The hard truth about business model innovation

Abstract

The landscape of failed attempts at business model innovation is crowded and becoming more so as management teams at established companies mount both offensive and defensive initiatives involving new business models. This article assembles knowledge that the primary author has developed over the course of two decades studying what causes good businesses to fail, complemented by a two-year intensive research project to uncover where current managers and leadership teams stumble in executing business model innovation. Many failed business model innovations involve the pursuit of opportunities that appear to be consistent with a units current business model but that in fact are likely to be rejected by the existing business or its customers. To achieve successful business model innovation, organizations should focus on creating new business models, rather than changing existing ones. Once a new business is launched, it must remain independent throughout the duration of its journey, but maintaining autonomy requires ongoing leadership attention.