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Innovation Consulting for business model innovation often sounds strange to development managers, developers and engineers at first. Aren’t we the experts? What are they supposed to tell us? Aren’t consultants more for strategy meetings and SAP implementation? We want to address these questions and help you decide whether innovation consulting for technology innovation can support your company’s success.
What is Business Model Innovation?
Selling compressed air instead of air compressors, leasing equipment with reliability guarantees and providing rental platforms for construction machinery are typical business model innovations in industry. New ways to earn money instead of just selling goods for money as before. A special feature of business model innovation is that the product, technology and solution do not necessarily have to be new, but only the way partners cooperate, what the customer pays for or who bears the risk. Usually, it is about adopting business models or components of business models from other industries. Models can be taken from B2C and applied to B2B, or from a product to a service, or to completely new business areas. In most cases, business model innovation results from the pressure or foresight that competitors will gain increasing market influence.
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What are typical challenges in business model innovation?
- Thinking outside the box and removing your blinders. Years of experience often obscure one’s view of risks and opportunities in their immediate environment. “We’ve never done this before – we’ve always done it this way!” is often the first reaction to innovative approaches.
- Where are the customers of tomorrow? Can future business success be achieved with today’s customers? Or does it make more sense to aim at new target groups, new markets or even new industries? Without a clear idea of which innovations people desire, such questions seem to pose a classic chicken-and-egg problem.
- What do tomorrow’s customers want? If I had asked my clients what they wanted, they would have said “faster horses”, Henry Ford once claimed. So how do you find out what customers really want? And what are they willing to pay for it? Understanding customers is often a big challenge.
- Is innovation really possible in our industry? At first, it seems as if nothing will ever change. But suddenly, new players appear on the scene, and everyone sees “disruption”. Innovation occurs in every industry – when the time is right, or when someone decides the time is right.
- How can you test business models without risking too much? Prototypes are standard in classic product and technology development. But what does a prototype for a service or for a completely new business model look like? How do you test feasibility, market acceptance and profitability?
- The challenges often lie in risk avoidance. Engineers love technology. Product and service developers love products and services. They like to lose themselves in their solutions, so they don’t have to deal with customers. Over-engineering and solutions that no one ends up buying are also common challenges in business model innovation.
- Innovators often don’t deal well with financial issues. Estimating sales figures for new solutions, margins, necessary investments, amortization periods and business cases requires courage and unconventional approaches. These issues throw up hurdles that often cause innovation to fail.
- Unclear communication gets in the way of success. How does an industrial company that has only ever developed, manufactured and sold “nuts and bolts” describe a platform business model so that all parties willingly jump on the opportunity band wagon and pitch in? A lot of innovation potential falls by the wayside here.
- Last but not least, lack of focus is a big problem. There are a lot of ideas out there, and you don’t want to hurt feelings or demotivate anyone. There are nonetheless more opportunities than can realistically be exploited. Since so many seem to have potential, industrial and technology companies often end up initiating hundreds of innovation projects that receive only half-hearted support and end up languishing for months on end without any progress to show for the effort.
How does innovation consulting support business model innovation?
Business model innovation often represents a major change for companies. It’s quite different from the annual revision of standard products. An off-the-shelf solution idea is not something an innovation consultancy can successfully offer because acceptance in the client company would be far too low. In fact, the company itself already has the expertise necessary for conducting business model innovation. Instead, innovation consulting for business model innovation helps in the following ways:
INNOVATION CONSULTING MAKES THE UNTHINKABLE THINKABLE
Product developers, service developers, business developers and market experts are like all other experts. They know from experience what is not possible and “has never worked”. Practice “proves” that “it can’t work” – until someone else does it. Precisely because it is possible. Blinkered thinking, psychological inertia and operational blindness are common terms. These phenomena serve as effective brakes on progress that cannot be released within a company. Innovation Consulting can, however, get experts to step outside their comfort zone and dare to think the unthinkable.
DIVERSE INNOVATION TEAMS AND COLLABORATION BETWEEN A WIDE RANGE OF EXPERTS
Co-Creation is the key concept here, but it poses a major challenge for business model innovation. The experiences of company experts are diverse. Everyone speaks a different “lingo”. And everyone knows so much that discussion can last weeks, even if only every other expert talks about everything they can think of: about technology today, about technology yesterday, about what has already failed and what else you should do anyway. Innovation consulting focuses on this type of collaboration and sees to it that everything is placed on the table within just a few days. Everything necessary. No more, no less. And it ensures that groundbreaking solutions are developed in a few days that would otherwise cost months and years.
DEVELOPING IDEAS IS JUST A SMALL PART OF INNOVATION
There are ideas aplenty. But an idea or invention only counts as an innovation when it succeeds in the market. And the more innovative the technology, the greater the risk that the customer will end up shrugging his shoulders and preferring to stick to what he already knows. After all, most people do not want anything truly new. People want more – or better – of what they already know. At least initially. Innovation consulting helps ensure that they won’t say “that’s awesome, but I don’t pay extra for it”. The innovation consultant instead makes sure that the customer will say “… I’ll pay any price for that”. Cross-industry insights and the experience of the innovation consultant are important keys here. Experts on your team will be able to convince themselves that they can also convince others. And then they do it.
Isn’t Innovation Consulting simply a new twist on classic Management Consulting?
Classic management consulting says that a procedure that works in company A also works in company B. This is a well-known approach to topics such as SAP, quality, efficiency, lean manufacturing and others. The challenges of implementation usually affect the company when the management consultant has already packed his bags and is back on the plane. This approach is still most likely to work when the subject is innovation management. There are comparable answers in comparable companies.
It is therefore worth distinguishing between management consulting for innovation management and management consulting for innovation. Innovation management and innovation are fundamentally different things!
- Innovation management concerns the management of the innovation portfolio, efficient budgeting, reporting, and the innovation system, innovation culture and innovation process.
- The task of innovation is creating the product of the future and the business model for the next 10 years. Innovation creates innovation. It’s about selecting topics that are right for the company, putting together the right teams, really understanding the customer, developing the right ideas, developing excellent concepts and prototypes, making sure that the customer really wants the product and explaining how all this will profit the company and can actually result in real market success.
Business model innovation is one of four types of innovation. Technology innovation, product innovation and service/process innovation are the others. In principle, innovation management deals with all types of innovation. If you want successful business model innovation for your company, consulting for “innovation” helps more than consulting for “innovation management”. Only when a large number of business model innovations is required do you need to tackle innovation management. A handful of innovations can be easily created without separate “management”. Apart from the necessary project management for the innovation, of course. And: A lighthouse project is the best basis for successfully establishing innovation management.
Who can benefit from innovation consulting for business model innovation?
Basically, consulting helps anyone who does not want to have to benefit from their own mistakes. Benefitting from the experiences of others is preferable, isn’t it? In the case of business model innovation, innovation consulting primarily helps the following companies:
- SMEs in the B2B and B2C sectors for whom innovation and business model innovation are not part of day-to-day business. It is possible that the company emerged from an initial innovation but has changed little in its products and business models since then. These companies benefit from a consultant that guides them through the uncharted waters of business model innovation and ensures that “innovation” is not seen only as a buzzword and gets burned when innovation attempts fail.
- Large technology and industrial companies that know of innovation primarily from product and technology development, but have hardly thought about business models in the same way. Patents, specifications and prototypes in wind tunnel technology are one thing. Business model innovation is something else. Even if some principles are transferable.
- Experienced business model innovators who know that yesterday’s knowledge is tomorrow’s fallacy. Innovation consulting helps these companies question their established concepts and become even more successful than before.
- Startups that have a lot of good ideas, but are usually just as mired in technology as medium-sized industrial companies are. They know that the market should need their solution – should need it! But it is still not really clear who needs the product, what they are willing to pay for it, how the target group can be made aware of it, and how/whether the whole thing can really be profitably implemented in the end.
What support does innovation consulting offer business model innovation in concrete terms?
As with any physician, it is difficult to say what can be done to help you before you actually see one. A few examinations are required. Nevertheless, there are typical cases:
- Remove blinders: A fresh view from the outside and the experiences of comparable companies provide both the disillusionment AND the enthusiasm necessary for innovation success.
- Evaluate market opportunities afforded by business model innovations and prioritize innovation projects: Yes, all that can be done, just not all at the same time 🙂
- A productive kick-off for innovation teams: A good start increases the chances of success, stimulates intrinsic motivation in your team and saves resources.
- REALLY understand the customer – even in B2B: Before the solution is created, you need to be sure that the customer is ready to queue up. We show you how.
- Ensure that innovation success is repeatable: Together we develop a functional innovation process that is integrated into your process landscape.
- Test, learn and grow at low risk (Lean Startup): Fast prototypes and real market feedback for successful business model innovation.
- Get all-round support with guaranteed success: an innovation project guided by our experience in business model innovation projects and your experts.
Innovation consulting provides the necessary impetus and, above all, the clarity of an external perspective to successfully create business model innovation. Years of industry experience help TOM SPIKE’S innovation consultants enable technology companies to create innovations – and with them, achieve more differentiation and success in the market.
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