Introduction ix

1. The Innovation Is in the Business Model 1

2. Discovering New Business Models 23

3. Creativity Is Not Enough: From Discovering to Implementing New Business Models 55

4. Using Dual Business Models to Compete: Is a Separate Unit Necessary? 81

5. Separation Is Not Enough: How to Achieve Ambidexterity 99

6. Responding to Business-Model Innovation 121

7. When Would Established Firms Discover New Business Models? 143

8. Rethinking Innovation in the Big Firm 163

Appendix A: Examples of a Few Less Well-Known Business-Model Innovators 175

Appendix B: How to Enhance Corporate Creativity 185

Appendix C: How to Measure Relatedness Between Two Markets 193

Notes 197

References 205

Acknowledgments 211

The Author 213

Index 215

GAME-CHANGING STRATEGIES

COMPANIES THAT DEVELOP NEW RADICAL models in established industries—and in the process, break the rules of the game in those industries—can enlarge the market and create enormous value for themselves. Just consider companies such as Amazon, Starbucks, IKEA, and Dell.

While everybody agrees with this idea, few seem to appreciate that the majority of new business-model innovations are introduced by newcomers in an industry. Established firms appreciate the need to break the rules as much as start-up firms. They also possess many more resources, skills, and technologies to do so effectively. Yet they continue to allow new firms to take the initiative when it comes to business-model innovation. The question is why?

Game-Changing Strategies explains the reasons behind this puzzle and presents practical ideas on how established firms can not only discover radical new business models but also grow them next to their existing business models. The challenge for established firms is not the discovery of a new business model—the real challenge is how to make two business models coexist. This book offers advice on how established firms can implement structures and processes that make the new business model less conflicting and more palatable to the existing business.

The book also examines the incentives that drive established firms to pioneer new radical business models in their industries and describes how they can do it. In addition, it explores the challenge of responding to the invasion of a new business model and examines the various response options available to established companies. Game-Changing Strategies cautions that even though business-model innovation is difficult for established firms, they still must approach it in a proactive manner.