The rapid pace of business model innovation is new. Prior
to the 20th century, business models often remained
unchanged for centuries.
In the first part of the 20th century, business models
usually lasted for more than a decade. In the 1990s, we
suddenly saw a few dozen pioneering companies successfully
innovate new business models every two or three years under
the same CEO.
In the near future, we can expect to see business model
innovation become continuous as more than one company in an
industry becomes adept at this critical activity. As a
result, many skills that used to be very important like
continuously improving existing processes and reengineering
processes will become less valuable because frequent
business model change will permanently eliminate most
existing processes.
This acceleration of shifts presents an important challenge
for companies of all sizes, in all industries, and in all
countries. Being outstanding at what is important today
will no longer be enough to succeed. Business model
innovation and implementation must be added to your
company's strengths.
Here's an example to help you see how these generations of
business model innovations impact companies. After World
War II, a number of companies made a business out of
providing economic data.
Most people who needed these data bought hard-bound books
that were consulted by hand when information was needed.
Next, the formats were redesigned to make them easier to
use, and paperbacks with supplements arrived.
Then, you could get the same information faster through
time-sharing services where you paid by the hour. The next
step was to make these data compatible with customer
computer models so that electronic updating was automatic.
Next, to get customers for value-added services, the
computer data providers offered the data for free. When
the Web came along, the data became more extensive and were
coupled with free software to allow you to answer any
question you had. To that was added the opinions of many
leading experts about the data.
The next business model will probably apply the data to
improve your business for free. Obviously, in each case
there has to be some economic benefit for the service
provider.
Increasingly, that benefit is further and further removed
from the original reason the product was sought. This trend
will undoubtedly continue because service providers can
improve what they do for you in every area as they learn
more about you.
All of these changes raise a question: Will your company
still be independent and operating in its current form in
seven years? The odds are against it.
Chances are that your industry will experience three
significant, business model improvements in that time.
These business model improvements have the potential to
help you when you make them first or best soon thereafter,
and to hurt you when others do.
As a result, your company will either have to become a
leader in developing these improved business models, create
fast improvements in these models after they occur, almost
instantly emulate new ones, be harmed by the success of
those who use them or be acquired by someone whose business
model is stronger.
The choice is yours. What do you choose?
Copyright 2008 Donald W. Mitchell, All Rights Reserved
----------------------------------------------------
Donald Mitchell is chairman of Mitchell and Company, a
strategy and financial consulting firm in Weston, MA. He is
coauthor of seven books including Adventures of an
Optimist, The Irresistible Growth Enterprise, and The
Ultimate Competitive Advantage. You can find free tips for
accomplishing 20 times more by registering at:
====> http://www.2000percentsolution.com .
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