Business model innovations

Type of Innovation Categorize the focus of your innovation project as either a product, process, or business model innovation. 

If you re implementing a business model innovation, then you might have such performance indicators as profit, earnings, volume, customer loyalty, market share, revenue, and so on. 

An example of a business model innovation is when Dell began selling computers directly to customers, avoiding the retail link in the chain. With minimal inventories to manage, cash up-front from customers, and delayed payment terms to suppliers, Dell redefined working capital management. 

Exhibit 1.2 shows the relative proportions of a typical innovation portfolio. Usually you will have more product, process, and service innovations— and fewer business model innovations. As well, most organizations aim for more incremental and substantial innovations—and fewer breakthrough innovations. 

Of course, true competitive advantage is usually the result of making coordinated innovations on multiple fronts. Through the combination of its iPod and iPhone products with its iTunes business model, Apple created about 70 billion in shareholder value in just three years. Amazon s business model innovation of cutting out the brick-and-mortar store is coupled with service innovations such as 1-Click, Recently Viewed Items, Customer Reviews, and Books You Might Also Like. This is a taste of how these companies have innovated across the board. 

Maturity Business model innovation carried out bv the CEO that changes the value proposition (Gillette s focus on blades, not razors), or the company s role in the value chain, or both Structural innovation — also carried out bv the CEO — that capitalizes on disruptions in mature markets such as deregulation in the airline and banking industries... 

M.W. Johnson, Seizing the White Space—Business Model Innovation for Growth and Renewal (Harvard Business Press, Boston, 2010)... 

This leads us to the realm of disruptive technologies. Christensen [8] presents the innovator s dilemma, where the large company focused on meeting current customer demand on a large scale ignores the disruptive opportunity because it looks like too small a market to make a difference on the balance sheet. Further, the opportunity is ignored because it does not fit in the current business model or address the needs of the current customer base. 

The business model of the innovative pharmaceutical industry is to transform the results of basic medical research into products that provide health benefits to the patient. This model is characterized by a high risk of failure in the development of new products, coupled with the benefit of market exclusivity for a number of years if a product can be successfully developed and is approved by the regulatory agencies. Only very few chemical entities complete the development process from drug discovery to a commercial product. But those products that do reach the marketplace have to yield sufficient financial rewards to assure that the... 

Another collateral effect of the DESI project was the development of the abbreviated NDA, by which a generic version of the innovator product could satisfy the statutory preconditions for entering the market, without repeating the preclinical and clinical studies of the innovator. This administrative creation, designed to assure that generics were both pharmaceutically equivalent and bioequivalent to the pioneer product, was endorsed by Congress in 1984. As will be seen, this development had a staggering impact on the business model of the pharma industry. 

The double exposure on innovation and lean production of pharma s present business model. 

The definition starts by pointing out the service-oriented character of the ChL business model. This is linked to the innovative shift in payment basis from product based payments to payments based on functional units. The extended producer responsibility referred to in the definition results from the ownership of the chemical not being transferred from the supplier to its customer. Remaining the owner of the chemical, the supplier is responsible for... 

Remark Providing rooms, staff and logistic support is actually not part of Chemical Leasing. But by offering these additional services, PERO Innovative Service has facilitated to implement this business model for the first time world-wide. 

In the interview relating to the experience of Chemical Leasing application the General Director of the service provider underlined that the new business model was beneficial for the company in respect of economic profit and opportunity for a most effective introduction of innovations and know-how. The Deputy Technological Manager of the company using the service indicated that the new business relationship was economically beneficial and provided the fastest and mostly efficient approach to solve environmental problems that the company had been facing before. 

Chemical Leasing Business Models - an Innovative Approach to Manage Asymmetric Information Regarding the Properties of Chemical Substances... 

All in all, both models are able to reduce the over-consumption of chemicals due to information asymmetries between producers and users. If producers of chemical substances have advanced knowledge on the efficient application, disposal and recycling of produced chemicals the dissemination of this knowledge is neither required by REACH nor supported by the traditional sales concept. This poses additional risk to human health and the environment. These risks can be avoided by the introduction of Chemical Leasing business models, an innovative approach that delivers incentives for efficient application, disposal and recycling of chemicals. 

The fact that the break-even point will be reached in October 2007 exemplifies the potential success of this innovative business model (Fig. 3). 

ChemKit has discovered a need among many companies for professional and expert advice for the complex and expensive adoption of Chemical Leasing schemes. Based on the business model introduced above, ChemKit, as an innovative environmental consultant, aspires to bring together chemical suppliers and chemical users for the sole purpose of implementing Chemical Leasing schemes. 

The business model of the innovative pharmaceutical industry is to transform the results of basic medical research into products that provide health benefits to the patient. This process is characterized by a high risk of failure in the development of new products, coupled with... 

Depending on the business model(s) chosen, companies need to define their specific innovation headroom . This includes answering questions such as how important are innovations in the segment What do strategic customers need Should companies go for innovation in technology, service offerings, or in the value chain What does that imply for R D capacities and skills How can R D best collaborate with marketing and sales, (potential) customers, and external research institutes What level of external versus internal R D is required ... 

The key factors for success will be innovation and flexibility in identifying growth opportunities and turning them into profitable business models. 

What is innovation Breakthroughs can happen in a variety of dimensions. These often consist of new compounds, applications, or improved technical processes, but new services and new business models can be just as innovative and value generating (Fig. 13.3). 

The chemical industry has to revitalize the drivers of innovation to proactively generate sustainable competitive advantage. Innovative breakthroughs can happen in a variety of dimensions, including not only new compounds, applications, and processes, but also new services and business models. 

New commercial business model Radical change/innovation in the value proposition and delivery system. 

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