There’s a lot that goes on under the hood when you are designing better businesses. In this post, I’ve collected a decade of thoughts about the theory behind the design of better business models.
This post gives you deep insight into how to develop business model strategies and why these strategies are so powerful at enabling your to turbocharge your value proposition and disrupt the competition.
Business model strategy is often overlooked. Innovation departments at big companies often spend 90% of their budget on product innovation. The companies that have invested in new business models have often surpassed the results achieved by product innovation through multiple orders of magnitude (not 10X but 100X and 1000X).
In this post, I’m bringing together a lot of my thoughts and experience on business model strategy. A lot of it is original, some quite happily stolen and improved, and other strategies for business model innovation are presented here as they are because they are just so good.
There are over 400 posts about business model strategy on this site and this page will guide you to the best of them, but it’s taking me a while to go through each of those posts and link to them here. SO bear with me and check back regularly.
There are a number of key strands to my thought about business model strategy. These are
- Business Model Depreciation
- Business Model lifecycles
- The strategic purpose of business models
- Business models and the future of work
- Revolutionary Theory of Business Models
Together they support my manifesto of business model change. If the theory is too much you can see lots of worked examples here and more practical advice here
Business Model Lifecycles
Just like companies business models have a lifecycle. I explore it in a number of ways including considering how the success of business models distorts markets and influences the evolution of other business models. Here’s a case study of the automobile business model lifecycle.
A business model is a social construct
Business models start off as a glimmer of an idea, grow, mature and eventually stagnate, decline and die. Death can be slow and drawn out, surprising, or brutally quick. During this last phase of life business model innovation can be the only escape.
Business Model Depreciation
Why business models decline and die is absolutely fascinating. What reinvigorates them? The normal course is that they slowly depreciate but the rates always seem different – both by industry, time and geography.
The strategic purpose of business models
Whilst I have strong views on the ability of business models to change the world there is plenty that they cannot do. Many use the power of network effects but all should be disrupting competitors and boosting the impact of the core value proposition. This may involve finding a blue ocean or just setting a nuke off in your existing red one. Alternatively, you may design a business model to take down particular incumbents or traditional industries (e.g. Banking).
Business models and the future of work
The ability of businesses to rapidly copy product and service innovations and the impact of deep tech on SMEs business model innovation is crucial to the future of work. How this happens often seems to revolve around changes in supply and demand or scarcity and surplus.
Revolutionary Theory of Business Models
Building off Thomas Kuhn’s theory of scientific revolutions I use some of the same concepts to explore how business models rise and fall. What is normal business? IN some accounts there are long periods of business stagnation, or golden ages. In other accounts business is in perpetual competitive turmoil. How does business flip between these two worldviews?
Revolutionary business models can be developed on a logical basis. They require a shift in world view or weltanschauung, and that requires abandoning many comfortable beliefs about the way things should be. You have to leave the well-trodden path and explore the wilderness.
