Business model innovation: BMI
A clear and practical paper from BCG explains nicely what a business model is, what ‘innovating’ it means, and when and how to do it. The only caveat is the superior total shareholder returns it claims comes from BMI innovators vs. traditional innovators – it likely excludes BMI innovators who failed. So by all means check it out, assess whether BMI is appropriate for you, but if not, get back to driving performance in your existing business model.
Beware divesting core business
A rare example of clear and useful academic research from Emilie Feldman at Harvard [but treat it with care - see below]. Emilie “investigates “legacy” divestitures, the sale or spinoff of a company’s historical core business. Firms appear to divest their legacy businesses within the context of larger efforts to reshape their identities. I find that operating performance deteriorates Read more
… but some transformations are vital
There’s no question transformation is sometimes powerful or just unavoidable. You will find a more thorough, professional case showing how to think it through in Reinventing Print Media from strategy+business.
More ‘transformation’ hype
Just had to pour some cooling water over another bit of hype on this issue. Harvard Business Publishing just promoted ‘Constant Transformation Is the New Normal‘ by Scott Anthony. See below for my reponse: Read more
Successful transformation
Readers will know I’m no fan of the obsession with ‘transformation’ in strategy, but it’s sometimes essential or advanageous. In Corporate Transformation under Pressure, McKinsey report a less than 40% overall success rate, especially when used in an effort to get out of trouble – as they say, “this finding seems to contradict the common wisdom that it is hardest to transform a company when it lacks an acute and apparent need for change“. As I’ve said in previous posts, when you are in trouble is a bad time to reinvent yourself – most often better to focus on getting back to the basic, core business model that works.
Helpfully, the article goes on to offer tactics that, when used together, seem to make transformations more successful, depending on the purpose of the effort.
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When a new business model is essential
The music industry is a great example of where ‘changing the business model’ – aka ’strategic innovation’ or transformation – has been essential. So although I have poured cold water on this idea for almost all firms at almost all times, it’s worth looking at this case. Read more