Business Model Innovation

The nature of competition is rapidly changing. In the 20th century firms could do well by developing and executing detailed strategic plans and merely reacting to threats. However, in increasingly complex and fast-changing environments the traditional competitive dimensions are no longer sufficient. Nowadays these constitute a necessary standard and the process is becoming the differentiating factor. Winning depends on the ability to develop new, high-value propositions for (end-) users at low cost, and the capability to do so again and again. Firms need to redefine industry boundaries before competitors do, develop new revenue models, tie partners to a global platform, and position the firm at the heart of the revenue streams, brand building, and data about end-users. Using Open Innovation initiatives such as on-line innovation communities, corporate campuses and science parks, to renew value propositions over time and consolidate a long-term competitive advantage.

The combined execution of all these elements is dubbed Business Model Innovation. Firms that develop the competence to do so can create tremendous value for their stakeholders: shareholders, employees, clients, and people in their natural and social environment, including future generations. The current economic crisis offers unique opportunities to improve this capability and to sail out of the storm well ahead of competitors. Continuously innovating business models, overturning value propositions, and disrupting the core of competition before competitors do, based on strengths rather than follow others.

In this work stream we continuously improve insights, concepts, frameworks, and tools on how to do business model innovation successfully. We do so by way of a comprehensive research program and detailed studies in a variety of companies, industries and regions, as well as real-life experiments. Our work comprises teaching programs with PhD and Masters Students at the LSE and RSM and open or in-company workshops for top potentials and senior managers, where we have worked with over a hundred companies in Europe, Asia, Africa, and the Americas.

One major initiative focuses on business model innovation at the base of the pyramid (BOP). One billion people live on less than $1 per day and another 1.6 billion on $1 to $2 per day. We are spearheading research, teaching, case development, and actual business model innovation on this topic in sub-Sahara Africa, Asia (e.g. India), and South America working with companies in fast moving consumer goods, banks and microfinance institutions, and mobile phone companies. The LSE is funding a series of workshops and forums with leading companies in their industries, academics, NGOs and governments to co-create insights, frameworks, and tools to develop and improve actual business plans. We aim to produce business models at half the current operating costs and double the value for stakeholders at the BOP so as to facilitate massive rollout, halve extreme poverty, and sustainable livelihoods with dignity, as part of the Millennium Development goals for 2015.