The Wheel of Business Model Reinvention: How to Reshape Your Business Model and Organizational Fitness to Leapfrog Competitors

Institute of Innovation Research, Hitotsubashi University, IIR Working Paper 01/2003;
Source: RePEc


In today's rapidly changing business landscapes, new sources of sustainable competitive advantage can often only be attained from business model reinvention, based on disruptive innovation and not incremental change or continuous improvement. Extant literature indicates that business models and their reinvention have recently been the focus of scholarly investigations in the field of strategic management, especially focusing on the search for new bases of building strategic competitive advantage, not only to outperform competitors but to especially leapfrog them into new areas of competitive advantage. While the available results indicate that progress is being made on clarifying the nature and key dimensions of business models, relatively little guidance of how to reshape business models and its organizational fitness dimensions have emerged. This article presents a systemic framework for business model reinvention, illustrates its key dimensions, and proposes a systemic operationalization process. Moreover, it provides a tool that helps organizations to evaluate both existing and proposed new business models.

Download full-text


Available from: Marius Leibold, Oct 01, 2015
1 Follower
49 Reads
  • [Show abstract] [Hide abstract]
    ABSTRACT: In today's fast-changing competitive environment, strategy is no longer a matter of positioning a fixed set of activities along that old industrial model, the value chain. Successful companies increasingly do not just add value, they reinvent it. The key strategic task is to reconfigure roles and relationships among a constellation of actors--suppliers, partners, customers--in order to mobilize the creation of value by new combinations of players. What is so different about this new logic of value? It breaks down the distinction between products and services and combines them into activity-based "offerings" from which customers can create value for themselves. But as potential offerings grow more complex, so do the relationships necessary to create them. As a result, a company's strategic task becomes the ongoing reconfiguration and integration of its competencies and customers. The authors provide three illustrations of these new rules of strategy. IKEA has blossomed into the world's largest retailer of home furnishings by redefining the relationships and organizational practices of the furniture business. Danish pharmacies and their national association have used the opportunity of health care reform to reconfigure their relationships with customers, doctors, hospitals, drug manufacturers, and with Danish and international health organizations to enlarge their role, competencies, and profits. French public-service concessionaires have mastered the art of conducting a creative dialogue between their customers--local governments in France and around the world--and a perpetually expanding set of infrastructure competencies.
    Harvard business review 07/1993; 71(4):65-77. · 1.27 Impact Factor
  • [Show abstract] [Hide abstract]
    ABSTRACT: Analyzes how successful firms fail when confronted with technological and market changes, prescribing a list of rules for firms to follow as a solution. Precisely because of their adherence to good management principles, innovative, well-managed firms fail at the emergence of disruptive technologies - that is, innovations that disrupt the existing dominant technologies in the market. Unfortunately, it usually does not make sense to invest in disruptive technologies until after they have taken over the market. Thus, instead of exercising what are typically good managerial decisions, at the introduction of technical or market change it is very often the case that managers must make counterintuitive decisions not to listen to customers, to invest in lower-performance products that produce lower margins, and to pursue small markets. From analysis of the disk drive industry, a set of rules is devised - the principles of disruptive innovation - for managers to measure when traditional good management principles should be followed or rejected. According to the principles of disruptive innovation, a manager should plan to fail early, often, and inexpensively, developing disruptive technologies in small organizations operating within a niche market and with a relevant customer base. A case study in the electric-powered vehicles market illustrates how a manager can overcome the challenges of disruptive technologies using these principles of disruptive innovation. The mechanical excavator industry in the mid-twentieth century is also described, as an example in which most companies failed because they were unwilling to forego cable excavator technology for hydraulics machines. While there is no "right answer" or formula to use when reacting to unpredictable technological change, managers will be able to adapt as long as they realize that "good" managerial practices are only situationally appropriate. Though disruptive technologies are inherently high-risk, the more a firm invests in them, the more it learns about the emerging market and the changing needs of consumers, so that incremental advances may lead to industry-changing leaps. (CJC)
    01/1997; Harvard Business School Press.
Show more