5 Reasons for Failing @ Business Model Innovation

Source: HBR blog, Oct 2011

CEOs don’t really want a new business model.
The most obvious reason companies fail at business model innovation is because CEOs and their senior leadership teams don’t want to explore new business models.

Product is king. Nothing else matters.
The lines are blurring between product and service. Business models that are exclusively focused on products are vulnerable to being disrupted by models that blend both product and service to significantly change the value proposition.

Cannibalization is off the table.

When executives look at new opportunities they see them through the lens of the current business model and view them as competing with the current way the organization creates, delivers, and captures value. Organizations fail at business model innovation because they blindly take cannibalization off the table even if a new business model may have significant upside potential.

ROI hurdles are too aggressive for fledgling models.

Rogues and renegades get no respect.
Many organizations fail at business model innovation because they shoot their renegades. … Business model innovators go against the corporate grain. They see entirely new ways to create, deliver, and capture value. … ¬†Organizations must learn to celebrate and support people within the organization who are willing to challenge the status quo, to bring totally different perspectives on delivering value to the table, and to take experimental risks to explore new models.

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