The danger in missing the innovation moment15 September, 2014 / Articles
Companies fail to identify future opportunities because they do not have fresh business models. The danger in missing the innovation moment.
Have you ever wondered why hyper-successful companies like Nokia or Kodak suddenly lose their edge? How companies such as Commodore Computers, Grundig, Nakamichi, Newsweek or Polaroid could possibly fail?
They all had abundant research and development resources, top employees and a profound knowledge of their markets. But they had another thing in common: they all missed the moment when they should have left their successful path to rethink their business models. They missed out on radical innovation because they were too busy managing daily business and serving current clients – instead of looking for future opportunities.
Products and companies do not differentiate winners from losers; it is the right business models that do. Of BCG’s 25 most innovative companies in 2013, 14 are business model innovators. For example, Apple became the biggest music retail seller without selling one CD; Netflix reinvented the video business without operating a single video store. Google continues to attack new industries with its data-based services and devices; Google’s products from glasses, to self-driving cars to smart thermostats are just a means for increasing and leveraging Google’s data-based consumer insights.
Business model innovation is more profitable and more sustainable than product innovation and is badly needed in Europe today.
How are we addressing this issue in business schools? Too often business schools preach interdisciplinary research and team thinking while teaching in functional silos such as strategy, marketing, operations or finance. Global competition requires a more holistic approach to business development that typically reflects business model thinking.