model for business

What is Innovation in business models?

Innovation in business models:

In all industries, innovation is vitally important. However, in many instances innovation is usually connected to new, ingenuous technologies or new products. But, business model advancements are far more profitable. Changes in the behavior of customers technology, globalization, and globalization create an “window of opportunity” for innovative business models. What exactly a business model innovation is and the way Hilti as well as Apple have utilized it will be explained in this blog article.

A business’s model is a basis to invent

A business model Business model is only an overall description of the logical frameworks in which an organization creates value for its clients and itself. The specific diagram of this process makes the model evident, measurable and then adaptable.

A business’s model for operating a business can be considered an analytical device that can be used to find the most effective starting point for innovating that means that businesses are able to alter aspects that make up their company model, and gain an edge over their counterparts.

The term “business model innovation” refers to Business model change is essentially the conscious modification of a business model or the development of a new model that is more suited to the demands of the customer over the existing models of business.


10 key facts about Model Innovation in the Business Model Innovation

  1. Every company that is operating is governed by a business model.
  2. The model of business for an organization must change to guarantee its growth and ultimately its existence.
  3. The business model should be considered as a distinct analytical unit that is a new one with the primary focus is on the creation of value for the customer , and in the opposite direction, the recording of value for the business.
  4. Innovation in business model is the process that results in, and the outcome, a change of the business model. It could be completely different. Even the smallest changes could provide great benefits to both business and customers.
  5. Business models that are new can be created by design. Visualization tools like those like the 4-Dimension Concept, Business Model Canvas or BMI Pattern Cards aid in this process.
  6. Business models that are new aren’t developed on a drawing board. Business model development must be guided by what is known as the “Trial and Error Principle” The design process should be based on the Prototype Test.
  7.  Innovations in business models do not require the creation of entirely new concepts. Based on research from the University of St. Gallen, 90% of business model innovations are variations that are derived from “old” or “other” business models. Innovation is generally the result of combining known concepts.
  8.  Innovation in business models does not need to be associated with a brand new technology or product. Innovation in business models can be required to create profit from an innovative product or service innovation.
  9.  A business can have multiple business models simultaneously. Similar to that, multiple different business models may be profitable at the same time in the same sector.
  10.  Innovations in business model innovation can change the entire business.

Innovation in business models needs an understanding of the concept

In order to be successful in working on your business plan, an idea that aids in the description and discussion is crucial. It’s the job of comprehending and communicating the fundamental concept that an organization produces value. In relation to the desired degree of abstraction and detail the concepts may be different. Here we present two concepts with different levels of level of abstraction, but both they both provide the same answers.

1.The 4-Dimensional Concept of the University of St. Gallen

As the name of the concept suggests that the model of business is defined on the basis of four dimensions, and all components can be seen as the basis for a new management actions:

  • WHO are the customers who are targeted?
  • What are the benefits for both customers and the partners that are part of the creation of value?
  • How was the company established and how did it benefit the customers?
  • How does the company earn cash?

2. The Business Model Canvas

A more internationally acclaimed concept to describe business model is “Business Model Canvas” by Alexander Osterwalder and Yves Pigneur. It’s a bit more extensive than the previously mentioned four-dimension model and provides a greater degree of sophistication in descriptions of operation of a business.

The concept of canvas is based on nine fundamental elements that encompass the four major areas of the business (customer offer infrastructure, finance, and customer):

  • Customers segmentsPeople or companies that need to be contacted.
  • Value propositionsproducts and solutions that address a need for a particular customer segment or fulfill a need and therefore add create value.
  • channelssales channels that the company can reach out and respond to customers, expressing the value of its services.
  • Relationships with the customerThe company’s various relations with its customers (customer acquisition, client service and sales promotions, individual or automated)
  • Sources of income: Revenue from a business from different segments of customers.
  • Essential resourcesBasic resources required for the operation of in the model of business (physical, human, intellectual, and financial).
  • Essential ActivitiesThe essential steps of a business’s model that supply the resources mentioned above as key.
  • Partnerships that are keyThe principal partners in the business model (suppliers strategic alliances, joint ventures, partnerships)
  • cost structureThe most crucial of the costs that are incurred in your business plan.


apple-as a-product

Apple – The Apple product offers an immersive experience

As the 90s, it became evident that Apple’s initial business model had fallen off. The strategy of offering both hardware and software forced Apple into a niche which made it hard to compete with the competition.

in 2001 Apple took note of this change by launching the brand new iPod, iTunes and 2007 products, including the iPhone. It was also an innovative business model that revolutionized the process of downloading music via the Internet and pushed Apple up to the very top of the market in a short period of time.

The key to the success of Apple was not just the technology innovations. The success was mostly resulted from the iTunes platform offered an effective business model for the downloading of music, as well as programs that worked with iPod as well as iPad to be developed an environment that allowed musicians to offer single songs, not only albums.

Through the help of these products, Apple not only generates revenues of $5 billion per quarter ( Q4 / 2015) globally and also provides customers for its iPad and iPhone which totals a value of $ 36 billion a quarter ( Q4 / 2015). In a beneficial “side effect” of this new business model, the demand for the computer range of Apples increased and can describe as a lucrative outcome with the sales reaching 6.8 billion dollars for the quarter ending in 2015.

Apple has also demonstrated clear that business model innovation is much more than process, product, or technology innovation.

Utilizing the 4-dimension model The business model development of Apple could be summarized in the following manner:

  • The value of the customer (WHAT?) was extended to include the concept that of “the product as an experience”.
  • The advent of iTunes has led to an extreme change in the ways in which the benefits of customers are created (HOW? ).
  • Apple discovered new revenue streams via new services and products in addition to downloading music and apps (HOW is EUR).

Conclusion: What is a Business Model Innovaton? Click Here

Innovation in business models is among the most efficient ways to differentiate a company from the crowd and ensure the survival of their business, particularly during times of uncertainty. In the end, it’s about dissolving a business into its components analysing it, and then analysing it, then re-inventing them as well as, when combined with the other elements, putting them up in a methodical manner.



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