How innovative is your business model?

It seems that one of the current entreprenurship innovation trends lie in no more no less than in the business models. Why?

Topics on entrepreneurship recently often revolve around business models and how to innovate and benefit from them. While reading the article ¨Injecting New Life in into Old Business Models¨ many  Business Model Tips stand out. No better way to learn than looking at succesful examples of other companies taking such initiatives:

Radically innovative business models can do more than change a company’s fortunes. They can change entire industries, Amit says, citing the novel business model developed by Shai Agassi’s California-based electric car company, Better Place. To overcome the challenges of electric vehicles running out of power frequently and the electricity fueling the vehicles is often produced by burning fossil fuel, Agassi and his team changed the business model to fit the product, rather than vice versa as is often the case.

Just like telecoms operators established a wireless network to enable mobile phone communication, Better Place established a network, but in its case to enable mobile transportation with electric vehicle charging spots and battery exchange stations powered by renewable energy. It is creating an ecosystem of companies, which will produce electric cars with batteries that can be exchanged or recharged at the stations, manufacture batteries, set up electric-car dealerships and more. Just like telecoms customers paying for minutes used on a wireless network, its customers pay for miles driven. The vehicles become the means of generating revenue for Better Place.

To refresh from the usual theory on business models, the article gives some useful tips on how you could make your reviewed business model one of your main competitor advantages. So perhaps it is really worth to sit back and reevaluate your business model initiative with your team in order to innovate better than your competitor. Start today.  

So where can managers begin? The first step, say the authors, is to answer the following questions:

1. What is the new business model's objective? In other words, what are the perceived needs to be satisfied by the new activity?

2. What novel activities are required to satisfy these needs?

3. How can these activities be linked to each other in novel ways?

4. Who should perform each activity -- the firm or a partner? And what novel governance arrangements can enable this structure?

5. How will value be created for the firm and other parties involved in the model?

6. What will allow a firm to appropriate revenue from the new value created?

So perhaps it is really worth to sit back and reevaluate your business model initiative with your team in order to innovate better than your competitor. Start today.