Business Model Innovation (BMI) is the process of creating, modifying, or improving the way a company generates revenue, delivers value to customers, and operates in the market. BMI is an essential strategy that companies use to gain a competitive advantage, increase profitability, and stay relevant in a constantly changing business landscape.
The concept of BMI was first introduced by Peter Drucker in his book “Innovation and Entrepreneurship” in 1985. However, it was only in the late 1990s and early 2000s that the term gained widespread attention, mainly due to the rise of the internet and the dot-com boom.
During this time, many new companies emerged, offering innovative business models that disrupted traditional industries. Companies like Amazon, eBay, and Google revolutionized the way products were sold and information was accessed. They created new marketplaces, platforms, and ecosystems that changed the way business was conducted.
Steps for BMI
- Identify the problem or need: The first step is to identify the problem or need that you are trying to solve. This requires a deep understanding of your pain points, preferences, and behavior.
- Develop a value proposition: The next step is to develop a compelling value proposition that addresses your problem or need: clearly state the benefits of the product or service and how it solves the problem.
- Identify the target market: The third step is to identify the target market or customer segment to be served served; internal or external: demographics, behavior, pricing, and psychographics.
- Determine the revenue streams: The fourth step is to determine the revenue streams that you will use to generate revenue: product sales, subscription fees, advertising, or other revenue sources.
- Determine the cost structure: The fifth step is to determine the cost structure of the business: includes the fixed and variable costs of operating the business, production costs, marketing costs, and other expenses.
- Develop key partnerships: The sixth step is to identify and develop key partnerships that will enable you to deliver its products or services more efficiently or effectively: suppliers, distributors, or other strategic partners.
- Test and refine the business model: The final step is to test the business model and refine it based on feedback from customers, partners, and other stakeholders.
Example of using BMI
- Airbnb allows homeowners to rent out their homes to travelers. It is a prime example of a peer-to-peer business model that uses the internet to connect homeowners with travelers disrupting the traditional hotel industry and has become a preferred choice for many travelers.
- Tesla The company’s business model includes selling directly to consumers, a unique driving experience, and a charging infrastructure to support the use of electric vehicles.
- Amazon Prime Fast and reliable delivery, and a subscription-based loyalty program that has enabled Amazon to dominate the e-commerce industry and expand into other industries such as cloud computing, entertainment, and healthcare.
- Warby Parker disrupted the traditional eyewear industry by offering affordable and stylish glasses directly to consumers through an online store and physical retail locations. The company also offers a try-on-at-home service and a social mission to provide glasses to people in need.
BMI Skill Set
- Expertise and experience: We have a track record of successfully performing BMI projects in several industries and have expertise in developing and implementing innovative business models that have a tangible impact on revenue, profitability, and market share.
- Strategic thinking: We can think strategically and holistically about your company’s business model and are able to analyze your current business model, identify its strengths and weaknesses, and develop a plan for creating an innovative business model that aligns with your company’s goals and objectives.
- Communication skills: We have excellent communication skills, including the ability to listen to your needs, ask the right questions, and clearly articulate ideas and recommendations. We also work to communicate complex ideas in a way that is easily understandable to all stakeholders.
- Analytical skills: We bring strong analytical skills, including the ability to collect and analyze data, identify patterns and trends, and use data-driven insights to inform their recommendations. We can use a variety of analytical tools and techniques to develop a deep understanding of your company’s new or existing business model and market dynamics.
- Creativity and innovation: We bring creative and innovative abilities to a project and work with your team to develop unique and original ideas when creating an innovative business model. We also challenge conventional thinking when necessary to develop a truly game-changing business model.
- Project management skills: We bring strong project management skills, including the ability to plan and execute a BMI project from start to finish. We work with your team to manage timelines, budgets, and resources effectively, and communicate progress and results to all stakeholders.
- Cultural fit: We work hard to have a good cultural fit with your company, with values and beliefs that align with your own and collaboratively with your team, build trust and rapport, and be open to feedback and input from all stakeholders.
Work Examples
SORMAS
- GOAL Reduce response time to disease outbreaks in West Africa.
- RESULT Following a series of Design Thinking workshops the team developed a non-profit business model by putting all code and related templates into the Open Source space. This allowed for multiple organizations and individuals to develop and support the platform in many countries around the globe.
Energy Generation
- GOAL Reduce overall demand of energy across an interconnected network of generation plants.
- RESULT A Design Thinking workshop initially identified the idea to develop a gamified solution to decrease their carbon footprint, This resulted in a new business model where several electric generation companies developed a mobile app in partnership with retail providers to show consumers how much electricity, and subsequent carbon, they were using compared to their neighbors.
Packaged Implementation
- GOAL Increase implementation of complex software by standardizing options and variations.
- RESULT Starting with back office functions, we prepackaged software offerings time from purchase to Go Live. The model allowed the company to expand their customer base while reducing overall cost of implementation. By packaging software and services the company also leveraged existing partners to increase marketshare into their customers and other countries.
Ready to explore how you can develop a new business model? Select the link below to start the discussion.