Innovation Value is in Business Models, Not Products

18 09 2008

BusinessWeek has some data in this week’s issue on revenue and profit growth for companies named to its Most Innovative Companies list, with some clear dominance from companies seen as innovating business models (in yellow below) – as opposed to customer experiences (green), business processes (purple), or products (blue).

BusinessWeek

Source: BusinessWeek

This is in line with research from innovation consultancy Doblin, which finds a bit of an 80-20 rule about innovation: ~80% of innovation is in products that account 20% of the value growth, while ~20% of innovation is in business models and other more lucrative areas that generate 80% of the growth.  Doblin’s reasoning: product innovation is often needed just to keep up, while business models can revolutionize value creation.

Business model innovation has led to a host of recent developments, including software-as-a-service (SaaS), fractional ownership, pay per use/rental/subscription services in music and movies, and even advertising (witness Microsoft’s cashback Search).





Transforming business with open source models | Why Nokia Bought Symbian

9 07 2008

A couple weeks ago, Nokia surprised the world when it announced it would buy out the other partners in mobile operating system company Symbian for $410 million, repackage the software, then release it to the world under a business-friendly Eclipse Public License.  Why would this leading handset maker turn loose the market-leading mobile operating system, installed on roughly two-thirds of the world’s handsets?  And what does it mean for the LiMo Foundation and Open Handset Alliance, both of which are developing open source operating systems for mobile devices as well?

Scott Anthony, the President of Innosight and a Discussion Leader at Harvard Business Publishing, has offered one of the best analyses of Nokia’s business case for turning Symbian open.

Why Nokia Bought Symbian, Then Gave It Away – Scott Anthony

Essentially, the folks at Innosight reckon that consumers don’t purchase cell phones for the operating system – they purchase for the looks and, increasingly, the capabilities.  With new SDKs for the iPhone and the buzz around other open development platforms for mobile devices, Nokia could see its handset business threatened should a “killer application” be developed for a different platform.  Now Nokia is opening up the largest mobile development platform in the world, seeking to attract the best developers to Symbian so that Nokia’s handsets will be the most capable devices in the world.

I wonder if Nokia is also stepping down a path similar to IBM’s transformation into a services organization.  Could Nokia become a consultant and deployer of services when the platform is open?  Might Nokia become the preferred enterprise partner for mobile applications, given its expertise in handsets and operating systems?

What Nokia lacks is an integrated service tier, like that of Google’s mobile services, to make a concerted effort at becoming a leading mobile services organization.  Google, which is leading the charge on Android, has the potential to be the leader in mobile ad services for advertisers and publishers targeting Android devices as well as extend its reach of ad-supported services like GMail and Blogger to a world of mobile devices.

Google Mobile servicesGoogle Mobile Services

Google competes on the basis of choice every day, so it’s not likely to require use of its services in an Android deployment, but it is particularly well situated to benefit from wider mobile access to its web and ad services.





Greenopolis: social networking for the eco set

20 02 2008

Social networking sites are carving out unique niches of special-interest groups and responding to the backlash against advertising that has slowed the use of Facebook and MySpace. Case in point: Greenopolis.com.

This beta-stage, lifestyle-oriented web community is designed for members to share tips on living greener and earn recognition for both participation in the web community and for greeer lifestyle choices. Minimal advertising is offset by corporate sponsorship from a somewhat surprising list of partners – you won’t find Patagonia, but you will find Waste Management for example.

An interesting concept employed by the site is is reward points – like frequent flier miles for social networking. The more you participate in the site, the more points you earn. Evidently, Greenopolis plans to connect these points to a commerce center where members can purchase eco-friendly products discounted by points. So the points aren’t redeemable for cash but they do generate real dollar value for site members.

Greenopolis home page

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