Executing Lean Growth Strategies

The Business and Leadership website noted that lean thinking, customer development frameworks and business model innovation are transforming how new products are built and how growth strategies are developed. These frameworks help organizations design products that customers need and help reinvent their business models. Lean offers ways to cut work time and eliminate waste. Customer development takes a customer-centric approach to understanding customer needs and problems.  The term ‘business model’ means the design of a business.  Business model innovation  looks at how a business reinvents itself in order gain competitive edge.

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Elements of Sustainable Business Models

The authors present the elements constituting an advantageous business model, and suggest how to achieve that competitive edge. They argue that traditional innovation processes with funnelling front-end, stage-gate with go/kill decisions, and similar processes have inherent limitations in such an inclusive concept. They propose an alternative approach, driven by strategic business options. A business model, like everything else, has a limited life span. Anew model requires radical changes in thinking and logics. Still, the move is not easy, and most attempts will fail. The right timing is tricky, plans to abandon an existing model might feel dispiriting, and the necessity to change can be blinded by past successes. This article discusses these complex aspects and the steps needed to overcome them. Finally, in ever-changing business competition it is not realistic to constantly renew inside-out. Instead, for a company to survive, its business model must have a very important quality known as resilience. This article is based on the authors’ extensive practical experience in a global business environment, as well as on their academic work.

  • Content Type Journal Article
  • Category Research Article
  • Pages 43-54
  • DOI 10.1260/1757-2223.6.1.43
  • Authors
    • Tapani Talonen, KONE Corporation, Global Technology, Finland
    • Kari Hakkarainen, Virike Consulting, Finland

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The business model dilemma of technology shifts

Publication date: Available online 13 March 2014Source:Technovation
Author(s): Stefan Tongur , Mats Engwall
Technology shifts are lethal to many manufacturing companies. Previous research indicates that this is not purely a problem of technological innovation, but is also closely related to the inertia of business models and business model innovation. This paper inquires into the dynamics of this intersection between technology and business models. Anchored in a case study in the automotive industry, it reveals how a potential technology shift constitutes a business model dilemma for firms leading in the existing technology. The paper illustrates why technology shifts are so difficult to master and contributes to theory by suggesting that managing technology shifts does not require either technology or service innovation in order to create a viable business model, but instead a compound of both. Furthermore, the paper applies a business model perspective to illustrate the explanatory power of analyzing the challenges of technology shifts faced by incumbent firms.

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How to Do Business Model Innovation for the Established Firm

This article provides a systematic framework for helping executives of large, established organizations identify opportunities for business model innovation and organize themselves to pursue these opportunities. While also applicable to start-ups, this article focuses primarily on how to define, challenge, and revamp the business model of an existing business or organization.
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20 Business Model Innovations

The Eco-Business website noted that  the idea of business model innovation—that a company could launch a new business model never conceived of before, or transform an existing business model—has long captivated business leaders. And yet, executives are often held back by vested interests in their current approach: “If it ain’t broke, don’t fix it.” But as global trends—environmental, social, political, technological—continue to shift the foundations of our current business models, incremental innovation will become less effective in enabling companies, industries and whole economies to adapt and succeed. There is an urgent need for fundamentally different approaches to value creation.

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Who’s Managing Your Company’s Network Effects?

Much as war is too important to be left to the generals, the business of network effects is too valuable to be entrusted to the CMOs and CIOs. Network effects make Google Google, Facebook Facebook, Twitter Twitter, Netflix Netflix and  Pinterest Pinterest. Network effects are the not-so-secret sauce profitably flavoring Amazon’s recommendation engines and Apple’s App Store. They’re destined to transform the “Internet of Things” from a post-industrial aspiration to a trillion-dollar sector.

But who “owns” them in the C-suite?  Who should be accountable for identifying, cultivating and coordinating network effects inside the enterprise and out? The opportunities are clear; the responsibilities are not. Your organization needs a CNEO—a Chief Network Effects Officer—to integrate and align how your enterprise gets value from “harvesting collective intelligence.”

IT may understand the underlying software, algorithms and digital media. But managing network effects as technology byproducts is a bit like treating cars as extensions of internal combustion engines; technically accurate, yes, but missing the larger purposes and points. Similarly, marketing loves the virality that social media and network effects facilitate. But the potential impact and influence of network effects goes far beyond unique selling propositions and user experience. Comparable challenges exist for supply chain management and external partnerships: their collective intelligence may be ripe for algorithmic harvesting, but how well will it link to the rest of the enterprise?

Network effects are media and mechanism for making colleagues, customers, clients, channels, partners and suppliers more valuable. Network effects, not unlike risk management, transcend traditional enterprise functions and silos. Essentially, that design sensibility assures that the more people use these services, the more valuable they become. (The first use of the word “more” in the previous sentence does double duty—representing both the number of users and the quantity of use).  Seeing that sensibility as a series of tactical opportunities rather than a profoundly strategic organizing principle is a huge mistake.

In other words, opportunistically managing collective intelligence is not enough; smart leaderships need to rethink how to collectively manage collective intelligence.  How should organizations design and manage their networks of network effects? These are, arguably, the dominant design and business model issues for the Googles, Amazons, Apples, IBMs, Samsungs and General Electrics of the world. Reaping the network effects benefits of customers and clients is no longer good enough for sustainable value-added differentiation; tomorrow’s organizations need to better capture network effects-enabled value from their channels, partners and suppliers, as well. Monetizing network effects demonstrably makes for a helluva business model. That requires top management commitment and oversight.

The sweet spots will emerge not just from better identifying and addressing network effects opportunities with customers, colleagues and channels, but the intersections between them. For example, what kinds of recommendation engines would be of greatest interest and use for both customers and key suppliers? How might Kickstarter-like innovation initiatives facilitate new conversations and collaborations between clients and employees? Can the challenge of maintenance and upgrades be crowdsourced in ways that create communities of channels and customers who willingly share best practice?

Marshall W. Van Alstyne, a Boston University colleague and collaborator who’s pioneered breakthrough research in the economics of two-sided networks, argues that these are exactly the kinds of questions that organizations need to be asking as their own operating processes become digitized, virtualized and networked. Tomorrow’s organizations are going to give as much thought and care about investing in network effects as they do to new products and services.

Indeed, network effects investment will enable new product and service innovations, as well as new interpersonal capabilities and insights. Effectively managing the network effects portfolio will become one of the most important challenges tomorrow’s management will confront. Training and educating technologists, marketers and innovators alike to both design for and exploit network effects will become an essential core competence.   Can your organization do that without a Chief Network Effects Officer?  Start by asking: Who owns the challenge of network effects management today?


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Shared cluster resources as a source of core capabilities

Shared cluster resources as a source of core capabilities
Nuno César Cardeal; Celine Abecassis-Moedas; Nelson Santos António
International Journal of Entrepreneurship and Small Business, Vol. 21, No. 1 (2014) pp. 55 – 78
Literature on clusters acknowledges the existence of resources that are shared by firms in the same cluster. The literature on dynamic capabilities argues that in the context of capability development, firms need to develop different business models and to define their firm boundaries in complementary ways. We use a multiple case study approach to analyse how three small- and medium-sized firms belonging to the same cluster but with different business models have been using cluster resources. We find that the some resources are not used in the same way nor for the same purpose. Our inductive investigation leads to two propositions: shared resources that are used the same way by all the cluster firms are not a source of core capabilities to the firms; and shared resources that are used differently by the firms in the cluster are a source of dynamic capabilities which have an impact on the business model.

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