What is business model innovation? What are the characteristics of business model innovation? I will share the compiled business model innovation with you, welcome to read, for reference only!
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What is business model innovation
Thamos defines a business model as a complete product, service and information flow system, including each participant and their role in it. As well as the potential benefits of each participant and the corresponding sources and methods of income.
As a new form of innovation, business model innovation is no less important than technological innovation. In recent years, business model innovation has also become a buzzword in my country’s business community.
Business model innovation refers to innovative changes that provide the basic logic for enterprise value creation. It may include changes in multiple business model components, or changes in the relationship or dynamic mechanism between elements. In layman's terms, business model innovation means that companies make money in new and effective ways.
Characteristics of business model innovation
The concept of innovation can be traced back to Schumpeter. He proposed that innovation refers to the introduction of a new combination of production factors and production conditions into production. system. There are five specific forms: developing new products, launching new production methods, opening up new markets, obtaining new sources of raw materials, and adopting new industrial organization forms. Compared with these traditional innovation types, business model innovation has several obvious characteristics:
1. Business model innovation pays more attention to designing the behavior of enterprises from the perspective of customers, and its perspective is more extroverted. and openness, paying more attention to and involving economic factors of enterprises. The starting point of business model innovation is how to fundamentally create increased value for customers. Therefore, the starting point of its logical thinking is the needs of customers, and it considers how to effectively meet them based on customer needs, which is obviously different from many technological innovations. A technology may have multiple uses. From the perspective of technological innovation, we often start from the technical characteristics and functions, see what it can be used for, and find its potential market uses. Even if business model innovation involves technology, it is mostly related to the economic factors of the technology, the economic value and economic feasibility contained in the technology, rather than purely technical characteristics.
2. Business model innovation is more systematic and fundamental. It is not a change in a single factor. It often involves large changes in multiple elements of the business model at the same time, requiring major strategic adjustments in the enterprise organization. It is a kind of integrated innovation. Business model innovation is often accompanied by product, process or organizational innovation, but conversely, it may not be sufficient to constitute business model innovation. For example, the development of new products or new production processes is generally considered technological innovation. Technological innovation usually refers to the production of tangible physical products. But today is an era dominated by services. For example, in the United States, the proportion of the service industry in 2006 was as high as 68.1%. For traditional manufacturing companies, services are far more important than before. Therefore, business model innovation is often reflected in service innovation, which manifests as innovative changes in service content and methods, as well as organizational forms and other aspects.
3. From a performance perspective, if business model innovation provides brand-new products or services, it may create a new profitable industry field. Even if it provides existing products or services, it will be more profitable. Bringing more lasting profitability and greater competitive advantage to enterprises. The traditional form of innovation can improve local internal efficiency and reduce costs of an enterprise, and it can be easily imitated by other enterprises in a relatively short period of time. Although business model innovation can also improve corporate efficiency and reduce costs, because it is more systematic and fundamental and involves simultaneous changes in multiple elements, it is also more difficult for competitors to imitate and often brings strategic consequences to companies. Competitive advantages often last for years.
Three classic cases of business models
(1) Belle Shoes, the King of China’s Retail Market Value
1. The King of China’s Shoes
Belle Shoes is the king of China’s shoe industry. Among Chinese women's shoe brands, four of the top ten are owned by Belle, namely: Belle, Teenmix, Tata, and Staccato. The company represents 28 footwear brands, including: Bata, ELLE, BCBG, Mephisto, Geox, Clarks, Merrell, etc. Belle is also one of the largest retailers of sporting goods in China. It represents sportswear brand products including: Nike, Adidas, and LiNing; it also represents the casual denim brand Levis.
Belle shoes are beauty shoes. Not only are lesbians unable to escape Belle, but gay men will soon be unable to escape Belle, because Belle has acquired Jiangsu Senda, a famous Chinese men's shoe brand. After Belle Company took control of the department store, customers went to the mall to choose, and in the end they chose Belle Company's products. The comprehensive gross profit of Belle's shoe industry reached 62%.