Sunday 19 September 2010

Business Model Innovation, Stick to your Roots !!!

In my advisory practice we work a lot with large corporate companies. In our annual Global Innovation Survey we see the focus on Business Model Innovation and co-creation in the value chain getting more attention every year. The far majority of corporate companies invest in new business models to create sustainable value in a different way. A growing area for changing the current business model is to outsource not only supporting processes like Finance, IT or HR but also primary business processes such as Purchasing, R&D, Logistics and Manufacturing. Many well known Technology companies left their original core competences behind and become a Design, Marketing and Sales company (Philips is a clear example). I understand the business drivers behind this and that senior executives are seduced to go for short term sales growth and stock value. But I believe this is not a sustainable model for a leading innovator. In my opinion there is a need for a balance between R&D, Operations and Marketing & Sales within the boundaries of a corporate company in combination with an open innovation strategy to the outside world. Open innovation and co-creation seems to flourish if a company keeps substantially own core capabilities. The pitfall for large extend of outsourcing is that the company expect to manage the core process with contracts and SLAs. We see often that short term and top line successes are still hard to find. What is missing is a holistic view on collaboration an doing business! The leading success factor is all about trust and long term relationships.

I like to share two examples of successful business models in which core competences are not outsourced, the focus is not on short term money but collaboration with the outside world is based on many different but integrated aspect like economics, politics, social integration and education, green & sustainability, new style of leadership.

The first example is the Region of Voralberg in Austria. This is one of the most innovative industrialized export oriented region of traditional Europe. Many successful SMEs, traditional craft manufacturers like metal, wood, nutrition, electro, differentiate based on Product (high quality), Design (Modern Trendsetting) and Functionality (usable). There collaboration network enables them to find new product-market-combinations in a high frequency. The schools and education programs are a close partner in their network. The Region is relative small (less than 400.000 habitats) and accelerate on smartness, trust and regional proud rather than volume and power. (source: Prof. GJ Hospers, University Twente)



The second example is American Apparal. American Apparel is a vertically integrated manufacturer, distributor and retailer, based in downtown Los Angeles, California. We currently employ approximately 10,000 people globally (about 5,000 in LA), and operate more than 285 retail stores in 20 countries.

Within our business model, knitting, dyeing, cutting, sewing, photography, marketing, distribution and design all happen in the company's facilities in Los Angeles. The company operates the largest garment factory in the United States, at a time when most apparel production has moved offshore. With our recently opened stores in China, we are now selling Made in USA clothing in the largest consumer market in the world.



American Apparel leverages art, design and technology to advance the business process, while continuing to pioneer industry standards of social and environmental responsibility in the workplace.
(source: americanapparel website)

The most interesting thing about these examples is the strong vision and leadership on sustainable innovation. The strong believe in integrating the most important aspect of human life and living environment into the business model of their companies. It is not about short term, it isn’t about making fast and a lot of money, it isn’t about power play, it is about honesty, fairness, trust and real collaboration for every involved partner. And they are and will be successful! In my opinion the most corporate organization can learn a lot of these role models.

Thursday 7 January 2010

Business Model Innovation, yes you can!!!

I mentioned many times the high impact on business value of innovating the Business Model of a company. We choose 2 years ago to adapt the Business Model Framework of Alex Osterwalder. With my team we adjusted the framework in more detail while working with a significant amount of our key clients. The results are far above any expectations. This is the reason that we as Capgemini choose to co-work with Alex and his network. Two members of our team: Bas van Oosterhout and Daan Giesen represented us in the co-creation of the new book: Business Model generation, written by Alex Osterwalder & Yves Pigneur. It is the first extended handbook for innovators working on changing the business models for the future. Besides the superb content, a lot of effort is put into the design and accessibility of the book.


All this is support by a strong community of co-workers facilitated by the Business Model innovation Hub. We expect a lot of this initiative where all global brains on this theme will meet, work and enjoy the near future state of doing business.


The next challenge will be the integration between the Innovation Strategy, New Business Modeling and capturing the implications for the current Operating Model of the company. Integration of these three dimension will be key to implement the full range of business transformation in order to harvest the new business value in the market. The first draft model of this overall Business Innovation approach is already out of our Innovation Lab in the Netherlands and bringing into practice with our key clients.

I never experienced so exiting breakthroughs in innovation and this will accelerate only more in the near future!