partnership.
Of course, we all know the great examples of great business model innovations that did achieve growth. But to reach this success for your company, we recommend avoiding these pitfalls.