Business Model Innovation – Big Risk, Big Rewards

There is a lot of talk about business model innovation these days. Psion, the maker of mobile handheld computers has joined in and they aim high.

They want to no less than revolutionize the rugged mobile computing market with its move to an open innovation business model in which Psion will co-create mobile hardware, software and services, bringing together customers, partners and developers within the Psion eco-system. They call this approach for “Open Source Mobility”.

Psion has set some very ambitious objectives for this initiative. One is to dramatically reduce customer’s total cost of ownership and do this 30-50% better than their competitors over a five to ten year span.

Such ambitious objectives are not unusual when companies began to work with business model innovation. Dell became an 800-pound gorilla by changing how to order and build your own computer and more importantly by getting payments upfront while paying their suppliers 60-90 days later. The latter financed the growth of the company.

As a more current case, we can just look at Apple and how they are rewriting the rules in the industries they operate within. Business model innovation plays a big role in their success.

I have no doubt that Psion has a difficult task ahead of them, but as with the Dell and Apple examples, I think they touch on something important. If you really want to make a difference within an industry, you need to include business model innovation and get beyond products, technologies and services.

You also need to involve all business functions and to bridge internal and external resources while making this happen. This is no easy task, but if you have the potential to reap rewards similar to what Dell and Apple got, it could be worth the risk.

Several people have questioned whether business model innovation is more or less just corporate strategy. I think there is some truth in this and I think it is a good thing as it brings innovation up closer where it belongs; as a key strategic element of in any company.

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.