“Business model innovations impact all aspects of our lives,” says IESE Professor Joan Enric Ricart.
“If look around, you realize that how we consume, work, interact with each other, how we live – all of this is affected by changing business models.”
And for companies, even the most established organizations, the current climate of change and disruption implies constant and continuous re-assessment of business models, says Ricart, who holds the Carl Schroeder Chair of Strategic Management at IESE.
How established businesses set about innovating in terms of business models – the drivers, costs, competitive advantages and implications of this – was the focus of a conference that brought distinguished academics and top experts in the field from around the world to IESE in Munich.
Co-directed by Ricart and Christoph Zott, IESE professor of Entrepreneurship, “Business Model Innovation and Change in Established Firms,” was an extension of the 36th Strategic Management Society Annual Conference, celebrated this year in Berlin.
Speakers from academia and leading organizations such as IBM, Siemens and Bosch, shared thoughts on how business model innovation differs between startups and established companies. Core to the conference was each representative sharing examples of successful – and less successful – strategies from their diverse industries.
Innovation in Established Companies
Ricart opened the conference citing the case of Apple, who executed the iPod / iTunes innovation just in time to capitalize on digital disruption to the music industry. A less happy example, he said, was that of Blackberry, who had failed adapt their business model.
“We want to delve into how business model innovation pans out in established companies,” said Ricart.
To this end, guest speakers from markets leaders shared their thoughts on business model innovation (BMI) from inception to implementation.
CEOs and Bridging the Gap
“As they face digital transformation, CEOs want to answer three key questions,” said Edward Giesen, Partner of Strategy & Transformation, Interactive Experience at IBM Global Business Services.
These, says Giesen, are: “Is our strategy ambitious enough? Is our execution fast enough? And how do we transform our people?”
Giesen joined CEO of Siemens Corporate Technology's Innovative Ventures, Rudolf Freytag, to share what really happens when BMI is put into practice in established firms. Raffi Amit, who is the Robert B. Goergen Professor of Entrepreneurship and Professor of Management at the Wharton School, Pennsylvania, also took part in the discussion.
Freytag said that there was a need to “bridge the corporate and venture worlds.” Based on his experience, he is convinced that both have a pivotal role in business model innovation.
Managing Director for Bosch Car Multimedia Portugal, Dr. Johannes Sommerhäuser shared insight from a firsthand perspective on executing business model innovation at Bosch. He highlighted the need for top management to “embrace” business model innovation for success.
The final panel discussion – “Perspectives on BMI in Established Firms” – brought together City University of London’s Centenary Professor of Strategy Charles Baden-Fuller and Ecole Polytechnique Federale de Lausanne Chair in Corporate Strategy & Innovation, Professor Chrisopher Tucci.
The session was chaired by Ricart, who stressed that innovation not only hinges on developing a framework, but on “ensuring it can be successfully implemented afterwards.”
“While we have the tools to for the ideation stage, what we need now is more work on execution, organizational and governance implications, processes, scalability of novel business and criteria to prevent failures early on,” he said.
Baden-Fuller closed the day with a call to remember the importance of the customer.
“The customer drives business model innovation. Strategy often forgets the customer is at the center of business.”