Monthly Archives: April 2010

Great new book – Seizing the White Space: Business Model Innovation for Growth and Renewal

Kodak invents digital photography in 1975 but doesn’t successfully capitalize on its invention for decades. Xerox famously devises the mouse, the laser printer, and the graphical user interface but fails to commercialize any of them. The $2 billion Digital Equipment Corp. spends developing a personal computer turns out to be too little, too late.

What makes opportunities like these so difficult to grasp is that, so often, they require companies to move far beyond their core into uncharted territory — into their white space. That’s a scary place, one where many companies’ experience is (as one CEO put it) “unblemished by success.” But if the danger is all too obvious, its causes are not. The white space is hard to navigate not because it’s uncharted but because so many companies try to go there with the wrong map, the one they’re currently using — their existing business model.

And who can blame them? Every successful company is already fulfilling a real customer job with an effective business model. The problem is that few organizations can explicitly articulate what that model is. Day to day, they go along guided by implicit rules of thumb, metrics, incentives, and the odd success story. But without an explicit understanding of their business model — the premise behind its development, the way its various parts work together, its strengths and weaknesses when in pursuit of new growth — they don’t know whether they can use it to deliver on a new customer opportunity or if that opportunity is a move into their white space requiring a new model.

Seizing the White Space offers the path to that explicit understanding, starting with an eminently practical business model framework. It identifies the four fundamental building blocks that make your business model work: the customer value proposition that fulfills an important job a real customer needs to do in a better way than current alternatives do; the profit formula that lays out how your company makes money delivering the value proposition; the key resources that value proposition requires; and the key processes needed to deliver it.

A series of in-depth case studies then explores the circumstances when a new business model might be needed — to fulfill unmet customer jobs in your current market, to serve entirely new customers in new markets, or to respond to tectonic shifts in market demand, government policy, and technological capabilities that transform entire industries. A detailed discussion follows that lays out a structured process for designing a new business model and developing it into profitable and thriving enterprise, while investigating the vexing and sometimes paradoxical managerial challenges that have commonly thwarted unguided forays into the unknown for so many companies like Kodak, Xerox, and DEC.

With this book, you can turn business model innovation into a managed process and a more predictable discipline. To play a new game, on a new field, you need a new game plan. Seizing the White Space gives you a language and framework for understanding both the core space of your existing enterprise and the white space you hope to seize. Think of this as your playbook for conquering the unknown.

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Accelerating Innovation through Effective Supplier Collaboration

Exceptionally interesting document on the value of collaboration between an organization and its suppliers, resulting in co-creation. This surely has to be the way of the future. Nothing gets me more stressed than when I hear the word “vendor”. Its is a word that should be banned from our vocabulary. It certainly puts up the barriers, which is totally counter to Open Innovation thinking.

This document finds that accelerating innovation through effective supplier collaboration requires both an overall company wide innovation strategy and an integrated supply innovation strategy. An open innovation strategy requires executive leadership and culture change. This innovation strategy needs to be communicated internally/externally. Management must commit resources and processes (e.g. innovation portal and third party providers) to support the
strategy. Further, the innovation strategy must be linked to overall firm performance and assessed by objective metrics. Definition of innovation and establishment of innovation metrics requires a cross-functional consensus and alignment from top to bottom of the organization.

The innovation metrics with weightings based on innovation needs should be linked to company and supplier performance evaluation. Both hard and soft metrics need to be developed. Risk management strategies enhance the speed and likelihood of successful commercialization of new products. Risk must be defined as a combination of uncertain events and outcomes for both buyer and supplier during any new product development stage gate process. The companies should establish alternative plans if required innovation does not pass the stage gate risk/reward evaluation.

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The Value of Business Model Innovation – BCG Report

Interesting report on Business Model Innovation from BCG.

Read the report here.

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Apple Tops Bloomberg BusinessWeek’s Sixth Annual Ranking of The 50 Most Innovative Companies

NEW YORK, Apr 15, 2010 (BUSINESS WIRE) — For the sixth consecutive year, Apple has topped the list of Bloomberg BusinessWeek’s annual special report, “The 50 Most Innovative Companies,” produced in collaboration with partner Boston Consulting Group. Google, Microsoft, IBM, and Toyota Motor round out the top five.

For the first time since the rankings began in 2005, the majority of corporations in the Top 25 are based outside the U.S. and 15 of the Top 50 companies are Asian–up from just five in 2006. China’s rise is biggest. A year ago its only representative was PC maker Lenovo Group, at No. 56. This year Greater China is tied with Asia’s postwar powerhouse, Japan, thanks to showings by BYD (8), Haier Electronics (27), Lenovo (29), China Mobile (44), and Taiwan-based HTC (47). Just ahead of General Electric in seventh and eighth places are newcomers LG Electronics of South Korea and BYD, with Korea’s Hyundai Motor claiming a spot at No. 22.

Boston Consulting Group’s annual survey of top executives, which provides the raw data for Bloomberg BusinessWeek’s list, suggests that the crucial factor of the drive of innovation is a mindset–a belief that innovation matters. In China, 95% of executives said innovation was the key to economic growth, while 90% and 89% of respondents in South America and India, respectively, agreed. In the U.S., only 72% said innovation was important. Similarly, 88% of executives in China said they were raising their innovation budgets this year, followed by 82% in South America and 73% in India. The rate fell to 48% in the U.S., ahead of only Japan, where just 34% of executives said their companies planned to increase innovation spending. All of which suggests the U.S. may not be dominating the list again soon.

Bloomberg BusinessWeek’s “The 50 Most Innovative Companies” special report is based on data from Boston Consulting Group (BCG). Last December, the consultancy e-mailed a 21-question poll to senior executives around the globe. The 1,590 respondents, who answered anonymously, were asked to name the most innovative companies from outside their own industry in 2009. BCG then factored in the financial performance of the top vote-getters. The final lists weights the survey results 80%, stock returns 10%, and three year revenue and margin growth 5% each.

Bloomberg BusinessWeek’s special report, “The 50 Most Innovative Companies,” is featured in the April 26th issue, on newsstands April 16th. BusinessWeek.com will also feature expanded content, including an interactive table of the full ranking and methodology, at http://www.businessweek.com/go/innovativecompanies.

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