In Module 2 of our Business Model Innovation course, I explore the world of business model patterns and how digital transformation is reshaping the innovation landscape. Let’s dive in and unlock the power of these game-changing concepts.
Table of Contents
Business Model Patterns: Templates for Innovation
A business model pattern is a repeatable configuration of business model elements. It serves as a template to test new ideas and innovate your business model. We’ll explore two leading approaches:
- Business Model Navigator (BMI Labs): Developed by Prof. Oliver Gassmann, Prof. Karolin Frankenberger, and Dr. Michaela Csik, this approach offers 55 pattern cards. These cards provide a rich source of inspiration for your innovation efforts.
Key tips:
- Adapt patterns to fit your existing or new business models
- Select six to eight patterns that differ significantly from your industry norms
- Use these patterns to challenge your thinking and spark new ideas
- Strategyzer’s Invincible Company: Created by Alexander Osterwalder and Yves Pigneur, this approach presents patterns as repeatable configurations of business model building blocks. These patterns aim to strengthen your overall business model.
Let’s look at some powerful pattern examples:
Subscription Business Model: This pattern allows customers to receive products or services regularly. It offers several benefits:
- Customers save time and money by avoiding repeated purchases
- Companies enjoy predictable, forecastable revenues
- It enables easier scaling for businesses
Key changes in a subscription model:
- Selling focuses on demonstrating ongoing value for renewals
- Buying behavior shifts for both consumers and businesses
- Customer experience emphasizes retention and referrals
- Companies gain more predictable revenue and deeper customer insights
Razor and Blade Pattern: In this model, the basic product is cheap or free, while consumables are expensive with high margins. Dollar Shave Club disrupted the razor market by combining this pattern with a subscription model.
Combining Patterns: Some companies create unique advantages by combining two or more patterns. For example, Nespresso uses the Razor and Blade, Lock-in business model, and Direct Selling patterns together.
Digital Business Models: Transforming Innovation
Digital technologies are revolutionizing how we innovate business models. The Invincible Company approach identifies several types of innovation:
- Front Stage Disruption:
- Market Explorers: Create new or tap into untapped markets
- Channel Kings: Pioneer innovative ways to reach customers
- Gravity Creators: Build switching costs and long-term relationships
- Back Stage Disruption:
- Resource Castles: Develop unique, hard-to-copy resources
- Activity Differentiators: Create novel ways to perform key activities
- Profit Formula Disruption:
- Revenue Differentiators: Innovate how you generate income
- Cost Differentiators: Find new ways to manage expenses
- Margin Monsters: Maximize profitability through various strategies
Spotlight Market Explorers:
These innovators develop value propositions that unlock new or underserved markets. They come in three flavors:
- Visionaries: See market potential where others don’t (e.g., Tesla)
- Repurposers: Find innovative ways to use existing infrastructure (e.g., Amazon AWS)
- Democratizers: Make products and services accessible to wider audiences (e.g., M-Pesa)
Take Tesla as an example. They disrupted the automotive industry by:
- Selling directly to customers
- Focusing on electric, eco-friendly vehicles
- Targeting the high-end market initially
- Emphasizing design-led innovation
As you explore these patterns and approaches, remember that the goal is to create a business model that generates money and isn’t easily replicated. Use these patterns as springboards for your own innovative thinking.
In the next sections, I’ll dive deeper into how to apply these patterns and create truly disruptive business models. Get ready to transform your approach to business innovation!
