How Can You Find and Study Examples of Continuing Business Model Innovators?
January 25, 2010 by admin
Filed under Uncategorized
Having found that the top growth performing CEOs were continually improving their business models to become more profitable, the next challenge was to see what else could be learned about business model innovation. When I began to look at the earlier history of business model innovation, I saw that improved business models usually came from start-ups and new entrants. So entrepreneurs were obviously focused on this opportunity.
I then became curious about the frequency with which companies enjoyed ongoing success in improving their business models. Where should I find the answer?
I read the profiles of all public companies described in the Value Line Investment Survey over 12 years. I noted the companies that seemed to have completed at least two major successful business model innovations during those years, without regard to their stock-market performance. As a result of either lower stock-price growth or changes in CEOs, many of them did not make my CEO 100 lists during those years.
I contacted these companies by e-mail to request interviews with their CEO and some of the other senior executives. From these contacts, I was able to arrange CEO interviews at over 40 companies.
I performed literature searches on another few dozen companies that confirmed that they had been frequent business model innovators, but these companies declined to be interviewed. Obviously, you can still learn lessons by characterizing the direction that those companies take even if you cannot learn more fine-tuned details.
From these investigations, I became convinced that at least 70 public companies had performed at least two major successful business model innovations in the same business over the 12 years.
I began a year-long analysis. I took what was learned and summarized it in simple form so that more companies could understand how to choose and successfully follow this path. You could obviously do the same thing for the examples that interest you.
To test my thinking, I discussed the work in progress with many of the CEOs and their staffs as well as top strategic thinkers in other companies. Many valuable corrections and improvements were made as a result.
Next, I sought out individual, small company, and nonprofit examples of the themes that the larger, public companies exhibited. Many of these examples are drawn from my personal experiences with the subjects or my long-term interest in their work.
Finally, I kept in touch with all of the individuals and companies so that the information could be as up-to-date as possible.
By: Donald Mitchell
About the Author:
I then became curious about the frequency with which companies enjoyed ongoing success in improving their business models. Where should I find the answer?
I read the profiles of all public companies described in the Value Line Investment Survey over 12 years. I noted the companies that seemed to have completed at least two major successful business model innovations during those years, without regard to their stock-market performance. As a result of either lower stock-price growth or changes in CEOs, many of them did not make my CEO 100 lists during those years.
I contacted these companies by e-mail to request interviews with their CEO and some of the other senior executives. From these contacts, I was able to arrange CEO interviews at over 40 companies.
I performed literature searches on another few dozen companies that confirmed that they had been frequent business model innovators, but these companies declined to be interviewed. Obviously, you can still learn lessons by characterizing the direction that those companies take even if you cannot learn more fine-tuned details.
From these investigations, I became convinced that at least 70 public companies had performed at least two major successful business model innovations in the same business over the 12 years.
I began a year-long analysis. I took what was learned and summarized it in simple form so that more companies could understand how to choose and successfully follow this path. You could obviously do the same thing for the examples that interest you.
To test my thinking, I discussed the work in progress with many of the CEOs and their staffs as well as top strategic thinkers in other companies. Many valuable corrections and improvements were made as a result.
Next, I sought out individual, small company, and nonprofit examples of the themes that the larger, public companies exhibited. Many of these examples are drawn from my personal experiences with the subjects or my long-term interest in their work.
Finally, I kept in touch with all of the individuals and companies so that the information could be as up-to-date as possible.
By: Donald Mitchell
About the Author:
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at
When to Protect an Innovative Idea
December 30, 2009 by admin
Filed under Intellectual Property
“I have thought through and worked out the innovative concept in my mind. Can I patent it at this stage?” The inventor is typically in a dilemma as to when he/she should proceed to start the patenting process. The life cycle of converting an innovative idea into a product typically runs into many years. During which of these stages should one file for patent protection – when the inventive concept is firmed up, at a first level prototype, mature prototype, early product phase or in the maturity stage of the product lifecycle? Surprise of surprises, the timing for patenting is not determined by the stage of the product life cycle. It is dependent on when you plan to publicly disclose the innovative idea, or market the new product. With intense competitive product development occurring in some of the hot and well funded areas like software, electronics, nanotechnology and biotechnology, it is prudent to protect your idea at the earliest stage, possibly at the point when the innovative or inventive idea is conceptualized.
“Hitting is timing, pitching is upsetting timing,” said Warren Spahn, a famous American baseball pitcher. In every country of the world except the United States, the patent is awarded to the first to file. The US is the only country that grants a patent to the person who was the first to invent and this rule is scheduled to be changed shortly to bring the US in line with the first to file rule.
In many countries, the inventor loses the right to file a patent if the invention is publicly disclosed before the patent application is filed. Therefore, prudence dictates that an invention not be disclosed before an application for it has been filed in the patent office. Developed countries are exposed to developing technologies at an early stage of the technology. They can envision new applications of these technologies ahead of their counterparts from developing countries. Hence, it is to their advantage to patent an innovative idea, at the concept level, before their counterparts in developing countries.
“Can a patent application be filed for a prophetic invention, i.e., for an invention based only on an idea that has not been tried, tested, perfected, prototyped or reduced to practice?” The answer is: Yes. “Does the patent office require one to have a fully working or marketed product before filing a patent application?” The answer is: No. A new concept is patentable provided the concept is workable and the inventor discloses in the patent application how to make and use the invention. An invention comprises an inventive concept plus a reduction to practice of the inventive concept. The courts have held that filing a patent application based only on a workable, inventive idea is the equivalent of a reduction to practice. However, if the invention, on its face, is impossible or unworkable, the patent application will be rejected. When Thomas Edison invented and filed a patent application for the light bulb, he was nowhere close to a robust working light bulb!
In the United States a patent application can be filed within 1 year of a public disclosure of the invention. Under US patent laws there is also a provision to protect your idea by filing a provisional application. The provisional application must be followed up by the filing of a non-provisional application within one year from the date of filing the provisional application. Failure to do so will result in the applicant losing the claim to priority date of the earlier filed provisional application. The period of priority is limited to six months in case of industry design and trademarks. If the non-provisional application cannot be filed within 1 year of filing of the provisional application, the applicant may file for another provisional and get another priority span. However, in this case the original priority date no longer holds.
The time tested and safest route for a company that wishes to protect its innovative idea is to withhold commercialization or publishing details of the invention until a provisional or a non-provisional application is filed and a “patent pending” status is obtained for the innovative idea.
By: Ash Tankha
About the Author:
“Hitting is timing, pitching is upsetting timing,” said Warren Spahn, a famous American baseball pitcher. In every country of the world except the United States, the patent is awarded to the first to file. The US is the only country that grants a patent to the person who was the first to invent and this rule is scheduled to be changed shortly to bring the US in line with the first to file rule.
In many countries, the inventor loses the right to file a patent if the invention is publicly disclosed before the patent application is filed. Therefore, prudence dictates that an invention not be disclosed before an application for it has been filed in the patent office. Developed countries are exposed to developing technologies at an early stage of the technology. They can envision new applications of these technologies ahead of their counterparts from developing countries. Hence, it is to their advantage to patent an innovative idea, at the concept level, before their counterparts in developing countries.
“Can a patent application be filed for a prophetic invention, i.e., for an invention based only on an idea that has not been tried, tested, perfected, prototyped or reduced to practice?” The answer is: Yes. “Does the patent office require one to have a fully working or marketed product before filing a patent application?” The answer is: No. A new concept is patentable provided the concept is workable and the inventor discloses in the patent application how to make and use the invention. An invention comprises an inventive concept plus a reduction to practice of the inventive concept. The courts have held that filing a patent application based only on a workable, inventive idea is the equivalent of a reduction to practice. However, if the invention, on its face, is impossible or unworkable, the patent application will be rejected. When Thomas Edison invented and filed a patent application for the light bulb, he was nowhere close to a robust working light bulb!
In the United States a patent application can be filed within 1 year of a public disclosure of the invention. Under US patent laws there is also a provision to protect your idea by filing a provisional application. The provisional application must be followed up by the filing of a non-provisional application within one year from the date of filing the provisional application. Failure to do so will result in the applicant losing the claim to priority date of the earlier filed provisional application. The period of priority is limited to six months in case of industry design and trademarks. If the non-provisional application cannot be filed within 1 year of filing of the provisional application, the applicant may file for another provisional and get another priority span. However, in this case the original priority date no longer holds.
The time tested and safest route for a company that wishes to protect its innovative idea is to withhold commercialization or publishing details of the invention until a provisional or a non-provisional application is filed and a “patent pending” status is obtained for the innovative idea.
By: Ash Tankha
About the Author:
Ash Tankha, US patent attorney, works with inventors to develop their ideas into patent application for worldwide filing and patenting. Contact Ash Tankha atash@ipprocurement.com or visit www.ipprocurement.com.
Assess Your Company’s Potential to Innovate With a New Business Model
Business concepts are all well and fine, but what do these business model innovation concepts potentially do for you? I want to share some questions designed to help you apply what you have been reading to your existing business.
What is your current business model?
If you offer many products and services, you may have more than one. Understanding how you operate now will make it easier to think about how you can improve upon the present.
In thinking about this question, you will find it helpful to focus first on what benefits customers get from what you provide. Also, consider what benefits the customers’ customers get through to the end user of the product or service. In thinking about benefits, remember that customers always want more and at a lower price. How does your business model accomplish that for them?
As an example, let’s consider the Folger’s coffee business at Procter & Gamble. That business is an industry leader in providing coffee-based products to allow consumers to have a tasty, comforting beverage at home that may or may not stimulate them with caffeine. The products are sold primarily through supermarkets, discounters, and warehouse clubs.
Compare that with the Starbucks coffee business. Starbucks primarily provides high-quality coffee and tea products through a service in complex prepared forms in coffee bars to also provide an enjoyable experience. The company further offers roasted coffee beans as a product for tasty experiences at other coffee bars and eat-away-from home locales as well as for consumers to brew at home, so that customers can always have the good-tasting products they prefer.
The companies have two different business models that provide different products, differing amounts of experience, in different ways, and mostly in different locations. Notice that Folger’s could have innovated with the Starbucks business model before Starbucks even existed as a company. The model already existed in Europe, which is what helped stimulate the Starbucks model.
Had Folger’s taken this path, there would probably be only one business model now in the industry. Interestingly, the two businesses have started to compete directly with each other’s business models by offering prepackaged coffee-based beverages that are manufactured and distributed by others into normal beverage outlets.
What were the last five business models before the current one?
Understanding how you got to where you are today often provides valuable insights into what new business models would be most attractive in the future. The forces that made those innovations work may still be around today, or may have only been slightly changed.
Has your company had a process aimed at developing improved business models?
New business processes almost always emerge from a deliberate process of innovation. If your company has yet to establish such a process, chances are higher that you have a substantial backlog of opportunities for desirable new business models.
If you have such a process, does it look at business model innovation separately from product and technological innovation?
Many companies see new products and technologies as the only potential ways to provide increased benefits to customers and end users. As the coffee discussion suggested, it can be easier to add more value by turning a product into a service than it is to focus only on improving the product itself.
For example, General Food’s Maxwell House division had introduced flavored coffees conceptually like what you get in a coffee bar in the early 1970s. Few would argue that the taste and experience of these canned items are a match for what is offered at a Starbucks or a coffee bar using Starbucks products. Without a separate focus on designing and implementing new and better business models (that may include new products and technologies), you are probably missing most of your opportunities.
When was the last time your company changed its business model?
If the answer is more than two years ago, the odds favor there being a current opportunity to implement an improved business model.
How many times has the business model changed in your industry in the last ten years?
If the answer is less than three times, there is probably untapped potential for a new business model now.
How expensive is it for you to develop and test a new business model?
The answer differs a lot from industry to industry. If the costs are low, then you have very high potential to develop an improved business model. You will face few internal hurdles to doing the necessary early experimentation. Conversely, if the costs are high, you will probably need to create an improved way to develop business models that is less expensive.
How risky is it for you to develop a test a new business model?
For some companies, reputation is so important, for example, that it is difficult to even test new things until they are almost perfect. In other industries, working with crude prototypes is the expectation.
What do you lose if your business model experiment fails in all of the predictable ways that it could? If not very much, what are you waiting for?
If much is at stake, consider ways to reduce the amount at risk or the visibility of your flops. Early experiments should be expected to create “learning” rather than solutions, so you need to have a way to get your learning on the cheap.
Copyright 2008 Donald W. Mitchell, All Rights Reserved
By: Donald Mitchell
About the Author:
What is your current business model?
If you offer many products and services, you may have more than one. Understanding how you operate now will make it easier to think about how you can improve upon the present.
In thinking about this question, you will find it helpful to focus first on what benefits customers get from what you provide. Also, consider what benefits the customers’ customers get through to the end user of the product or service. In thinking about benefits, remember that customers always want more and at a lower price. How does your business model accomplish that for them?
As an example, let’s consider the Folger’s coffee business at Procter & Gamble. That business is an industry leader in providing coffee-based products to allow consumers to have a tasty, comforting beverage at home that may or may not stimulate them with caffeine. The products are sold primarily through supermarkets, discounters, and warehouse clubs.
Compare that with the Starbucks coffee business. Starbucks primarily provides high-quality coffee and tea products through a service in complex prepared forms in coffee bars to also provide an enjoyable experience. The company further offers roasted coffee beans as a product for tasty experiences at other coffee bars and eat-away-from home locales as well as for consumers to brew at home, so that customers can always have the good-tasting products they prefer.
The companies have two different business models that provide different products, differing amounts of experience, in different ways, and mostly in different locations. Notice that Folger’s could have innovated with the Starbucks business model before Starbucks even existed as a company. The model already existed in Europe, which is what helped stimulate the Starbucks model.
Had Folger’s taken this path, there would probably be only one business model now in the industry. Interestingly, the two businesses have started to compete directly with each other’s business models by offering prepackaged coffee-based beverages that are manufactured and distributed by others into normal beverage outlets.
What were the last five business models before the current one?
Understanding how you got to where you are today often provides valuable insights into what new business models would be most attractive in the future. The forces that made those innovations work may still be around today, or may have only been slightly changed.
Has your company had a process aimed at developing improved business models?
New business processes almost always emerge from a deliberate process of innovation. If your company has yet to establish such a process, chances are higher that you have a substantial backlog of opportunities for desirable new business models.
If you have such a process, does it look at business model innovation separately from product and technological innovation?
Many companies see new products and technologies as the only potential ways to provide increased benefits to customers and end users. As the coffee discussion suggested, it can be easier to add more value by turning a product into a service than it is to focus only on improving the product itself.
For example, General Food’s Maxwell House division had introduced flavored coffees conceptually like what you get in a coffee bar in the early 1970s. Few would argue that the taste and experience of these canned items are a match for what is offered at a Starbucks or a coffee bar using Starbucks products. Without a separate focus on designing and implementing new and better business models (that may include new products and technologies), you are probably missing most of your opportunities.
When was the last time your company changed its business model?
If the answer is more than two years ago, the odds favor there being a current opportunity to implement an improved business model.
How many times has the business model changed in your industry in the last ten years?
If the answer is less than three times, there is probably untapped potential for a new business model now.
How expensive is it for you to develop and test a new business model?
The answer differs a lot from industry to industry. If the costs are low, then you have very high potential to develop an improved business model. You will face few internal hurdles to doing the necessary early experimentation. Conversely, if the costs are high, you will probably need to create an improved way to develop business models that is less expensive.
How risky is it for you to develop a test a new business model?
For some companies, reputation is so important, for example, that it is difficult to even test new things until they are almost perfect. In other industries, working with crude prototypes is the expectation.
What do you lose if your business model experiment fails in all of the predictable ways that it could? If not very much, what are you waiting for?
If much is at stake, consider ways to reduce the amount at risk or the visibility of your flops. Early experiments should be expected to create “learning” rather than solutions, so you need to have a way to get your learning on the cheap.
Copyright 2008 Donald W. Mitchell, All Rights Reserved
By: Donald Mitchell
About the Author:
Donald Mitchell is chairman of Mitchell and Company, a strategy and financial consulting firm in Weston, MA. He is coauthor of seven books including Adventures of an Optimist, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. You can find free tips for accomplishing 20 times more by registering at:
www.2000percentsolution.com
