Five Reasons Companies Fail at Business Model Innovation – HBR


Several years ago when I first read these words from Clay Shirky they really resonated as far as my own industry [insurance] was concerned.

“It is easier to understand that you face competition than obsolescence”

In the intervening period a great deal has changed…not necessarily for the better. But too much has remained the same. As I read recently “Nowadays, competition is mainly taking place between business models rather than just between products and services…”. It is true.

Business models that are unsustainable but still function in the current environment, are now showing the outward signs of frailty. Fragile businesses lack the agility to adapt for survival in a post-critical financial landscape.

Bankers were better equipped than dinosaurs to detect the “tipping point” of a paradigm shift….but still failed. Don’t be a dinosaur and be wary of getting too close to those who are, because their demise will, most likely, be sudden and all in the immediate vicinity will be crushed.   

The following is only one point but PLEASE read the the article in full because “too big to fail” is a well-crafted myth.

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. They are content with the current one and want everyone in the organization focused on how to improve its performance. The clearest indication that a company and its leaders aren’t interested in business model innovation is when any discussion about emerging business models and disruptive technology is viewed and treated solely as a competitive threat.

via Five Reasons Companies Fail at Business Model Innovation – Saul Kaplan – Harvard Business Review.

4 Responses to Five Reasons Companies Fail at Business Model Innovation – HBR

  1. Pingback: Students for Free Culture - Entrepreneurship position paper | Students for Free Culture - Europe

  2. Justin says:

    I would say: Build business model basing on the market end and customer end.

    With the development of technology and economises, customers’ preference, shopping&purchasing habits, consuming concepts etc are keeping changing, so there will be no business model keeping the same in the long-run. Remodeling from time to time is important for most of the businesses.

    Justin

    • Thanks for the input Justin and, although your choice of language and grammar don’t help(!), I reckon you are on the right track: an agile model able to adopt new technologies; sensitive, aligned and adaptable to sustain stakeholder service and satisfaction.

      There are a number of articles on the subject of “business change”, strategy, social media, etc that expand upon some points that may be of interest.

      David

  3. Reblogged this on Get "fit for randomness" [with Ontonix UK] and commented:

    We have become so used to the idea of standards as a good thing that we tend to apply them in the wrong places. For example, consider the idea of a “best practice.” The concept of a best practice assumes that there is one ‘best way” to solve a problem. It assumes that every problem can be isolated from its context, and a single best way of solving it can be described and shared. Unfortunately, this has caused a lot of problems in the business world, because it’s impossible to isolate problems from their contexts.

    A system is not just the sum of its parts. What makes a system work is not the parts in isolation, but the interactions between them, and the inherent tradeoffs that must be made to achieve different kinds of system performance…

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