The document discusses three options for companies: non-innovation, re-innovation, and innovation. It argues that survival often requires innovation or re-innovation, which involves reframing mental models and business models. Examples are given of companies like Uber, Facebook, and Alibaba that innovated business models. McDonald's case of introducing all-day breakfast is discussed as an example of successful re-innovation through reframing customer expectations. Overall, the document promotes reframing thinking and models to better connect with customer needs through innovation or re-innovation.

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Non‐Innovation l Innovation l Re‐Innovation
Reframing the Mental & Business Model
“It’s not necessary to change … if survival is not mandatory!”
Innovation, a single 10 letter word with billions of dollars of implication.
Managers today have, basically, three strategic Innovation options:
1. Non-Innovation
2. Re-Innovation
3. Innovation
Non-Innovation is one option. Simply put: ‘It’s not necessary to change … if survival is not mandatory!” If
survival is mandatory, what must companies do today to generate billions of dollars in revenue, retain or
create thousands of jobs, reward investors and sustain the environment? They have to think about it.
They have to think outside the box, they have to think in new boxes and they have to Innovate or Re-
Innovate. They must reframe both their metal & business models.
The Necessity of Understanding Innovation
“Business has only two functions—marketing and innovation. “ Peter Drucker
There is a dictionary definition for the word Innovation … but it does not really seem to fit what is going on
today. Today’s innovators and change agents are redefining the word to also mean, reframing issues
and thus reframing the mental model or mental model that leads to innovation. Reframing a problem
allows people to see old reality through a new lens—and that in its own right is an important innovation.
Many call this process, ‘thinking outside the box’. Advances in technology or shifts in consumer
expectations mean that now, we must also often switch our thinking to thinking in new boxes.
Innovation therefore results in a change in reality.
Innovation Changes Reality
Some examples of disruptive and reality changing business Innovations:
 Uber is the world’s largest taxi company, yet owns no automobiles.
 Facebook is the world’s most popular media company, yet creates no media.
 Alibaba is the world’s largest retail company, yet has no inventory.
 Airbnb is the world’s largest accommodation provider, yet owns no real-estate.

2. The Track of Innovation Change
Technology, linked to a variety of platforms (PC’s, Desktops, Tablets and Smartphones), has spurred
Innovation, sometimes disruptive, at an ever, almost exponentially, accelerating pace. Consumers today
have near-perfect information and near-infinite product, services and price choices. And … consumers
today cannot seem to live without things they did not know existed yesterday.
Think about the track. In 1995, less than 1% of the world’s population had an Internet connection. Today,
that number is around 46% or 3.4 billion people. On April 21st
, 2016, Nielsen released its 4th
–quarter 2015
Comparable Metrics report, Smartphones now have 82% U.S. HH penetration with cross-platform
functionality … meaning they can access synchronized information virtually anywhere, 24/7 regardless of
device.
Therefore, technology and non-technology are intertwined, Consumer expectations meld to produce a
change in existing reality through an unprecedented demand for Innovation or Re-Innovation!
Example: Non‐Innovation Marissa Mayer Yahoo
“Management is doing things right; leadership is doing the right things.”
“If you want something new, you have to stop doing something old”
Peter Drucker
Today, under Marissa Mayer’s leadership of the last 4 years there is no evidence of successful Innovation
or Re-Innovation. Yahoo is now categorized as a relic of the past—a declining internet giant with no
apparent competitive advantages, no recent innovations and an obscured future trajectory. Yahoo was
founded in 1995. A billion users visit Yahoo sites every month. At one point, Yahoo had a market
capitalization of $128 billion. Today, that valuation is somewhere, according to many, south of $0. NYU
finance professor, Aswath Damodaran says, “A tech company that is 20 years old is like a regular
company that is 60 years old.” Note: In the Silicon Valley world there are winners or ‘smoking craters’.
There are very few middle of the road successes. Venture capitalists and the markets generally fund
companies until they blow up, one way or the other. The financial market does not want companies that
are moderately successful. Yahoo is up for sale!
Example: Steve Jobs and Mental Model Innovation
Steve Jobs achieved spectacular Innovations by reframing a mental model which
led to reframing product, business and solutions models. He re-imagined—he linked
new technologies—he combined things that had never been combined before. For
example, in 2007 Apple introduced the iPhone. The iPhone, for the first time, was a
single device that converged an iPod, phone, camera and touch screen. Jobs reframed the mental model
of what a phone could be. Jobs thus was able reframe a business model as cell phone carriers were now
forced to buy the phone from Apple and resell it to consumers over some period of time on a contract
basis. Jobs went on to create the APP Store which subsequently has sold billions of dollars of iPhones
and Apps. The iPhone and the APP store were Innovations, consumer solutions and software
applications that were useful to consumers. To reiterate, ‘Consumers today cannot live without things
they did not know existed yesterday.’

3. Example: Re‐Innovation McDonald’s New Mental Model Changes the Menu
Following is a headline from a Fortune Magazine article, January 23, 2015:
“McDonald’s reported a 21% decline in quarterly profit on Friday as sales slid across all regions,
ending a challenging year on a poor note.”
Following is a headline from a USA Today article, January 25th
, 2016:
“The fast-food giant's all-day breakfast strategy, rolled out nationally in October, also appears to be winning over
customers. The company credits all-day breakfast with helping send sales at U.S. restaurants open at least a year up 5.7%
in the quarter ended Dec 31. That marks the second quarter in a row of same-store sales growth in the U.S., after seven
quarters of declines.”
Historically, the restaurant industry has always thought (Mental Model) about food in ‘day parts’—
Breakfast, Lunch and Dinner or certain foods for certain times of the day. Someone at McDonalds
apparently asked the questions, “What if today’s customers want breakfast type foods when they want it?
What if breakfast products were not really just about the time of day?
McDonald’s, for the moment, is an example of a company that recently mastered something we will call
Re-Innovation. Their challenge was not based upon a disruption by new technologies; rather the
challenge was a change in consumer expectations. Consumers moved on from the way McDonald’s and
other fast food restaurants defined their business. McDonald’s management reframed their thinking. They
moved from trying to sell what they made to finding out what their customers wanted to buy, when they
wanted to buy it—and found ways make it happen.
The challenge for the McDonald’s management team was not to Innovate and create a new business.
McDonald’s management was required to re-innovate their existing business model—to change their
frame—to look at their customers in new ways.
Innovation or Re‐Innovation is simply about ‘Thinking Outside the Box’ or
‘Thinking in New Boxes’ and turning that thinking into reality.
In other words, Innovation or Re-Innovation is about reframing your mental models to
connect your products and services by adding customer value and by serving your
customers better than anyone else can serve them. Reframing Mental Models leads to the
linkage of product, business and solution models that serve as the foundation for radically successful Innovation or
Re-Innovation.
Can Innovation be taught? Try this … https://sph.uth.edu/research/centers/ingen/
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