Author Saul Kaplan’s fascinating take on business model innovation combines reflections on why such innovation is crucial with advice on how to go about it. He explores the process of business model innovation with illustrations and anecdotes, and sets the stage by presenting Blockbuster’s history as a case study. Kaplan examines the reasons why companies fail at business model innovation. He lays down clear principles managers can adopt profitably to become more innovative. Kaplan engages the reader by going beyond the conventional boundaries of innovation within corporations and examining how nonprofits and individuals can also adopt business model innovation. getAbstract recommends his practical insights to managers in for-profit and nonprofit organizations and to business students.
“What You Have Always Done Isn’t Working Anymore”
Blockbuster Video built a successful business around home rental of movie videocassettes. Netflix built upon Blockbuster’s business model by mailing DVDs to customers’ homes. In 1999, Netflix further departed from Blockbuster’s approach when it shifted from DVD rentals to subscriptions. Customers could watch as many movies as they wanted each month for a fixed fee. This business model innovation (BMI) proved wildly successful and, within eight years, Netflix reached a billion dollars in sales. Blockbuster filed for bankruptcy in 2010.
Blockbuster made the error most businesses make – it completely ignored threats to its business model and when it realized the danger, it “reacted way too slowly.” Business models do not last as long as they once did. Firms need an internal “business model innovation factory” to explore recombining their technology and capacities to deliver new value. The “factory” is an internal testing ground for experimenting with innovation before implementing it systemwide.
“Business Model 101: Creating, Delivering and Capturing Value”
“A business model is a story about how a business...
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