Chapter 40

Business Model Innovation: When the Game Gets Tough, Change the Game

Zhenya Lindgardt, Martin Reeves, George Stalk, Jr., and Michael Deimler

By the late 1990s, Apple's initial pathway to growth had hit a wall. The company's proprietary approach to designing both hardware and software limited Apple to being a niche player in the personal computer market and hampered its ability to compete on price. All that changed in 2001, when Apple launched the first in a series of networked products and services. The iPod and the iTunes online music service—followed by the iPhone, the iPad, and other connected devices and software—propelled Apple to the top of a redefined industry. But the shift represented by the iPod wasn't a matter of simple product innovation. Apple's success resulted from its ability to define a workable business model for downloading music—something that had eluded the music industry.

This combination of product innovation and business model innovation (BMI) also helped expand the company's share of the traditional computer market as new customers took another look at Apple computers.

Challenging environments require businesses to bolster and accelerate innovation. The discipline of BMI offers a fresh way to think about renewing competitive advantage and reigniting growth. But BMI means more than a brilliant insight coming at the right place and the right time. To confer a reliable competitive advantage, BMI must be systematically cultivated, sufficiently supported, ...

Get Own the Future: 50 Ways to Win from The Boston Consulting Group now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.