Innovation - lc00/wiki-experiment GitHub Wiki

  • Incumbent's internal systems (metrics, resource allocation, incentives, recruitment, investment, and promotion) are always set up to support the old model. Even if an incumbent can overcome their internal challenges, can their supply chain keep up?
  • New innovations require tight control over the value chain and partners who can adapt with you. Mature products can modularize and operate in isolation.
  • Modern models depend on understanding every customer's life and offering a custom experience. You don't need big data, you need small data to personalize the experience.
  • IT used to help enterprises become more efficient. Now, it helps newcomers scale up and have closer relationships with customers.
  • Data is:
    • Scalable - Moreso than physical production
    • Defensible - Hard for a competitor to replicate
    • Reinforcable - Better over time for free
  • Output-based metrics favor traditional execution. Measure things that favor long-term strategy.

Spontaneous private deregulation = Platforms ignoring laws (eg. Uber, AirBnb). Incumbents are at risk if:

  • The consumers are unnecessarily being protected
  • Your business practices can be codified or computer assisted

You can create temporary organizations staffed with consultants and contractors so you don't have to lay people off if it doesn't work

Transformative Business Models

Original article

Over time, a single business model (how a company creates and captures value) starts to dominate an industry. Transformative business models either displace incumbents or force competitors to adopt them. They are usually spurred by a new technology.

Keys to creating a transformative business model:

  1. A more personalized product or service
  2. A closed-loop process (instead of make/use/dispose, more recycling)
  3. Asset-sharing (sharing costly assets, eg. Uber and AirBnb)
  4. Usage-based pricing (instead of purchasing)
  5. More collaborative ecosystem (allows for risks to be shared easier)
  6. Agile and adaptive organizations

These all link a tech trend with a market need. To be successful, a business model should hit at least 3 of the 6 features.