Online from: 1988
|Title:||Reinventing your business model|
|Author(s):||Johnson M W, Christensen C M, Kagermann H|
|Journal:||Harvard Business Review, Dec 2008, Volume: 86 Issue: 12 pp.50-59 (10 pages)|
|Keywords:||Business Planning, Innovation, Organizations, Product Development|
|Reference:||38AB159 (Permanent URL)|
Design/methodology/approach - The example of Apple's great success in developing the iPod/iTunes Store product, despite there being earlier products that were similar and worked well, is discussed to illustrate the fact that these competitor products failed due to the lack of an appropriate business model. Explains that innovative business models often look unattractive to internal and external stakeholders of a business but breakthrough products rarely emerge from established businesses because a radically new product demands a new business model. Sets out the four interlocking elements for a business model to create and deliver value: customer value proposition (CVP); profit formula; key resources; and key processes.
Findings - The elements of the authors' proposed business model framework are revealed, comprising: creating a CVP; designing a profit formula; and identifying key resources and processes. Reveals how this type of approach has been made to work in companies such as Tata Motors, Hilti, Procter & Gamble and Dow Corning. Concludes with a listing of the rules, norms and metrics that can stand in the way of new business models.
Originality/value - Offers advice and warnings to companies aiming to develop radical new ideas and products but may be planning to rely on old, established business models.