The Renaissance Innovator

Thoughts, examples and updates on the Renaissance Innovation Method

The Business Model Journey at Amazon

Posted on November 17, 2013

everything_storeAmazon.com is in the headlines again because it started Sunday package deliveries in several large cities. This offering follows the company’s recent strategic decision to offer same day delivery to most US addresses.  As a part of this strategy, the company is drastically increasing the number of warehouses all around the US.

As we discussed in our forthcoming book,  and this recent post on the HBR bloggers network. Amazon is in a class of its own when it comes to thinking about its business model. We are all accustomed to new offerings from Amazon.com: in fact, since its inception in 1995, Amazon has fundamentally changed its business model several times.  At its inception, Amazon’s operation was organized around a “sell all, carry few” business model: while offering more than a million books it actually stocked only about 2,000. The remaining titles were sourced through several arrangements but predominantly by “drop-shipping”: Amazon simply forwarded customer orders to book wholesalers or publishers, who then shipped the products directly to consumers using Amazon’s packaging materials and labels.

Categories: Examples, Others, Theory

Why Large Companies Struggle With Business Model Innovation

Posted on September 28, 2013

After a brief summer hiatus, we are bmarkerBulback and blogging!  As we describe in the recent blog post on HBR Network, innovation success stories are all strikingly similar: a bright idea, supported by a zealot-innovator who sees it through. The windfall of goodies follows.  But failures happen for all sorts of reasons, and they often occur even when the idea is sound.

Categories: Examples, Theory

At Last, a New Business Model for Tesla

Posted on July 3, 2013

20130703_3Two weeks back,  Tesla Motors, the company behind the Tesla Model S, arguably the most promising all-electric challenger to the century-long domination of fossil-fuel cars, announced an innovative switching station based infrastructure that would bring its flagship product one step closer to being the first all-electric no-compromises luxury sedan.

We were delighted to hear of this latest move by Tesla. Almost four months back, on this blog, we called for Tesla to complement the path-breaking technology in the Model S sedan with an innovative business model to match (Tesla’s Model S: Technology Outruns the Business Model). The proposed battery-swap system will allow a driver to replace a depleted battery with a fully charged battery in less than 90 seconds — faster than filling up a tank of gas — giving electric vehicles the almost unlimited range of fossil fuel vehicles.

Categories: Examples, Others, Theory

A Business Model for Bangladesh

Posted on May 21, 2013

20130522_2As we discuss in our recent blog post on HBR Blog Network, the death of over 800 people in the collapse of Rana Plaza, a building with garment factories in Bangladesh, spurred widespread outrage over working conditions in offshore factories. In the search for blame, many commentators point to the absence of building codes, lack of workplace safety rules, and the greed of US corporations.  Many of the solutions proposed are around paying people more to manufacture in the USA. But however well intentioned the ideas are, this is not the best use of one of the most productive workforces in the world. The true solution, we think, lies in understanding the changed nature of modern supply chains and identifying new business models better suited for managing them.

Categories: Examples, Others

Liberate Your Employees and Recharge your Business Model

Posted on March 28, 2013

employee-engagement1As we discussed in our recent blog post on HBR Blogging Network, it finally seems that the uproar over Marissa Meyer’s diktat banning flexible work policies at Yahoo is dying down.  While good arguments were made on both sides of the issue, what got lost in the charged debate was the potential for evolving traditional business models through changing the employee-employer relationship.

Our research on identifying replicable templates for business model innovation shows that innovating how a company engages with its workforce is an often overlooked way of increasing business model performance. The basic structure of the firm-employee relationship has not changed much over the last 50 years.  Relying on a forecast of organizational needs, firms select the nature and number of employees, who are then assigned some working hours and tasks to do in those hours. But a few pioneering companies are challenging each aspect of this traditional model and are offering unprecedented opportunities along the way.

Categories: Experiences, Others

Tesla’s Model S: Technology Outruns the Business Model

Posted on February 26, 2013

20120226_4 In our recent blog post on HBR blogging network we discussed the Tesla Model S, which is arguably the most promising all-electric contender for a slice of the luxury sedan market, but was panned recently by New York Times reporter John Broder, who finished his test-drive on the back of a flatbed truck. Elon Musk, co-founder of Tesla Motors, was quick to respond with accusations that the test was not performed under fair conditions. Whatever the rights and wrongs of the dispute, though, one thing is clear: Tesla has some way to go before it can get motorists to buy into its vision of an all-electric no-compromises luxury sedan.

Categories: Examples, Others

Extreme Focus and the Success of Germany’s Mittelstand

Posted on February 13, 2013

20130213_3In a recent post on Harvard Business Review bloggers network, we discuss the extreme focus business model of Germany’s famed Mittlestand:

Quick test: name one company that does one thing and does it very well. The companies that occupy the limelight are typically diversified giants that achieve growth through constant expansion into new markets and the introduction of additional product lines (just think P&G, GE, and Microsoft).

But the truth is that the really successful companies are highly focused, achieving unprecedented efficiencies by designing a business model with a razor-thin focus and learning to do the one thing really well. Many of us academics still teach an old case about Shouldice Hospital, which only treats simple cases of hernias and nothing else but does it better than anyone. A more recent example is Quidsi, the driving force behind Diapers.com web site which sells only baby consumables. Some of readers may also recall ING Direct, which is focused on a narrowly defined set of simple financial services, and Southwest Airlines, which still has one class (economy) and one aircraft type (Boeing 737).

Categories: Examples, Theory

Business Model Innovation: The Gift that Keeps Giving

Posted on December 6, 2012

20121206_3

In a recent blog post on the Harvard Business Review bloggers network,  we discuss the sustainability of the advantage that come  from innovating the business model.

With the Winter holiday shopping season, fashion apparel retailer Zara has been the focus of media attention — the New York Times recently profiled the innovative fast fashion business model pioneered by Zara, while Elizabeth Cline’s book on the costs of fast fashion has climbed up the sales charts.

Despite this very recent popularity, the novel business model of Zara has gone virtually unnoticed for over 30 years, allowing Zara’s parent company, Inditex, to grow from zero to almost $20B in revenues. Why wasn’t it copied immediately? How can it be so sustainable and continue growing? The answer lies in a different type of innovation that Zara used: Business Model Innovation.

Categories: Examples, Theory

When Business Models Trump Technology

Posted on November 19, 2012

In a recent blog post on Harvard Business Review we discuss one of these frequent situations in which business model innovation is necessary to bring technological innovation to life. In case you missed it, the 2012 World Food Prize went to Daniel Hillel, an Israeli scientist who, in his own words, “…helped to develop the principle of shifting from low-frequency, high-volume irrigation to high-frequency, low-volume irrigation”, the system known as drip irrigation. Irrigation is a big deal in many countries: in just the last 50 years, the world population has doubled and irrigation water is increasingly becoming a critical constraint in many parts of the world. Study after study has shown that improved irrigation systems like drip irrigation can set in motion a new dynamic of development that has the potential to change the face of these regions, relieving vast numbers from the vicious cycle of poverty, insecurity and underdevelopment. But drip irrigation is not a new technology, it has been around for over 120 years, and many companies have developed and marketed it. So why are we celebrating drip irrigation only now? The answer is because it’s only recently that the technology has begun to catch on, thanks to a business innovation by an Israeli company, Netafim. Netafim now controls over one-third of the market for this seemingly commoditized micro-irrigation equipment market.

Categories: Examples

Why Apple Has to Manufacture in China

Posted on October 2, 2012

       Apple gets a lot of stick about manufacturing in China, and the issue came up again recently with the release of the iPhone 5. A recent article on the “Cult of Mac” contrasts Apple to Timbuk2, a US producer of traveler and messenger bags, that proudly locates most of its of its manufacturing in San Francisco, one of the most expensive places on earth. The workers in the factory are neither overworked nor are they underpaid, yet Timbuk2 is not struggling financially unlike many other US-based manufacturers. This begs the question: can’t Apple do the same and move jobs back from China?  We covered this issue in a recent post on HBR network.

Categories: Examples