Innovate revenue model or industry model?
by Miki Saxon
Continuing the focus on disruptive innovation as discussed in chapter four from IBM’s The Enterprise of the Future (a steady Saturday feature since July 12; be sure and download your free copy) begs the question as to what is being disrupted? What are companies really doing to drive financial performance?
The most common approach is “revenue model innovations, nine out of ten are reconfiguring the product, service and value mix. Half are working on new pricing structures.”
Changes include offering more services; moving to recurring charges (as opposed to one-time payments); bundling or unbundling depending on products and industry.
The major change in pricing is being driven by more knowledgeable customers who can tap into global choices. “More are starting to price based on value to the customer, rather than on cost plus.”
The truly disruptive innovation, i.e., industry model innovation, you may have been hoping for isn’t as likely.
“CEO s mentioned several reasons for not pursuing industry model innovation. But most can be summed up with: it’s tough to do. For similar reasons, industry model innovators are more focused on redefining their existing industries (73 percent) than on entering or creating entirely new ones (36 percent).”
Not surprisingly, it’s the outperformers that usually focus on industry model innovation—think Apple.
So, what can you do to embed innovation in your MAP (mindset, attitude, philosophy™) and strategic planning?
“Think like an outsider; draw breakthrough ideas from other industries; empower entrepreneurs; experiment creatively in the market, not just the lab; manage today’s business while experimenting with tomorrow’s model.” (See the details I the doc.)
And be sure that you can answer the following four questions with a resounding “Yes!”
- Is a disruptive business model about to transform your industry? Is it more likely to come from you or your competitors?
- Do you spend time thinking about where the next disruption will come from?
- Are you watching other industries for concepts and business models that could transform your market?
- Are you able to create space for entrepreneurs and innovative business models while continuing to drive performance today?
If you can’t, then start working on them today!
Is your MAP in tune with disruptive innovation?
Your comments—priceless
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Image credit: nookiez CC license
