Business Model Innovation as a means to realize growth

Business Model Innovationas a Means to Realize Growth

Business model Definition of a business model: The rationale of how an innovation will be organization creates, delivers, the next big 2 and captures value . differentiator for Drivers for business model companies aspiring innovation Organizations throughout innovation industries experience similar leadership. challenges to maintain turnover and profit levels. Innovation leaders are breaking These are: away from the pack by  Balance between short- allocating increasingly more term cash focus and long- resources to business model term value focus innovation1. And they are right. Research has illustrated that  Globalization and complexity of Value Chains more value is to be expected from business model  Ever more ambitious innovation, than from any strategic business other form of innovation. objectives Business model innovation has  New forms of competition a higher impact on business results.  Insufficient awareness and Pursuing new markets is much understanding to transform more likely to be successful business models effectively when driven by means of new models for value creation. Approaches to creating new More and more game-changing business models models see the daylight, Companies can approach however, the balance between business model innovation value creation and value from various angles. capturing remains to be a First there is the angle challenge. of the individual Key for success is the ability to innovation or new business adequately apply changes to development project. Second, the operating model, in order there is the more tactical angle to deliver the value as designed on a portfolio of innovation by new business models. initiatives. Third, there is the strategic angle of considering the implications their business strategy brings to their 1 Global Innovation Survey, business models. 2010, Capgemini Consulting 2 Business Model Generation, Osterwalder & Pigneur (2009)2

Accelerating individual processes of bringinginnovation initiatives innovations to market, theMost innovation projects opportunity to create new andwithin organizations start game-changing businesseither from insights that models is often overlooked.customer demand is changing Companies with strong brandsor that a company can deliver are able, more than others, toother products and/or services maintain and manage aout of the available capabilities. portfolio of business modelsDriving business model that sets a clear message toinnovation for individual various segments of customers.innovation projects entails The portfolio of business(re-)considering the earnings models drives decision makingand business model for the along insights in attractivenessproject, ensuring optimal fit of business models, ability tobetween the external (outside- execute, and of course,in) requirements and the business impact.internal (inside-out)capabilities. Strategy implications The success of a businessTo increase the success of new strategy largely depends on abusiness models companies profound understanding of theshould not try to pursue a ‘one- business environment and thesize-fits-all’ model, but match with organizationalcarefully specify business capabilities. Essential to anymodels to match with market strategy is not only the strategyrequirements and capabilities. formulation, but also the way aPrior to coming to a preferred strategy is implemented.business model variousalternatives need to beconsidered and weighted Most organizations draw aagainst each other. The roadmap for strategyalternatives as they are implementation that neglectsgenerated vary in terms of the impact on business modelsValue Chain involvement, Value throughout the organization.Creation strengths, and Value There are basically two ways inCapturing opportunities. which the business model strengthens strategy:Portfolio of business  Applying the businessmodels model as a sanity check toBusiness models occur at the ensure proper strategylevel of product-market implementation.combinations. Since companies  Using the business model tomost often have an elaborate translate strategy andportfolio of different product- determining its implicationsmarket combinations the same enhances the performanceshould apply to business of the strategymodels. However, most implementation.companies struggle with this.Heavily relying on the currentskill set together with Business Model Innovation as a Means to Realize Growth 3

Illustration 1: Capgemini Consulting Business Innovation Framework Translating strategy Success of any strategy is determined by its implementation. Traditionally the impact of the business model is not considered when drafting an implementation roadmap. By including the impact a strategy will have on the business model an organization is much more able to focus its attentions to where it is really needed. Considering the implications on business models result in identification and prioritization of hotspots that are key to the strategy’s success. Translating strategy to the impact on business models identifies what changes are Strategy sanity check required to operating models Considering the business model to drive performance and when creating a new strategy success. This enables enables companies to prepare organizations to implement for implementation. By new strategies faster and more assessing the degree of change smoothly. that is required for successful strategy implementation, Implementing new business companies gain insights into models the feasibility of the strategy By assessing the differences and its objectives. The larger between future business the degree of change, the more models and the current ones challenging achieving any organization can be more objectives is. prepared for changes up ahead. These insights serve as a key Key to successful business input for iteration towards model implementation is the finalization of the strategy adaptation of an organization’s formulation and therefore as operating model. By adapting an input to optimizing fit the operating model to fit with between strategies and new business models organizations. organizations prove to be more Conducting a sanity check able to change their operations based on the business model and way of working effectively. enables organizations to Thus increasing agility and formulate strategies that are flexibility to respond to fit-for-purpose, realistic and changes. implementable.4

Conclusion industry expertise: we do notEver faster changing only develop the right solutionenvironments together with - we also implement itdemanding customers increase effectively and sustainably inthe necessity to adapt business the organization.models to capture future With our proven approachgrowth. comprising a combination ofDepending on the kind of formal/quantitative andchallenge up ahead companies content/qualitative analyses ascan focus their business model well as established tools, wechanges on accelerating can quickly establishinnovation initiatives, driving a transparency on businessportfolio of innovation projects drivers and identify businessor strengthen their strategy by model potential within 3-4connecting to business models. weeks. Based on ourPositive effects of adapting experiences, we willbusiness models are: collaborate with you in Improved ability to benefit developing structural from the complexity of alternatives, and establish the Value Chains framework for an objective assessment and selection of More explicit decision the best possible alternative making regarding short- business model. term cash focus and long- term value focus Contact Raised understanding and ability to transform Koen Klokgieters businesses effectively Global LeaderRegardless the circumstances R&D and Business Innovationbusiness model innovation +31 6 511 23 259enables organizations to koen.klokgieters@capgemini.comimprove the way they createvalue and increase the value Bas van Oosterhoutthey capture. Business Model Innovation +31 6 100 35 828Capgemini Consulting and bas.van.oosterhout@capgemini.comBusiness Model InnovationCapgemini Consulting hassupported numerous nationaland international companiesand institutions in the analysis,design and implementation ofbusiness models. Drawing onour global network ofinnovation experts, we haveaccess to established tools aswell as best practices. Ourcompetencies in changemanagement and provenimplementation skills augmentour business model and Business Model Innovation as a Means to Realize Growth 5

About Capgemini Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working, the Collaborative Business ExperienceTM. The Group relies on its global delivery model called Rightshore®, which aims to get the right balance of the best talent from multiple locations, working as one team to create and deliver the optimum solution for clients. Present in more than 30 countries, Capgemini reported 2009 global revenues of EUR 8.4 billion and employs 90,000 people worldwide. More information is available at www.capgemini.com Rightshore® is a trademark belonging to Capgemini. About Capgemini Consulting Capgemini Consulting is the Global Strategy and Transformation Consulting brand of the Capgemini Group, specializing in advising and supporting organizations in transforming their business, from the development of innovative strategy through to execution, with a consistent focus on sustainable results. Capgemini Consulting proposes to leading companies and governments a fresh approach which uses innovative methods, technology and the talents of over 4,000 consultants world-wide. For more information: http://www.capgemini.com/services-and-solutions/consulting/ Capgemini Nederland B.V. Papendorpseweg 100 Postbus 2575 – 3500 GN Utrecht Phone: +31 30 689 00 00 – Fax: +31 30 689 99 99 www.nl.capgemini.com/consulting6 Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group

Business Model Innovation as a means to realize growth

by Bas van Oosterhout on Feb 09, 2011

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