Business model innovation in existing companies

Benson Garner
September 8, 2014
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 min read
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Thinking about business models in existing companies is slightly different than in a startup. The best way to look at it is by drawing a continuum between improving existing businesses that a company has and inventing new businesses that a company plans to build.

On the left hand side you have one or several existing business models. The company knows them well and the entire company is trimmed to execute and incrementally improve them. Here the company operates in a known environment, with existing customers, and a good understanding of the market. In such a known environment, it is possible to make relatively accurate forecasts about sales and predictions about growth. Hence, the left-hand side is all about executing and improving known business models or improving them incrementally.

On the right-hand side you have one or several new business models that the company is trying to develop. The models are far from proven and the organization is still experimenting with them. Contrary to the improve end of the continuum, inventing is usually done in an unknown environment. Predictions such as sales forecasts or growth numbers are practically impossible to make at the early stages. The company is still developing a good market understanding. Hence the right-hand side is all about the search for business models that work.

The rules of the game are almost totally different on the opposite ends of the continuum. For existing business models and their improvement you make business plans with performance projections, you evaluate people on how they meet those projections. Failure is not an option. When it comes to new business models, detailed plans are worthless. Projections don't make sense for yet unproven business models. What you really want to do is perform many small experiments to test the hypotheses of you unproven business model. You will learn from these continuous small bets, which will allow you to improve, adapt, or pivot your business model until you've made sure it will really work. 

Existing and new business models require completely different thinking, different rules, and different organizational structures to succeed. Are you able to play both games in parallel?

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About the speakers

Benson Garner
Business design consultant

Benson is a business design consultant and a member of the Strategyzer content team. He helps companies of every shape and size, big, small, and everything in between to design or even redesign their business models and their value propositions. And at Strategyzer he also helps to create content for the Strategyzer workshops, the online course, Strategyzer blog, webinars. He is a contributor to our book: Value Proposition design. 

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Benson Garner
September 8, 2014
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Business model innovation in existing companies
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Business model innovation in existing companies

September 8, 2014
#
 min read
topics
No items found.

Thinking about business models in existing companies is slightly different than in a startup. The best way to look at it is by drawing a continuum between improving existing businesses that a company has and inventing new businesses that a company plans to build.

On the left hand side you have one or several existing business models. The company knows them well and the entire company is trimmed to execute and incrementally improve them. Here the company operates in a known environment, with existing customers, and a good understanding of the market. In such a known environment, it is possible to make relatively accurate forecasts about sales and predictions about growth. Hence, the left-hand side is all about executing and improving known business models or improving them incrementally.

On the right-hand side you have one or several new business models that the company is trying to develop. The models are far from proven and the organization is still experimenting with them. Contrary to the improve end of the continuum, inventing is usually done in an unknown environment. Predictions such as sales forecasts or growth numbers are practically impossible to make at the early stages. The company is still developing a good market understanding. Hence the right-hand side is all about the search for business models that work.

The rules of the game are almost totally different on the opposite ends of the continuum. For existing business models and their improvement you make business plans with performance projections, you evaluate people on how they meet those projections. Failure is not an option. When it comes to new business models, detailed plans are worthless. Projections don't make sense for yet unproven business models. What you really want to do is perform many small experiments to test the hypotheses of you unproven business model. You will learn from these continuous small bets, which will allow you to improve, adapt, or pivot your business model until you've made sure it will really work. 

Existing and new business models require completely different thinking, different rules, and different organizational structures to succeed. Are you able to play both games in parallel?

related reads
No items found.
Business model innovation in existing companies

Thinking about business models in existing companies is slightly different than in a startup. The best way to look at it is by drawing a continuum between improving existing businesses that a company has and inventing new businesses that a company plans to build.

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