When we recently evaluated our predictions for 2018, we gave ourselves a C for our prediction that said, “Innovation often will come via business models” (part of our “Key Predictions for Trends in 2018, Part II).
Our basis for that grade was:
We expected, for example, that upscale restaurants with a delivery-only business model (relying on mobile-ordering apps) would be a bigger trend than it turned out to be. There was some coverage of that sort of innovation – not so much of technology but in the use of technology – but it wasn’t a top story.
However, in a Nov. 2, 2018 Wall St. Journal column that was published after we posted our grade, Irving Wladawsky-Berger, a regular contributor who formerly worked at IBM and served as a strategic advisor for Citigroup, HBO and Mastercard, actually supported our prediction about the importance of business models. The column makes the case that “It’s All About Business Model Innovation, not New Technology. New technology, no matter how transformative, is not enough to propel a business into the future.” (In the interest of disclosure, I worked with Irving back in the days when IBM was a client at a former agency.)
According to his article,
Surveys show that most executives agree, and in fact, many believe that business model innovation is even more important to their company’s success than product or service innovation.
Another key quote further validates the point we made in our initial prediction:
New technology alone, no matter how transformative, is not enough to propel a business into the future. Nor, for that matter, can past success justify existing business models. The business model wrapped around the technology is the key to its success or failure, argues Mr. Johnson, senior partner at Innosight, the strategy consulting firm he cofounded with Harvard Business School professor Clayton Christensen.
Irving also outlines four key attributes of a successful business model:
- Customer value proposition.
- Profit formula.
- Key resources.
- Key processes.
- e-Commerce. (This was something that Irving pioneered at IBM.)
- Digital platforms.
- Models that turn data into assets.
- Automation-enabled services.