Dancing with Disruption Newsletter: September 2016

Business Model Innovation in the Age of Disruption

This month’s Dancing with Disruption newsletter is co-authored with our colleague Rajesh Setty, a serial entrepreneur, author and speaker based in Silicon Valley. Two of his latest projects are Audvisor and NapkInsights. You can reach Raj here.

Trying to accelerate results in the Age of Disruption without innovating your business model can be likened to pushing rope. Lots of effort with less than thrilling results. A timeless truth comes to mind: “If you always do what you’ve always done, you’ll always get what you always got.” It’s time to do different things in today’s global business environment if you want remarkable results.
 
Business models are the way in which a company generates revenue and makes a profit from its operations. It is the blueprint and design behind a successful business, including the identification of revenue sources, a customer base, product portfolios, core competencies, cost containment, and capitalization.
 
Our research suggests there exists three innovative characteristics that market-leading companies are inserting into their business models that also-rans continue to ignore.

  • Customer Empathy: Customers have never had so many options to choose from. But they do have a point of view, and they will make their choices whether you understand them or not. Wise organizational stewards should strive to understand current customer orientations and future customer desires - employing genuine empathy as a cultural trait - better than every other competitor.
  • Infrastructure Vaporware: Consider the following:
    • AirBnB doesn’t own a single bed
    • Facebook creates no content
    • Netflix owns no cinemas
    • Uber has no vehicles

Perhaps its time to ask yourself and your leadership team whether the organizations mission could still be accomplished by owning significantly less assets and infrastructure on the books.

  • Proactive Disruption: Defensive driving is still taught today by U.S. driving instructors, but it is a poor strategy to employ when leading in today’s disruptive business environment. Global leaders and organizations would be wise to disruptrather than be disrupted in an effort to avoid playing the global game of business as victims of circumstance. We also suggest the change before you have toapproach is a better path to take than the change because you have to approach.

Despite their size, all companies must constantly engage in proactive business model innovation. This can only happen when organizations first begin by challenging outdated mindsets that are no longer helpful. There is no question that business model innovation starts and ends with your mindset.
 
For example, if you hope to gain new customers, then you must help customers “see” your new value proposition in new and different ways. And that will only happen if you and your fellow leaders shift YOUR mindset first. It all begins with you as the leader. It seems almost everything does. As we’ve noted, leaders are the force-multipliers behind results, whether good or bad.
 
We suggest you adopt four mindsets before innovating your business model:

  • Profound sense of humility and willingness to learn new things
  • An urgency to confront the brutal facts
  • Ability to think about things from the customers point of view
  • An understanding that best ideas don’t always come internally 

Revolutionary business models - and thus, revolutionary results - cannot happen in today’s Age of Disruption without leader mindsets also shifting in revolutionary ways.
 
Are you and your team up to the challenge?

Becky Schrumm

Boston, MA