Shared Secrets – Entry #2: Collaborative Business Model Innovation

This is the second in the series on managing collaborative innovation. Click here for Entry #1.

A world-wide survey of seven hundred CEOs in the spring of 2006 showed most companies suddenly refocusing from growing their existing lines of business to fundamentally changing them. Two thirds of CEOs expected severe industry change to force a significant overhaul in their business model. Business model change initiatives rose to one third of innovation planning, and companies that focused on business model innovation significantly outperformed those that focused on product innovation or operational efficiency.

Eighty percent of business innovators said that the key to success was working collaboratively with external organizations.

The trends toward business model innovation on one hand and collaborative innovation on the other constitute an historic convergence – collaborative business model innovation – where stories like Adobe’s become the norm, and diverse companies collaborate to create new, hybrid businesses. Virgin Airlines and Volvo strike a deal to combine airplanes and limousines into a door-to-door transportation experience. The host of an online community joins with international bankers to conceive Entropia, an online experience that sidesteps the typical gaming subscription model to become a currency exchange, changing real world money into the community’s virtual credits and vice versa.

OneWorld Health merges a traditional pharmaceutical business and a not-for-profit model to address malaria and other diseases that do not generate the financial returns to attract traditional pharmaceutical companies.

In their bestselling book, Blue Ocean Strategy, Renee Mauborgne and W. Chan Kim describe the rise of Cirque Du Soleil. Cirque’s CEO, Guy Laliberte, formed an intention to reinvent the traditional circus. What he created was an entirely new hybrid business model with elements from the circus, street performance, traditional theater, and the corporate event industry. Is Cirque a high-brow theater event or a circus? It is both and more. It requires business competencies outside the field of any one of its sources.

[Click here for Entry #3]

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