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In the “old” days – 10 or 20 years ago – product innovation was one of the most important ways a company could gain a competitive advantage.

But today, believe it or not, it’s business model innovation that will push companies to leadership heights in their respective industries.

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Almost every company that wants to bypass the competition is searching for ways to advance their efforts in business transformation. But few figured out the critical role that an innovative business model – one that drives every process, organizational structure, product, and service of the organization – plays into this.

And even fewer companies have a systematic approach to business models that can accelerate innovation. But they are quickly realizing that static and outdated models just won’t work anymore.


It’s time for BMDI

This is where business model development and innovation (BMDI) comes in. This beauty of this approach is that it’s iterative and agile – and it can be applied to any business unit or any size company.

BMDI, which is relatively new approach, can help companies be more responsive to market conditions and it also helps mitigate risks by validating underlying business assumptions and perhaps most importantly, economic viability. And it will help uncover new business opportunities not yet thought of.

Think “unit of analysis”

There are lean engineering and design thinking approaches that offer tremendous value, but they focus on product delivery and the human desire for it. The BMDI approach adds a new dimension, as it can capture the competitive advantage of a company. This added dimension, which combines a market-based view and a resource-based view, or a “unit of analysis,” can be the basis for a systematic development of business activities. And it can help companies build a meaningful and solid foundation to more soundly calculate business cases and develop business plans.

In addition, it allows for the full exploitation of ideas and capabilities for any type of business model needed in an organization – whether it’s for new innovation, or the adaptation of something already in place.

To explore BMDI, read “Business Model Development & Innovation: A Strategic Approach to Business Transformation,” which is on page 6 of the 360° – the Business Transformation Journal. You’ll learn more about agile and iterative business models, including the four key steps of the process, and how a company used BMDI to respond effectively to a new market segment.

360° – the Business Transformation Journal is produced by the Business Transformation Academy, a thought leadership network devoted to providing cutting-edge insights on innovation and business transformation. For more business transformation articles on the SAP Community Network, please visit the 360° – the Business Transformation Journal library.

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