The Business Model Challenge

This month’s blog harvest offers ideas for how to make the case for further diversification to your boss. Another blog explains how to develop your business modelling skills by using a financial concepts. Inspired by the concurrent TED conference, many innovation blogs have also proposed action towards making ‘a better world’. Why not partake in Osterwalder’s business model challenge that can improve the lives of billions?
Marcus’ favorite post this week for actionable knowledge and inspiration is Sundelin´s blog post about business models that decrease net working capital.

Business model innovation seemed to be a common theme among the innovation blogs this month. Yesterday, the new book by Mark Johnson – Seizing the White Space: Business Model Innovation for Growth and Renewal was released. Johnson is perhaps best known for his article with Christensen in Harvard Business Review on the topic. The book is supposed to develop his methods for business model innovation using numerous examples. To stay on top of things, have a look at this video interview with Mark in which he summarizes his book. And here is a blog post by Mark himself, building on the same tool.

To stay on top of things, have a look at this video interview

I’m also happy to refer to my Chalmers colleague Anders Sundelin, who offered some particularly nice posts this time around. In two extensive posts, he gives a thorough walkthrough of different types of contributors to net working capital. Most importantly, he gives examples of innovative business models that have managed to decrease the different sources to a minimum. It is not rocket science, but it is important to keep in mind when designing new businesses.

In a different post, Sundelin returns to mid-twentieth century management literature by referencing Humphrey’s elements of a business model – from 1968! I suppose he implicitly implies that the business model thinking of the 21st century might have much to learn from older but related concepts. I couldn’t agree more and warmly recommend every innovation manager out there to get a copy of this one classic piece in particular. I believe it vividly summarizes the most important aspects of innovation management through its several in-depth case studies. The book (originally a doctoral thesis) is called Skapande företagsledning (1975). It is written by the now late Swedish researcher Richard Normann (unfortunately, I have not been able to find the name of its English translation.)

it vividly summarizes most important aspects of innovation management

Not surprisingly, there are numerous blog posts about the contents of the recent TED conference from a strategy perspective. Here’s one presentation I wished I had seen already: Esther Duflo from MIT gave a talk about how charging money for malaria nets in poor countries can actually increase their usage! From a strategic perspective, the comparison to expensive brand clothing lies near at hand. It seems that insights from strategy and marketing can have huge implications not only for making money but also for saving lives and other good causes (not that making money isn’t as good a cause as any!). Two other examples I already know of are process re-engineering in hospital wards (thesis presentation at Chalmers Feb 26th!) and the application of diffusion of innovation theory for eco-innovations. If you have the time, I suggest taking a moment to consider which of your own current knowledge – perhaps originally created in order to develop and sell expensive stuff in rich countries – could equally well be applied to save lives under different circumstances?

On a similar theme, business model guru Osterwalder presents an open case study challenge. The challenge is based on a real (Swedish) organization that could improve the sanitary situation radically for billions of people if they can just find the right business model. Why not spend some of your business model skills on helping people find their business model by commenting on his blog?

Useful yet scientifically valid blog posts on innovation management.

Finally, Professor Don Sull at LBS can always be counted on to provide useful yet scientifically valid blog posts on innovation management. This time, he offers an accessible summary of the research on diversification; it’s benefits versus costs. The summary – an easy read for any practitioner – received some positive reviews from other scholars (for example here). It should probably be read as a useful source of nuanced arguments for the innovation manager trying to sell the idea of further diversification to a senior decision maker. I personally think it becomes even more powerful if combined with an argument based on the notion of diversification around the firm’s core competencies. In a later blog posts, Sull also develops the argument by connecting it to product portfolio agility.

Your comments are welcome!

Do you have any comments on the links presented here? Are some of them broken or not accessible from your network? Would you like more focus on peer-reviewed journals or more focus on pure blogs? Do you know of a blog post that you would like to see here next time? Feel free to send an email to [email protected]

About Marcus Linder

Marcus LinderMarcus Linder researches environmental innovation among industrial firms at Chalmers University of Technology. Focus areas include strategic rationale and the practical how-to of including environmental aspects in the innovation process. An important starting point is that profitable environmental innovation often requires more than just “quick-fixing” a firm’s existing offers. Theoretically, Marcus is grounded in the problem-solving perspective on management, a subset of the knowledge-based view of the firm. In terms of applied innovation management, his main passion lies in business model design. He is currently employed as a PhD student at Center for Business Innovation at Chalmers University of Technology. Before starting his PhD studies, Marcus successfully performed a business innovation project at CBI culminating in a new product concept now planned for market introduction by Göteborg Energi.