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Brandwave-logo-6.png |Business Model Innovation | october 2015
Companies hoping to drive growth through business model innovation face a number of critical questions: How broad should the scope of the effort be? What is the appropriate level of risk to take? Is it a onetime exercise, or does it call for an ongoing capability? How can a company discern which new business model is the most attractive? And what differentiates those companies able to transform their business models from those that might run a pilot but fail to fundamentally change the company’s trajectory?
To answer those questions, it is important to realize that not all efforts toward business model innovation are alike. Understanding four distinct approaches can help executives make effective choices in designing the path to growth.
Four Approaches to Business Model Innovation:
To understand which business model innovation approach fits best for any individual company, it is critical to understand both impetus and focus.
Impetus: Is the company defending against an external threat, such as commoditization, new regulation, or an economic downturn—or is it proactively disrupting the status quo?
Focus: What is the most attractive area of opportunity—does it reside in the core business or in adjacent businesses or markets?
These two factors define a matrix of four approaches to business model innovation. (See the exhibit below.) Within each of the four approaches, companies will employ different tactics to successfully rebuild their models and make different choices.
  • The reinventor approach is deployed in light of a fundamental industry challenge, such as commoditization or new regulation, in which a business model is deteriorating slowly and growth prospects are uncertain. In this situation, the company must reinvent its customer-value proposition and realign its operations to profitably deliver on the new superior offering.
  • The adapter approach is used when the current core business, even if reinvented, is unlikely to combat fundamental disruption. Adapters explore adjacent businesses or markets, in some cases exiting their core business entirely. Adapters must build an innovation engine to persistently drive experimentation to find a successful “new core” space with the right business model.
  • The maverick approach deploys business model innovation to scale up a potentially more successful core business. Mavericks—which can be either startups or insurgent established companies—employ their core advantage to revolutionize their industry and set new standards. This requires an ability to continually evolve the competitive edge or advantage of the business to drive growth.
  • The adventurer approach aggressively expands the footprint of a business by exploring or venturing into new or adjacent territories. This approach requires an understanding of the company’s competitive advantage and placing careful bets on novel applications of that advantage in order to succeed in new markets.

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It’s worth comparing the innovation models of each to find out. 

1. Samsung
Samsung originates in a highly deferential culture and has built its innovation model around five elements, the first of which allows them to redefine hierarchy way from traditional status:
  • Developing a creative elite within the company based on innovation training
  • Pursuing and circumventing patents of competitors
  • Consistent, replicable company-wide innovation methodology
  • Relying on external expertise for fundamental breakthrough science
  • A conglomerate approach
2. Apple

Apple’s innovation strategy had changed the way we all think about the post-industrial enterprise. Apple’s platform strategy goes back as far as the first iTunes platform, which integrated external content with an Apple product (the Nano).

It evolved into the apps developer community and Apps Store, as Apple miraculously ramped up a developer community of hundreds of thousands in the space of two years.
At the same time, as reader Dave Nelson points out, Apple opted for extensive outsourcing and in so doing showed competitors the way – there was no need to build or invent, just go and buy Apple-like parts.
In the meantime Apple has been castigated for not repeating its disruptive success with the iPhone, when in fact a platform and ecosystem model is both a huge risk and a game changer that can yield cash for a long time. How ironic that Apple is under fire only five years after inventing it.
So what are the components of the Apple innovation model?
  • The platform and the significant investment in seamless integration of developer and content provider contributions, user access and friction-free commerce. That platform strategy and execution still does not get the credit it deserves
  • Design, as we all know. In smartphones the iPhone redefined the UI
  • The competitive internal market as teams compete against each other on select projects
  • Wearables and the disaggregation of the smartphone, presumably looking for new ways to exploit the platform and ecosystem
  • Supply chain management
  • Radical adjacencies such as retailing and indeed mobile and now watches
  • Control of all customer experience
3. Google
Google is usually associated with a fairly loose innovation model -the 20% free time its engineers can claim but in fact its innovations are systematic in the infrastructure. This is a comment left by Goolge here on ReThinking Innovation:
We are constantly innovating, figuring out new more efficient ways to remove heat from machines while reducing pollution. We publish our findings, after they have been vetted. After a few years, our designs start showing up in other companies’ datacenters. We only waste 7-8% of our power on overhead. The norm *used* to be 50-100%.
YouTube was converted to use Google technology. It would not be what it is without Google’s expertise in networking and distributed computing. Android was barely more than an idea when Google merged with it. Google made it what it is.
So there is a strong line of continuous improvement in Google’s infrastructure allied to its larger, better known innovations like driverless cars. Google also works in a lot of adjacencies, going from search and advertising to enterprise apps, to mobile computing, to devices and soon to deliveries.
Advertising appears to give coherence to this but I doubt it does in reality. Google clearly needs to reinvent itself to reduce its advertising dependency. For example it appears unlikely to dominate the domestic TV screen as it has computing, so it will not be as well positioned to offer integrated campaigns. It has through Android and its own apps business, been able to replicate Apple’s platform and ecosystem strategy. Arguably it already had a model of that kind with search and SEO.
So its model?
  • It is platform and ecosystem-based in its customer facing innovations
  • Continuous improvement in infrastructure
  • Radical adjacencies to become more integrated (deliveries) and to look for a new disruption (Glass, driverless cars)
  • Device innovations, which are proving difficult to generate along with supply chains that it lacks experience of
  • Increasingly it is becoming design-centric
  • Bench-time – a factor most companies now deprive their engineers of
These models might be about to change. This is what reader Dave Nelson says of the three companies, looking to the future.
“In the future, I think you will see more unified manufacturing where a company does the hardware and software. Apple thought it could design hardware and software in house and use standard off the shelf parts but that leads to copy cats because parts are parts. Google thought it could outsource nearly the entire product solely for the search revenue but is now at risk. Samsung did a lot of the hardware and received a huge freebie from Google. All three are now looking at doing more of the product in-house.”

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Brandcell in the Lead
Brandcell has been appointed in the past months to lead major consulting projects for leading brands in the luxury goods & service industries in Lebanon ranging from Mercedes-Benz/T. Gharghour & Fils to Roadster, Zaatar W Zeit and GlobeMed Lebanon.
Brandcell's consulting services that engaged high-level expertise - offered with its partner Livework - includes Empathic Research Design, Strategy Design and Customer Experience Design.

Business strategy may not be a science, but using the right method with the right materials in the right place at the right time can create explosive results. We've gathered some examples of the most successful business models that have gone on to make lasting impacts on industry, consumers and the world at large.

10) Name your price:  

Vendors bid to meet the prices customers set for hotel stays and air tickets.

9) Offer Aggregation:


eBay has made offer aggregation and price comparisons a major part of its online auctions and buy-it-now sales.

 ​8) One day One deal:


Woot/ LivingSocial/ Moolala
Providing discounts on meals, products and services with local merchants.

7) Just in time:

The JIT method combined with Dell's direct-to-consumer process made for a dynamite business model.

6) Growth first: 

Amazon has combined regular and offer-aggregate sales into its pricing for every product.

5) The modern franchise:  

A business model that has inspired enough imitators to launch the fast-food industry.

4)  Software first:  

The company got a head start by developing the operating system for IBM's personal computer in 1981.

3)  Lifestyle takeover: 

& Apple
While Apple and Google may appear at first to work in very different ways they share one pioneering interest: you

2) The everything store: 

Walton saw that general stores were turning a good profit, but he found a way to perfect the business model.

1) The P2P Revolution:  

Kickstarter/ Paypal/ Craigslist,
The newest and most fascinating business model of all is the personal, customizable, one-on-one transactions. 


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French Bakery, a major player in the Business to Business French Bread trade aimed at entering the Business to Consumer market with an innovative concept.
The Challenge was to develop a strategic business entry model that would translate into an innovative retail concept. Following research and the identification of main business opportunities, we developed 3 business models and retail concepts and pre-tested them among potential customers.
The Business Model Innovation Factory
by Saul Kaplan
Business models just don’t last as long as they used to. Historically, CEOs have managed a single business model over their entire careers. Today, all organizations must be capable of designing, prototyping, and experimenting with new business models. The Business Model Innovation Factory provides leaders with the survival skills to create a pipeline of new business models in the face of disruptive markets and competition.


1:  Map your current business model on a large poster with post it notes.

2:  Don’t try this alone. Let your colleagues help you.

3:  Visualize your business model.

4:  Translate 3 trends into your business model.

5: Learn from other business models.

6: Do not rely on one model, build prototypes.

7: Apply business model patterns.

8: Build a (self) sustainable business model.

9: Show me the money!

10: Consider Beyond Profit


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