Business Model Innovation Strategy Transformational Concepts and Tools for Entrepreneurial Leaders

The most comprehensive, global guide to business model design and innovation for academic and business audiences.

Business Model Innovation Strategy: Transformational Concepts and Tools for Entrepreneurial Leaders is centered on a timely, mission-critical strategic issue that both founders of new firms and senior managers of incumbent firms globally need to address as they reimagine their firms in the post COVID-19 world. The book, which draws on over 20 years of the authors collaborative theoretical and rigorous empirical research, has a pragmatic orientation and is filled with examples and illustrations from around the world.

This action-oriented book provides leaders with a rigorous and detailed guide to the design and implementation of innovative, and scalable business models for their companies. Faculty and students can use Business Model Innovation Strategy as a textbook in undergraduate, MBA, and EMBA degree courses as well as in executive courses of various designs and lengths. The content of the book has been tested in both degree and non-degree courses at some of the world's leading business schools and has helped students and firm leaders to develop ground-breaking business model innovations.

This book will help you:

• Learn the basics of business model innovation¯including the latest developments in the field
• Learn how business model innovation presents new and profitable business opportunities in industries that were considered all but immune to attacks from newcomers
• Learn how to determine the viability of your current business model
• Explore new possibilities for value creation by redesigning your firm's business model
• Receive practical, step-by-step guidance on how to introduce business model innovation in your own company
• Become well-versed in an important area of business strategy and entrepreneurship

Authors Amit and Zott anchored the book on their pioneering research and extensive scholarly and practitioner-oriented publications on the design, implementation, and performance implications of innovative business models. They are the most widely cited researchers in the field of business model innovation, and they teach at the top-ranked Wharton School of the University of Pennsylvania and the prestigious global business school IESE with campuses in Barcelona, Madrid, Munich, New York, and São Paulo.

Raphael Amit is the Marie and Joseph Melone Professor and a Professor of Management at the Wharton School. Dr. Amit received his Ph.D. in Managerial Economics and Decision Sciences from Northwestern University's Kellogg Graduate School of Management. He has published widely cited, award winning research on business models.

Christoph Zott is professor in the Department of Entrepreneurship at the prestigious European Business School IESE in Barcelona, Spain. His research centers on the design of business models. Prof. Zott has published on this topic in the Administrative Science Quarterly, the Journal of Business Venturing, Organization Science, and the Strategic Management Journal, as well as in other research outlets and books. Professor Zott teaches courses on entrepreneurship and private equity at MBA, EMBA and Executive Education levels.

Preface

Part I: Foundation and Mindset For Business Model Innovation

Chapter 1: Why Do Business Models Matter—The “What, How, Who & Why” Framework For Understanding Any Business Model

Why Do Business Models Matter?

What Is a Business Model?

Approaches Towards Defining Business Models

Our Definition: The Business Model as an Activity System

The “What, How, Who & Why” Framework

Value Creation vs. Value Appropriation in Business Models

Summary of Key Takeaways and Outlook

Chapter 2: How Business Models Create Value in New Ways – Case Studies and Theory

Value Creation Through Business Models

Uber: A Star Is Born

Michelin: Not Tired of Tire Rental

Standing on the Shoulders of Giants: Theoretical Foundations

Schumpeterian Innovation

Resource-Based View

Transaction Cost Economics

Value Chain Analysis

Strategic Network Theory

Business Model: New Unit and Level of Analysis

What the Business Model Is Not

The Business Model Is Not Traditional Strategy

The Business Model Is Not All-Encompassing

Summary of Key Takeaways for the Effective Business Model Designer

Chapter 3: Adopting a Business Model Mindset – A Prerequisite for Transformative Innovation

Towards a Business Model Mindset

What Is a Business Model Mindset?

Why Is a Business Model Mindset Needed? Mindset Traps

Cognitive Underpinnings of Business Models

Business Models as Cognitive Structures

Cognition as Antecedent: Cognitive Practices and Processes Underpinning Business Model Design and Innovation

Ways to Foster a Business Model Mindset

Leadership Actions to Foster Employees’ Business Model Mindset

Ways to Foster One’s Own Business Model Mindset

Summary of Key Takeaways for the Effective Business Model Designer

Chapter 4: Business Model Innovation – A Fundamentally New Source of Innovation

What is Business Model Innovation?

Business Model Innovation Formally Defined

Definition

Illustrating the Definition

What Business Model Innovation Is NOT

A Framework for Business Model Innovation

Business Model Content Innovation

Business Model Structure Innovation

Business Model Governance Innovation

Business Model Value Logic Innovation

Measuring Business Model Innovation

Quantitative Measures

Qualitative Measures

Illustrating the Upside of Business Model Innovation

Pros of Business Model Innovation

Value Creation Beyond Process or Product Innovation

Low Capital Expenditure

Effective Barriers to Imitation

Industry Disruption

Illustrating the Downsides of Business Model Innovation

Cons of Business Model Innovation

Lack of Protection from Imitation by Competitors

Legitimacy Risk

Risk of Increased Complexity

Risk of Path Dependency

Summary of Key Takeaways for the Effective Business Model Designer

Part II: Strategic Design and Evaluation of Business Model Innovation

Chapter 5: Strategic Design of Innovative Business Models – How to Bring Design Thinking and Creativity to Your Business Model

Why Design Is More Than a Metaphor for Business Model Development

What Is Design?

Business Model Strategic Design Drivers

Deployable Resources (D) And External Environment (E)

Stakeholders’ Activities (S)

Incumbents’ Templates (I)

Goals (G) and Needs (N) of Customers

Mindfulness in Design

Robust Business Model Design

Designing Robust Business Model Content

Designing Robust Business Model Structure

Designing Robust Business Model Governance

Summary of Key Takeaways for the Effective Business Model Designer

Chapter 6: How to Design a New Business Model—A Dynamic Design Method

A Process Perspective on Business Model Design

The Business Model Design Process

BMIdeate

BMIterate

BMImplement

Building a Business Model Innovation Capability

Summary of Key Takeaways for the Effective Business Model Designer

Chapter 7: How to Design A New Business Model—Methods Championed by Startup Entrepreneurs

Converting Design Ideas into Practice

Discovery-Driven Planning—Fail Soon, and Fail Fast

Basic Principles of Discovery-Driven Planning

Discovery-Driven Business Model Development: Pros and Cons

Other Planning Approaches That Are Related to Discovery-Driven Principles

Effectuation—Just Do It!

Effectuation Principles

Effectual Business Model Development: Pros and Cons

Lean Startup—Test, Test, Test

Basic Principles of Lean Startup

Lean Startup Business Model Development: Pros and Cons

Summary of Key Takeaways for the Effective Business Model Designer

Chapter 8: Value Propositions – The NICE Framework for Measuring the Impact of the Business Model

Business Models and Value Propositions

A Formal Model of the Value Proposition

How the Business Model Enhances Value Propositions: The NICE Value Drivers

Novelty

Lock-in

Complementarities

Efficiency

From Value Proposition to Value Appropriation

Summary of Key Takeaways for the Effective Business Model Designer

Chapter 9: Evaluating Existing Business Models and Designing New Ones—Your Essential Toolkit

Business Model Analysis—Why Is It Needed?

Tools for Articulating and Understanding Business Models

Story of “How it Works”

Business Model Elaboration

Activity Map

Tools for Framing the Design Effort

Goals and Needs of Customers

Templates

External Environment, Stakeholders’ Activities and Deployable Resources

Tools for Designing and Implementing Business Model Innovations

Generating New Business Model Ideas

Experimenting with New Business Model Ideas

Implementing Innovative Business Models

Tools for Evaluating Business Models

Summary of Key Takeaways for the Effective Business Model Designer

Part III: MAKING BUSINESS MODEL INNOVATION HAPPEN

Chapter 10: Implementing Business Model Innovation in Established Firms – Organizational Barriers and How to Overcome Them

Changing the Model: The Importance of Fit

So, What Does Implementation Mean Precisely?

Implementation Challenges in Established Firms

Creating Internal Fit: Resistance to Change

Creating Internal Fit: Organizational Inertia

Business Model-Specific Barriers to Implementation

Overcoming BMI Implementation Barriers in Established Firms

Addressing Leadership and Knowledge Gaps

Anticipating and Overcoming Resistance to Change

Countering Organizational Inertia

Summary of Key Takeaways for the Effective Business Model Designer

Chapter 11: Implementing Business Model Innovation in New Ventures – Balancing the Prospects of Shooting for the Stars With the Risks That Can Sink the Ship

The Importance of BMI Implementation for New Ventures

Implementing BMI New Ventures—Challenge or Opportunity?

It is About Managing Risks, Not Taking Them

Dependence on External Third Parties: The Sharks Dilemma

Internal Governance and Leadership Problems That Can “Sink the Ship”

Business Model-Specific Barriers to Implementation

Approaches to Overcoming BMI Implementation Barriers in New Ventures

Business Planning: An Effective Way to Manage Risk

Building Trust with Business Model Stakeholders by Using Symbolic Actions

Countering the Sharks Dilemma: Defense Mechanisms That Work

Choosing a Revenue Model Strategically

Establishing Good Governance from Day One

Summary of Key Takeaways for the Effective Business Model Designer

Chapter 12: Business Model Innovation Strategy in The Digital Age—What Does It Mean for You?

Business Model Innovation in the Digital Age: A Key Strategic Issue

The Strong Case for Having a Business Model Innovation

Strategy

Business Model Innovation Strategy: Think Digital Platforms

How to Develop a Business Model Innovation Strategy

Business Model Innovation Strategy: What Does It Mean For You?

Business model innovation design skills and mindset

Business model innovation implementation skills

Business model innovation management skills

The Bottom Line: What is Your Business Model Innovation Strategy?

Acknowledgments

About the Authors

Index

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