Successful Innovation in Business Models

Innovation must always occur to enhance competitive advantage. One is innovation in business models, which can be a very determining factor of corporate success. The selection of appropriate business model with a master strategy is the key to the success of many companies.

Examples of companies that make changes to business model is Apple’s, when first launched the iPod. iPod not just MP3 technology, but rather part of a great business model, starting from the hardware (iPod and iPhone), software (iTunes) to service (Apple Store). Business model adopted by Apple is a huge success and to continue to make history today at the Apple profitability. Apple could see huge opportunities in the digital music industry.

To create an innovative business model, then the company should be able to find a gap where the market demand can not be fulfilled. Only a little who really can do it successfully. In addition, you can also take advantage of core competency that has to reach other business opportunities. For example, Marvel Entertainment is in the 90′s established Marvel Studios, which later produced the blockbuster superhero films including Spiderman.

The global financial crisis that hit this time, became one of the factors that cause businesses to change their business model. Cost efficiency is no longer the main focus, but the innovations that are expected to encourage growth in the future. When a crisis happens, it happens changes, including the customer. Customers have different preferences, so there may be new opportunities that previously did not exist. Businesses that are able to understand customer needs and wants well is to be out of the crisis as the winner.

According to Johnson, Christesen and Kagermann in the article `Reinventing Your Business Model`, successful business model at its core has a number of the following components:
• Customer value proposition. This business model provides a value for the customer, which is not provided by any other offering. iPod for example, in addition to providing superior technology, has elements of style and a strong prestige. According to its market share, mostly young people.

• Profit formula. These models generate revenue for your company through factors such as revenue, cost structure, margins, to inventory turnover.

• Key resources & processes. The Company has a human resources, technology, products, facilities, equipment and the brand needed to give the customer value proposition. Then companies also have a process (manufacturing, training and service) to take advantage of these resources.

So how you can develop an innovation in business models? The trick is to create organizational structures that allow people to innovate the business model, including:
• directors gave mandate to the management to innovate the business model
• there are cross-functional cooperation between departments and between different hierarchies
• the idea of businesses not only evaluated by managers, but also the other co-workers
• involving customers in the process of business model innovation
• physical space that encourages innovation