Charting long term success through business model innovation
In 1935 a photographic company was established providing photographic services including equipment sales, repair and film processing. The company grew very quickly to become the market leader in 1970 and in 2012 it turned over c. £230m in revenues. Today this company is no longer with us…
You could be forgiven for thinking this is Kodak and that it’s old news, but in fact this is much closer to home. Jessops the UK’s leading high street photography retailer went into administration on the 11th January 2013. There are a number of reasons that caused Jessops demise, but what is clear is that the traditional retail business model was not effective in today’s digital environment and Jessops’ failure to innovate their business model led to the company’s downfall.
There are three reasons why todays businesses need learn from the unfortunate mistakes of Jessops:
1. Business lifecycles are shorter than ever - companies that fail to evolve their core business risk being left behind. It took Ford 7 years to reach 1million customers; Dropbox achieved that figure in 7 months.
2. Business model innovation is the most sustainable form ofinnovation - Companies focusing on business model innovation outperform competitors in operating margin and shareholder value –Apple continuously redefines its definition of core business and in August 2012 became the most valuable company in the world.
3. Business model innovation is the biggest driver of competitive advantage –Business model innovation is embedded in a company’s DNA which is difficult for the outside world to see. It is much harder for competitors to copy business models successfully than it is to copy products.
Forbes states: “Business model innovation is the fastest path to greatness” – This is excellent advice, and adopting an innovation mindset can be seen as an investment in the company’s long term future.
According to the Harvard Business Review, “Business model innovation is the gift that keeps on giving” . Take time to think about the innovation model that is right for you, but not too long as failure to take action could land you in the same unfortunate situation as Jessops.
So how can a large established company remain agile and embrace new innovation? In our next blog, we explore new approaches to corporate innovation including examples of Start-up Accelerators such as WAYRA and BBC Worldwide Labs.
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