Driving Growth with Business Model Innovation
Business model innovation is a powerful approach to driving growth and to capturing a more durable competitive advantage. Four success stories point the way.
Product and service innovation are essential, but business model innovation can deliver more lasting competitive advantage, particularly in disruptive times.
In the past 50 years, the average business model lifespan has fallen from about 15 years to less than five. As a result, business model innovation is now an essential capability for organizations seeking to drive breakout growth, reinvigorate a lagging core, or defend against industry disruption or decline.
Business model innovation is the art of enhancing advantage and value creation by making simultaneous—and mutually supportive—changes both to an organization’s value proposition to customers and to its underlying operating model. At the value proposition level, these changes can address the choice of target segment, product or service offering, and revenue model. At the operating model level, the focus is on how to drive profitability, competitive advantage, and value creation through these decisions on how to deliver the value proposition:
Business model innovation is critical to transformation. Many organizations share a common set of concerns: What type of business model shift will help us achieve breakout performance? How do we avoid jeopardizing the core business? How do we build the capability to develop, rapidly test, and scale new models? Inspiring an organization to change is not a trivial undertaking, but given the current strategic environment, it’s a critical one.
Companies hoping to drive growth through business model innovation face a number of critical questions: How broad should the scope of the effort be? What’s the appropriate level of risk to take? Is it a onetime exercise, or does it call for an ongoing capability?
To answer those questions, it’s important to realize that not all business model innovation efforts are alike.
:Business model innovation is a powerful approach to driving growth and to capturing a more durable competitive advantage. Four success stories point the way.
When traditional growth levers—such as product extension and pricing—become less effective, it’s time to embrace business model innovation.
In an era of rising protectionism, the business models that succeed are the ones that use digital technologies to access new markets and find new ways to grow.
A BCG survey of 2,687 large companies found that asset-light models deliver stronger financial results—especially if used with “smart controls” that improve coordination and knowledge sharing.
A targeted strategy helps a bank capture Millennial customers at twice the rate of its conventional rivals.
Learn how BCG helped define a new, innovative business modelManaging Director & Senior Partner
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Managing Director & Senior Partner
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