While everyone in the tech industry focuses on innovating their product, one great way to create value is by innovating your business model. A recent article in the MIT Sloan Management Review, Creating Value Through Business Model Innovation by Raphael Amit and Christoph Zott, does a great job of showing ways to innovate and create value. The article also points out that innovating the business model and not focusing just on products can be less capital intensive. Finally, it puts you at less risk, because currently in the tech and gaming space you are one innovation away from people not needing your product.
There are three primary reasons you should consider focusing on innovating your business model
- It represents an often underutilized source of future value.
- Competitors might find it more difficult to imitate or replicate an entire novel activity system than a single novel product or process.
- Leaders must be attuned to the possibility of competitors’ efforts at business model innovation because it is so potentially powerful.
One of the best examples of a company dominating an industry by innovating business models is Apple with the iPod. Continue reading “Innovate your business model, not necessarily your product”