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Business model innovation

Business model Innovation is important for your company if you want to continue to grow, and perhaps even disrupt your market. However, it is also important if you want to prevent your business from going under (because there are plenty of those examples). Innovation is associated with developing new products and techniques. However, business model innovation is constantly changing your current business model or renewing your business model to better satisfy your customers’ customers.


What exactly is a business model? “A business model describes the rationale of how an organization creates, delivers and captures value” (source: Frankwatching). A Business Model is usually mapped using the Business Model Canvas. This is a way to visualize your business model.


It is often startups that manage to conquer a market with an innovative business model, but established companies can also gain a larger market share by innovating their current model. Innovating your business model can happen with varying degrees of intensity. A business model innovation does not have to be huge. Even the smallest changes can help you deliver more value to your customers. An example of a company that has successfully innovated its business model is Zara. Zara sells ‘normal’ clothes (not very distinctive compared to their competition), but by producing faster and switching collections, Zara is always ahead of the competition.

If you find business model innovation interesting, be sure to check out the TedTalk below.

Another nice example of business model innovation is Gillette’s razor blades. The razor is cheap, but the big money is made by Gillette by selling razor blades. Ultimately, Gillette’s tactics served as the template for Nespresso’s business model innovation. The coffee machines are relatively cheap, but the real money is made by selling coffee capsules. These are also made in such a way that consumers cannot change to another brand.

This example is taken from the video below from the University of St. Gallen which also talks about business model innovation. We definitely recommend checking it out!


There are some well-known examples of companies that failed to innovate their business model and went under as a result. Think of Free Record Shop, which just didn’t switch to selling over the internet. For the same reason, Intertoys also went under. If you don’t innovate, or your competition beats you to it, your entire business could just be wiped out.


A special form of business model innovation is disruptive innovation. Well-known examples of companies that have disrupted their business in an innovative way are Netflix and AirBnb.


Do you have plans to innovate your business model? Feel free to contact us. We are happy to discuss innovation opportunities within your market and how we could achieve this through innovative software.

Haven’t you thought about innovating your business model yet? Then it is wise to consider the future-proofness of your business model in the short term.

Business Model Innovation is a necessity – Indora.