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Once organizations start to have an internal awareness of the fundamental changes going on through the digitization, they start to look outside their walls (e.g. through “Open Innovation”) and discover that there are alternative ways of thinking about their own business.
It’s usually startups or products of large tech companies, which start to directly attack parts of the legacy business and by doing so in a completely different manner, they question the status quo. Hence the incumbents move themselves into questioning their own, old business models and try to develop them further or to develop entirely new ones. This is what we refer to with business model innovation.
Business model innovation is driven by the ongoing pursuit to constantly identify and solve customer problems using the technology progress of the day. It is either aimed at developing new businesses, products or services or at transforming existing ones around an evolving understanding of a customer opportunity. Business model innovation requires technology, but mostly doesn’t drive technological innovation in the first place. On the contrary: Most business model innovations are entirely built with off-the-shelf technology that has just become available, at least for their first iterations.
Examples: Food boxes (e.g. Blue Apron), UBER, Flixbus, AirBnB, Instagram.