- Innovation is key to corporate survival. Not just innovation of products and services, but processes and business models too. Cycle times are accelerating. Products and services are easy to copy, and at ever-faster rates. To create sustainable shareholder value, firms need to innovate their business models.
- Business models cannot be patent protected – although those such as one-click payments can – however, because of their complexity, business models are hard to copy. But open innovation creates many opportunities for new business models.
- A lot of R&D expenditure is wasted. Although there are no official figures, some multinationals are known to use only 10 per cent of their patents in commercial products, the rest are used tactically to stymie the competition. Henry Chesbrough, executive director of the Center for Open Innovation says this is a waste of valuable resources.
- Firms reliant on intellectual property (IP) for their success could extend their business model to include collaborations with other firms to monetise unused IP. Secondary markets for unused IP are beginning to emerge. This trend is likely to continue. Even companies whose business models are not built on IP will benefit from experimenting with different business models.
- Experiments are risky, but only firms that are prepared to diversify and try different business models will survive. Adaptability is critical for long-term success.
- Thanks to technology, there are many more building blocks for constructing business models. Not only does technology provide more opportunities for collaboration, it also provides many new routes to market.
- Business model redesign requires input from all parts of the company, not least, the CIO. And the CIO is in the best position to advise the board on the company’s ability to adopt a new business model. Mapping the current application portfolio onto the proposed business model will highlight any gaps and therefore areas that require more infrastructure expenditure.





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