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Tuesday
May292012

The Business Model Innovation Factory: A Review.

Innovation is one of those classic Rorschach words. 

When viewed through the lens of popular media, it’s mostly about disruptive product innovation -- like Apple’s IPAD. But the long tail of innovation is also about companies like Rosetta Stone, the leading language instruction platform.  Rosetta Stone’s innovation is more about pricing and innovative distribution through kiosks in airports and malls.

Innovation can occur at virtually any touchpoint in an organization -- and perhaps one of the most powerful is business model innovation.  It’s how a business or an organization creates, delivers, and captures value.

Saul Kaplan, Chief Catalyst of the Business Innovation Factory (BIF), has taken his eight-year journey with BIF and his lifetime passion for strategic innovation and turned it into a remarkable and provocative new book: The Business Model Innovation Factory:  How to Stay Relevant When the World is Changing.

The premise of Kaplan’s book is a reflection of economic realities.  “The half life of a business model is declining,” he writes.  “Business models just don’t last as long as they used to. In the twenty-first century, business leaders are unlikely to manage a single business model for an entire career.”

Kaplan’s advice: Don’t get Netflixed.

The keystone story of The Business Model Innovation Factory is how the behemoth and successful Blockbuster got toppled because of a superior business model -- Netflix.

Blockbuster didn’t see the emergence of DVD technology as a threat to their business model.  They saw DVDs as a sustaining technology to improve the performance of their current bricks and mortar model. 

“Netflix didn’t invent any new technology,” says Kaplan.  “What Netflix invented was new business model -- the ability for customer to avoid the trip to the video store by delivering the DVD by mail. “ Eliminating the pay per rental model and substituting a subscription platform with unlimited rentals and no due dates further enhanced the business model.

Blockbuster saw Netflix coming and chose to underestimate them at first and then reacted way too slowly. 

Kaplan believes that most organizations fail at business model innovation because they are “so busy pedaling the bicycle of their current business models they leave not time, attention or resources to design, prototype, and test new ones.”

Kaplan adds, “Most organizations also fail at business model innovation because if overreliance on tweaks.  Almost every company I visit has a crazy number of well-intentioned initiatives going on across the organization.”  He calls this pervasive phenomenon “death by 1,000 initiatives.”

The heart of The Business Model Innovation Factory is 15 business model innovation principles organized around the business model innovation mantra:  Connect. Inspire. Transform.

What sets Kaplan’s book apart from the myriad books on innovation, is that it not an ivory tower book.  Kaplan and his colleagues the Business Innovation Factory in Providence, RI have transformed these principals into action in four key experience labs: education, entrepreneurship, energy and elder care.

At BIF, action is a verb.  They believe in implementing and evaluating ideas in real world scenarios working in partnership with both private and public organizations. Kaplan and his team do better than walk the talk, they dance the talk.

The Business Model Innovation Factory isn’t a book to be placed on the shelf.  It’s a book that should be on your desk and top of mind.  It gives you an impressive array of tools to create your own business innovation factory.

If you want to stay relevant in changing times.

If you want to avoid getting Netflixed.

If you want to get inspired about the possibilities. 

If you want to connect the dots when it comes to transformative innovation.

Then pick up a copy of The Business Model Innovation Factory. 


 

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