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1.10 Business Models
A business model represents how an organization creates, distributes, and captures
value, and it is an oftentimes neglected aspect of many innovation efforts, which
tend to focus on the good or service to be launched, instead of on how to manage the
value created. In addition, as already mentioned, it is unfortunate that the business
world tends to be associated only with profit-seeking endeavors. Even innovation
teams with enough business acumen oftentimes spend insufficient time and
resources on their business models.
The self-inflicted damage caused by organizations paying insufficient attention
to designing the right business model not only reduces an innovation’s likelihood of
success, but it also grants the upper hand to competitors.
A business model is not a business plan. Nor is it a projection of future cash
flows, profits, and break-even points. A business model embodies how the organization views value creation, how its goods or services address the JTBD, and how it
allocates its talent and resources.
The ability to design business models tests whether an organization is truly
customer- centered. In many cases, organizations only pay lip service to keeping
customer needs at the center of everything.
Innovative organizations cannot operate without a business model. A well-crafted
model lets the organization test hypotheses, formulate and address questions, and
challenge underlying assumptions.
A business model can be a mighty source of innovation. Even for companies
with a strong digital footprint, a well-designed business model is key to transformational growth (Johnson 2018). Business models can be nicely articulated with the
canvas framework developed by Osterwalder and Pigneur (2010). A canvas is a
visual chart which is very effective to describe the founding blocks of the business
model of an organization, good, or service. Ulvenblad provides in Chap. 5 of this
book a detailed account about business models in Sweden.
With the right adaptive business model in place, an organization can rapidly
evolve and achieve success.
1.10.1 The Components of Business Models
A business model can be articulated around four components (Fig. 1.2):
Taken together, these four components can yield a powerful new way of doing
business and achieving innovation.
1.10.1.1 The Value Proposition
Value propositions are closely related to the JTBD concept. The value proposition
is the promise made to users. A value proposition is a good or service enabling users
to carry out a JTBD in a more convenient, effective, and/or affordable way (Eyting
1 The Quest for Innovation: Addressing User Needs and Value Creation
1.10 Business Models
A business model represents how an organization creates, distributes, and captures
value, and it is an oftentimes neglected aspect of many innovation efforts, which
tend to focus on the good or service to be launched, instead of on how to manage the
value created. In addition, as already mentioned, it is unfortunate that the business
world tends to be associated only with profit-seeking endeavors. Even innovation
teams with enough business acumen oftentimes spend insufficient time and
resources on their business models.
The self-inflicted damage caused by organizations paying insufficient attention
to designing the right business model not only reduces an innovation’s likelihood of
success, but it also grants the upper hand to competitors.
A business model is not a business plan. Nor is it a projection of future cash
flows, profits, and break-even points. A business model embodies how the organization views value creation, how its goods or services address the JTBD, and how it
allocates its talent and resources.
The ability to design business models tests whether an organization is truly
customer- centered. In many cases, organizations only pay lip service to keeping
customer needs at the center of everything.
Innovative organizations cannot operate without a business model. A well-crafted
model lets the organization test hypotheses, formulate and address questions, and
challenge underlying assumptions.
A business model can be a mighty source of innovation. Even for companies
with a strong digital footprint, a well-designed business model is key to transformational growth (Johnson 2018). Business models can be nicely articulated with the
canvas framework developed by Osterwalder and Pigneur (2010). A canvas is a
visual chart which is very effective to describe the founding blocks of the business
model of an organization, good, or service. Ulvenblad provides in Chap. 5 of this
book a detailed account about business models in Sweden.
With the right adaptive business model in place, an organization can rapidly
evolve and achieve success.
1.10.1 The Components of Business Models
A business model can be articulated around four components (Fig. 1.2):
Taken together, these four components can yield a powerful new way of doing
business and achieving innovation.
1.10.1.1 The Value Proposition
Value propositions are closely related to the JTBD concept. The value proposition
is the promise made to users. A value proposition is a good or service enabling users
to carry out a JTBD in a more convenient, effective, and/or affordable way (Eyting
1 The Quest for Innovation: Addressing User Needs and Value Creation