Business Model Innovation
The last innovation dimension is in ‘paradigm’ or ‘business model’ innovation. A firm’s business model is the means by which it creates and exchanges value with its customers and other stakeholders, in other words: how it makes money. So business model innovation is typically the most challenging of the four innovation dimensions, as it requires changes in key elements of the firm’s business model. Such changes include the value proposition the firm offers, the customers it chooses to serve, the means by which it delivers value to its chosen customers and how it gets paid for this. In a professional services context, whilst Service and Process innovation cover ‘Do Better’ and ‘Do Different’ innovation in specific services and ways of working and Market Position innovation is concerned with serving new market areas or existing market areas differently, Business Model innovation is at a higher level altogether. It is looking at the fundamental paradigms on which the business is based, considering questions such as:
• What value can we provide? • Who should our customers be? • How can we reach them? • How do we develop and deliver value? • How should customers pay for the value we provide?