This episode will help you understand disruption by business model innovation. Why do some new business models disrupt whereas others do not? Can you predict which models will become disruptive and which won’t? These are the questions we discuss in this episode of the podcast.
What is a Business Model?
A business model is a blueprint for making money from a business. A new business can make money in many ways. Depending on how you design the business model, you will make money in a different way. For example, when Google created its search engine, it didn’t know who it would make money. There were many ways to making money. Making Google a paid service was one possibility. Advertising was another way to make money. Market research was yet another way to make money.
Similarly, when Tivo created its DVR it had many options to make money. Licensing the technology to cable companies was one option. Selling boxes for a price was another option. Giving away a free box and charging subscription was yet another options. Each one refers to a different business model.
The blueprint of making money boils down to how you create value for customers and how you capture profits from it.
New Business Models
We continue to see business model innovation taking place around us. Netflix, Zipcar, and Uber are just a few examples of new business models. They involve not just charging money in a new way but also in configuring a value chain in a different way.
Disruption by Business Model Innovation
Some new models tend to disrupt existing businesses whereas others cause minor damage only. Some have no impact on an existing business whatsoever. If you knew which models will become disruptive, you could take pre-emptive action in time. This episode explains why some business models become disruptive.
This episode on disruptive business models will help you take away the following key points
- Two reasons why some business model become disruptive?
- How to predict if a business model will become disruptive?
- Why and how did Netflix business model disrupt BlockBuster?
- Why and how did Zip car business model impact car rental companies
- Three reasons why incumbents cannot adopt emerging business models.
How to listen?
Go to the The Disruption Management audio course to listen to the entire series of audio lessons on Disruption.