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The Business Model Innovation Factory: How to Stay Relevant When The World is Changing by Saul Kaplan

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Chapter 3

Why Organizations Fail at Business Model Innovation

Organizations fail at business model innovation because they are so busy pedaling the bicycle of their current business models they leave no time, attention, or resources to design, prototype, and test new ones. Far too much of our innovation focus today is on new products and services delivered through today's business models and on driving efficiencies into the current models. These are important activities, but not sufficient in a twenty-first century networked world where business models don't last as long as they used to.

While it's always necessary and important to strengthen current business models, it isn't sufficient if you want to avoid being netflixed. Leaders focus almost exclusively on improving their current business models at the expense of exploring new ones. The good news is that leaders have really embraced innovation as a strategy for growth. The bad news is innovation initiatives are all over the place, everyone is an innovator and everything is described as an innovation. When that happens no one is an innovator and nothing is an innovation. Most of the innovation efforts I have observed over the years, across industries and companies, are focused on improving the performance of the current business model. They are either an effort to source or develop new products and services to create new revenue within the current business model or an attempt to deploy new and improved capabilities within the ...

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