LEADERSHIP INSIGHTS

Innovation Insight: How to Engineer Business Models

Katherine Raleigh
Katherine Raleigh
Programme Manager | Thu 19 Feb
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Innovation Insight: How to Engineer Business Models

Most big companies fail because of their business model, not because of operational failure. Professor Charles-Baden Fuller, Centenary Professor of Strategy at Cass Business School, shared his research of how business models have changed over time and what an effective business model looks like at KnowledgeBrief’s latest Innovation Day.

Contemporary business models exist in multiple forms, but how companies execute their business model is critically important. Here are a few key insights from the Innovation Day:

  • Business models are more than just plans to deliver profit: They’re about the customer, not just about the value chain. An effective business model is a mechanism that enables good processes and technologies to be mobilised, to satisfy customer needs and to provide financial sustainability
  • Identify and engage with the customer: Customers can be ‘dyadic’ or ‘triadic’. Historically, customers pay for a service or product – sold on a dyadic basis. Just as product services began to grow, the late 20th Century underwent a shift in ‘platform’ and ‘market-making’ businesses – the ‘triadic’ customer group
  • Multi-sided business models have high growth but high risk-return: By the early 21st Century, service delivery had changed and multi-sided business models became more prominent. Nowadays, online services have users that are not the customers. Google’s customers, for example, are the advertisers

Technological, social, economic and other megatrends are in play and affect all businesses. Organisations can either be blown away by these winds of change, or chart a course. Understanding business model innovation helps leaders to chart that course and stay ahead of the curve.

Participants included Amey, London Borough of Hammersmith and Fulham, RBS and Tullis Russell.

Next, this group will be discussing Building an Innovation Culture. For more information and to join, please contact us.

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