Four Paths to Business Model Innovation
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Decision making and problem solving
by
Karan Girotra
and
Serguei Netessine
by
Karan Girotra
and
Serguei Netessine
From the Magazine (July–August 2014)
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Summary.
Reprint: R1407H Drawing on the idea that any business model is essentially a set of key decisions that collectively determine how a business earns its revenue, incurs its costs, and manages its risks, the authors view innovations to the model as changes to those decisions: What mix of products or services should you offer? When should you make your key decisions? Who are your best decision makers? and Why do key decision makers choose as they do? In this article they present a framework to help managers take business model innovation to the level of a reliable and improvable discipline. Companies can use the framework to make their innovation processes more systematic and open so that business model reinvention becomes a continual, inclusive process rather than a series of isolated, internally focused events.
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Idea in Brief
The Problem
Business model innovation is typically an ad hoc process, lacking any framework for exploring opportunities. As a result, many companies miss out on inexpensive ways to radically improve their profitability and productivity.
The Solution
Drawing on the idea that a business model reflects a set of decisions, the authors frame innovation in terms of deciding what products or services to offer, when to make decisions, who should make them, and why the decision makers choose as they do.
An Example
Traditional call centers hire a staff to supply services as needed from a place of work, incurring significant up-front costs and risks. LiveOps created a new model by revising the order of decisions: It employs agents as calls come in by routing the calls to home-based freelancers who have signaled their availability.
Business model innovation is a wonderful thing. At its simplest, it demands neither new technologies nor the creation of brand-new markets: It’s about delivering existing products that are produced by existing technologies to existing markets. And because it often involves changes invisible to the outside world, it can bring advantages that are hard to copy.
July–August 2014
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KG Karan Girotra is the Charles H. Dyson Family Professor of Management at Cornell Tech and the Johnson College of Business at Cornell University, and a coauthor, with Serguei Netessine, of The Risk-Driven Business Model: Four Questions That Will Define Your Company (HBR Press, 2014). Follow him on Twitter: @Girotrak
Serguei Netessine is the vice dean for global initiatives and the Dhirubhai Ambani Professor of Innovation and Entrepreneurship at the University of Pennsylvania’s Wharton School and a coauthor, with Karan Girotra, of The Risk-Driven Business Model: Four Questions That Will Define Your Company  (HBR Press, 2014). Follow him on Twitter: @snetesin
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Read more on Decision making and problem solving or related topics Risk management , R&D and Business models
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Navigation Menu. Subscribe. Sign In. Account Menu Account Menu Hi,  Guest. Search Menu. Close menu. CLEAR. SUGGESTED TOPICS. Explore HBR. Latest. The Magazine. Ascend. Podcasts. Video. Store. Webinars. Newsletters. Popular Topics. Managing Yourself. Leadership. Strategy. Managing Teams. Gender. Innovation. Work-life Balance. All Topics. For Subscribers. The Big Idea. Data & Visuals. Reading Lists. Case Selections. HBR Learning. Subscribe. My Account. My Library. Topic Feeds. Orders. Account Settings. Email Preferences. Log Out. Sign In. Subscribe. Latest. Podcasts. Video. The Magazine. Ascend. Store. Webinars. Newsletters. All Topics. The Big Idea. Data & Visuals. Reading Lists. Case Selections. HBR Learning. My Library. Account Settings. Log Out. Sign In. Your Cart. Visit Our Store. My Library. Topic Feeds. Orders. Account Settings. Email Preferences. Log Out. Reading Lists. 1 free. s. last free article. Subscribe. Create an account. Decision making and problem solving. by. Karan Girotra. and. Serguei Netessine. by. Karan Girotra. and. Serguei Netessine. From the Magazine (July–August 2014) Tweet. Post. Share. Annotate. Save. Get PDF. Buy Copies. Print. Summary. Reprint: R1407H Drawing on the idea that any business model is essentially a set of key decisions that collectively determine how a business earns its revenue, incurs its costs, and manages its risks, the authors view innovations to the model as changes to those decisions: What mix of products or services should you offer? When should you make your key decisions? Who are your best decision makers? and Why do key decision makers choose as they do? In this article they present a framework to help managers take business model innovation to the level of a reliable and improvable discipline. Companies can use the framework to make their innovation processes more systematic and open so that business model reinvention becomes a continual, inclusive process rather than a series of isolated, internally focused events. Tweet. Post. Share. Annotate. Save. Get PDF. Buy Copies. Print. Idea in Brief. The Problem. Business model innovation is typically an ad hoc process, lacking any framework for exploring opportunities. As a result, many companies miss out on inexpensive ways to radically improve their profitability and productivity. The Solution. Drawing on the idea that a business model reflects a set of decisions, the authors frame innovation in terms of deciding what products or services to offer, when to make decisions, who should make them, and why the decision makers choose as they do. An Example. Traditional call centers hire a staff to supply services as needed from a place of work, incurring significant up-front costs and risks. LiveOps created a new model by revising the order of decisions: It employs agents as calls come in by routing the calls to home-based freelancers who have signaled their availability. Business model innovation is a wonderful thing. At its simplest, it demands neither new technologies nor the creation of brand-new markets: It’s about delivering existing products that are produced by existing technologies to existing markets. And because it often involves changes invisible to the outside world, it can bring advantages that are hard to copy. July–August 2014. New! Start Course. Learn More & See All Courses. Read more on Decision making and problem solving or related topics Risk management , R&D and Business models. KG Karan Girotra is the Charles H. Dyson Family Professor of Management at Cornell Tech and the Johnson College of Business at Cornell University, and a coauthor, with Serguei Netessine, of The Risk-Driven Business Model: Four Questions That Will Define Your Company (HBR Press, 2014). Follow him on Twitter: @Girotrak. Serguei Netessine is the vice dean for global initiatives and the Dhirubhai Ambani Professor of Innovation and Entrepreneurship at the University of Pennsylvania’s Wharton School and a coauthor, with Karan Girotra, of The Risk-Driven Business Model: Four Questions That Will Define Your Company  (HBR Press, 2014). Follow him on Twitter: @snetesin. Tweet. Post. Share. Annotate. Save. Get PDF. Buy Copies. Print. New! HBR Learning. Start Course. Learn More & See All Courses. Read more on Decision making and problem solving or related topics Risk management , R&D and Business models. Partner Center. Latest. Magazine. Ascend. Topics. Podcasts. Video. Store. The Big Idea. Data & Visuals. Case Selections. 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