If you have spent any time looking into how to scale and grow a successful business, you will have seen that ‘innovation’ is a word that’s used a lot. Though product and service innovation is important, it’s the innovation of business models that can revolutionise and redefine industries. In this blog, we have taken a look at the importance of business model innovation, and we’ve delved into three businesses that have successfully mixed things up.
Why Business Model Innovation is Crucial for Success
It’s important for a business to continuously adapt and reinvent itself, in order to stay relevant and competitive in growing marketplaces. Otherwise, you run the risk of being forgotten about, lumped in with other businesses and overlooked. Innovation is a hugely important part of staying relevant, especially when it comes to creating a business model. Here’s why innovation is key when it comes to determining your business model:
- To Differentiate Your Brand – Standing out from the competition is more challenging than ever, but a unique and innovative business model can help your business to capture the attention of customers and distinguish itself from competitors. By offering something unique and valuable, you can attract and retain loyal customers who are drawn to innovation.
- To Adapt to Changing Demands – Consumer preferences and behaviours are constantly evolving, and a lot of these changes are driven by technology and societal trends. An innovative business model allows you to adapt to these changing needs and preferences, ensuring that your products and services are always relevant and valuable to your target audience, even when their demands change. By staying aware of customer feedback and changing market dynamics, you can continuously refine your business model to ensure it’s always optimised for your customers.
- To Stay Ahead of the Curve – In a rapidly changing market, business models can quickly become ‘out of date,’ but innovation will help you to stay ahead of the curve. By embracing innovation, you can stay ahead of other businesses and anticipate shifts in consumer behaviour, technology and trends. This allows you to maintain a competitive edge and take advantage of opportunities as they arise.
- To Drive Growth – Innovation in your business model isn’t just about success, it’s also about driving growth and scalability. By being innovative with what you provide to customers, you can unlock new sources of revenue. For example, you could expand into new markets and scale your operations more efficiently. An innovative business model can fuel sustainable growth and expansion, helping you to achieve long term business success.
- To Build a Culture of Creativity – Embracing innovation in your business model isn’t just about generating new ideas, it’s also about creating a culture that’s centred on creativity and experimentation. By encouraging employees to think outside the box, you can unlock untapped potential and drive continuous improvement. This innovation can lead to new discoveries, transformative changes and a competitive advantage that sets your business apart from others in the industry.
Business Model Innovation Success Stories
Airbnb – Innovative Approach Gives Customers Control
Airbnb has reshaped holiday lets by developing a unique approach to short term rentals. By offering a diverse array of accommodations on its platform, Airbnb has given travellers the power to compare options, read reviews and book their ideal stay with ease. This has not only revolutionised the way people travel, but it’s also transformed the industry as a whole.
Airbnb’s success relies on its ability to build trust and transparency between hosts and guests, despite the business itself not owning a single property. By taking full ownership of the customer relationship and providing review systems and safeguards, Airbnb has created an environment where mutual trust has flourished. This has made it a lot easier for hosts to let out their properties, giving them the confidence to share their spaces with strangers.
With Airbnb’s unique platform, traditional suppliers of accommodation find it hard to monopolise the market. Plus, by having control over the demand side of things, Airbnb has created a business model centred on new demand bringing in a constant supply, which drives continuous growth and innovation.
Amazon – Subscribe and Save Boosts Customer Lifetime Value
Amazon’s Subscribe and Save program has emerged as a game changer in the world of ecommerce, revolutionising the way that customers restock household essentials. By automating the delivery of frequently used items – such as washing tablets, pet food, toiletries and cupboard staples – Amazon provides convenience and savings to its subscribers, whilst also fostering long term customer loyalty.
For many households, keeping on top of shopping lists can be a daunting task, but Amazon’s Subscribe and Save program removes this burden by simplifying the process of purchasing commonly used items. Instead of constantly remembering to buy pet food or toiletries, customers can set up recurring deliveries, ensuring they never run out.
One of the key advantages of the Subscribe and Save program is its flexibility and customisation options. This enhances the customer experience, whilst also fostering a sense of trust in Amazon. It encourages customers to repeat their purchases and increase their order value by offering additional discounts as they spend more. This encourages customer loyalty and higher average order values, increasing the customer lifetime value for Amazon.
For Amazon, Subscribe and Save establishes a predictable and recurring revenue stream, providing the company with a steady source of income. Plus, by streamlining the purchasing process and reducing the need for customers to shop around for the best deals each month, Amazon retains customers over the long term. Additionally, the consolidation of multiple items into one monthly shipment allows Amazon to optimise its fulfilment processes, reducing operational costs and improving efficiency.
Microsoft – App Store Encourages Open Marketplaces
When Microsoft acquired Activision Blizzard, it set out to do something slightly different, by creating an open marketplace app store. The company has opted for an open store business model, the opposite of Apple’s closed store. Microsoft’s aim is to create somewhere that outside developers can thrive, whilst remaining inside Microsoft’s marketplace. This isn’t possible with Apple, which has been accused of favouring its own apps and imposing strict policies on developers. For Microsoft, this does mean saying goodbye to some possible short term profits, which could be gained if the app store favoured Microsoft’s apps.
By choosing an open app store model, Microsoft is using network effects to boost growth and add value to the gaming industry. Though this approach could lead to Microsoft missing out on some value in the short term, the company believes that the long term benefits of cultivating a strong app ecosystem will outweigh any immediate gains.
Plus, Microsoft’s embrace of business model innovation highlights a shift towards prioritising sustainable value creation, instead of focusing on maximising profits. By reframing its approach and focusing on the interests of all stakeholders, Microsoft is setting a precedent for a more inclusive and equal technology landscape. For Microsoft, long term value creation is key.
Your Innovation and Growth Partners
There is no denying the time, effort and creativity that goes into being an innovative business. Though the benefits are worth it, building a successful business model centred on innovation doesn’t happen overnight. Luckily, we are here to help.
Teaming up with a growth partner to devise an innovative business model can be a game changer for your business, especially if you are wanting to stay ahead. One of the key benefits is access to specialised expertise and fresh perspectives – which you will find at Profici – that can inspire innovative thinking and creativity. We bring a wealth of experience, industry knowledge and market insights to the table, allowing you to tap into new opportunities and identify untapped potential for your business. Plus, by collaborating with a growth partner, you benefit from experts working together to brainstorm ideas, test theories and refine strategies.
At Profici, we are here to guide you through business growth and innovation. We help businesses to develop business models that are not only innovative, but also sustainable and scalable, driving growth and competitive advantage in the long run. Get in touch to find out more.
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