The Definition of Business Model Innovation
The term "business model" means the design of a business. Business model innovation (BMI) refers to a business's attempt to reinvent itself in order to obtain a competitive edge and stimulate company growth. An important element of business design involves customer satisfaction, according to the Boston Consulting Group.
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History
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According to Oliver Wyman, a global management consultancy firm, the need to consider customer satisfaction in business design has evolved with technology. During the 1950s and 1960s, before an increase in technology use took place, businesses had the advantage over consumers in the marketplace. However, technology changed that by giving consumers more accessible options.
Parts
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A business model has two parts, the value proposition and operation system. The value proposition consists of the target demographic and the influences needed to attract those customers to doing business with you. The operation system defines how to sell your product or service in order to make a profit, according to the Boston Consulting Group.
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Considerations
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Factors to consider when working on a BMI includes weaknesses in the current business model, what can be done to edge out the competition and how fast a change needs to be made. For example, a retail company that has noticed a decline in sales could try to implement social media into the business's advertising strategy.
Warning
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Not all innovations to business models prove successful. Warning signs to look for includes attempts to implement innovations in too many areas of a business design, failure to garner enough attention or resources for a business model innovation, and refusal to embrace new business tools into the business model. For instance, print publications that refuse to use Internet tools will be more likely to falter, says the Boston Consulting Group.
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