It’s all about business model innovation, not new technology – Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

From The Wall Street Journal

To survive in today’s fast changing marketplace, every business–large or small, startup or long established–must be capable of a continual process of transformation and renewal. Surveys show that most executives agree, and in fact, many believe that business model innovation is even more important to their company’s success than product or service innovation. But other studies have determined that no more than 10% of innovation investments at established companies are focused on creating transformative business models.

This is not surprising. Most successful new business models come from startups. Despite the talent and resources at their disposal, business model success stories from well-established companies are relatively rare.

“Building a great business and operating it well no longer guarantees you’ll be around in a hundred years, or even twenty,” notes business model expert Mark Johnson in his new book, “Reinvent Your Business Model.”

Examples abound. In the 1970s, Xerox PARC famously developed, but didn’t commercialize, some of the key innovations of the PC era, including the graphical user interface, the mouse and local area networks. In 2010, Blockbuster filed for bankruptcy, a victim of Netflix Inc.’s new business models.

New technology alone, no matter how transformative, is not enough to propel a business into the future. Nor, for that matter, can past success justify existing business models. The business model wrapped around the technology is the key to its success or failure, argues Mr. Johnson, senior partner at Innosight, the strategy consulting firm he cofounded with Harvard Business School professor Clayton Christensen.

Why are so few big companies engaged in business model innovation? What prevents them from embracing innovative transformational opportunities?

Read the full post at The Wall Street Journal.

Irving Wladawsky-Berger is a Visiting Lecturer in Information Technology at the MIT Sloan School of Management.

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