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In recent posts, I looked at the right boxes to think in and the process to develop an innovative business model, it is now time to look at the people who are suppose to innovate the business model in large corporations.
Let’s take a look at a traditional organization, the people there and their ability to execute business model innovations. They are very detached from business but think they know where business should be moving to. Normally, we do not use the blog for announcements, however we have two good news that we want to share with you.
Besides the building blocks, we give guidance how to start the process to find the right thing.
The book is written in witty, precise and almost humorous language and designed to inspire people to get out of their comfort zone. In the book, we unveil the secrets of the business models of German and Swiss companies that are global, but often hidden champions.
The book was produced together with Thomas Meyer, a well known Swiss author, and Fritz Gottschalk, a doyen of Swiss graphic design (Remember the font Helvetica or Frutiger? Wolfsburg AG, the innovation agency of Volkswagen AG and the city of Wolfsburg, sponsored our team. My company, fluidminds Inc., joined forces in Australia with Norbert Haehnel and Orange Hills. Australia is an interesting turf for business model innovation since the country is still heavily depended on the export of raw material to the rest of the world. Volkswagen, the world’s second-biggest carmaker admitted that it has been dishonest with customers and regulators. Volkswagen faces a fines up to $18bn, criminal charges against its executives and legal actions from customers. The case is already bad enough, but what is even worse is that the deed and the behavior that lead to the deed totally contradicts what Volkswagen promises in its value proposition.
And cheating deliberately on emission test is just the opposite of being able to differentiate what is right or wrong.
And unfortunately, the car industry has a bad track record between their promises and reality when it comes to emission and fuel consumption.
And as a responsible company you should live up to your standards and do not try to seek loopholes in regulation to mislead customers and the public. One of the beauties of the business model thinking is that we learn to see a business totally different if we really apply stringent thinking and dissect a business into its building blocks.
Manstopper ammunition does not sound like a lovable product and in terms of Alex canvas as a good value proposition?
When I joined Microsoft in 1993 my decision to do so was stimulated by the picture I had from Bill Gates as a visionary leader. Most famous companies today are connected to visionaries: Apple with Steve Jobs, Amazon with Jeff Bezos, Facebook with Mark Zuckerberg and Tesla with Elon Musk.
All of the above named leaders are not only visionaries from a product or services point of view. Employees in organizations need to understand the value proposition a leader wants to create.
Right now, let’s make something better than what’s out there, something really cool and we’ll beat the competition and make a mint. The same thing happens in nature and as far as I know is current thinking for the formation of the universe. There are 3 types of Attractors to look for in your discovery, insight and understanding of what will excites your customer. Regardless what wording we use, what we need is a process that helps companies to develop innovative business models that customers, employees and the owners love.
Today, two processes exit in companies that could be used: the innovation process and the strategic planning process. Regardless how much you plan, you will not predict the future because neither customers nor companies can anticipate what is possible. Strangely enough the most successful companies become prosperous not by excluding comparisons, but by leveraging other industries success factors and applying them in a new context. Business Model Innovation is about combining successful models from various industries as well as finding completely new ways of doing things. When you design your future business model you need to find ways to overcome the current thinking patterns or dominant logic of your industry.
Google didn’t apply the business model from the software industry, yet their first product was nothing else than software packaged as a service.
They all applied models from a different industry and combined them with a new approach that broke the dominant industry logic.

Business Model Innovation opens up the opportunity to not only transform the value proposition, value architecture or revenue model of an organisation, it is a chance to rethink your human value systems and build businesses that customers love, employees’ value and investors are excited about.
Many books have been written about why organisations should have value systems defined and how you implement values in your core business. Effective organizations identify and develop a clear, concise and shared meaning of values or beliefs, priorities, and direction so that every employee understands and can contribute.
In my leadership career I have experienced what difference it can make if you have a leader that takes on the challenge to transform an organisation through values.
Schumpeter went further and defined it as “The introduction of new goods (…), new methods of production (…), the opening of new markets (…), the conquest of new sources of supply  (…) and the carrying out of a new organization of any industry”.
However, what most of the time is missing, is that innovation has something to do about being positively different from your competitors. Innovation is when you just offer one telephone handset when your competitor offers 118 devices.
This seems to be a simple question and in large corporation there should be a person in charge and capable of execution. But most of strategists are very detached from the real business and particularly customers. First, a workbook for startups was just released and second, we have teamed up with Orange Hills to form fluidminds Australia. Good business model design starts with customer & market insights and testing early the basic assumption. We want to inspire big thinking, at the same time we force entrepreneurs to be precise in what they want to start with. In my humble opinion we focus too much on American multinationals or Internet companies when writing case studies on interesting business model innovators. At the same time a third of its market value was wiped out or the a staggering amount of around €30bn. Volkswagen had to admit that 11 million of its diesel cars could be equipped with software to cheat on emission tests. Responsibility was their core value they wanted to pursue and used heftly in their marketing.
The car manufacturers promise low fuel consumption however, they can only be achieved in unrealistic test scenarios and not on the road. The whole value architecture including the product, the revenue model and the team & values all have to deliver the value the value proposition is proposing.
Take manstopper ammunition that is for very good reasons banned by the Hague Convention in international warfare. A good, and even meaningful value proposition depends from your customers, the job-to-be-done and the benefit you create for your customers.
The company’s mission Bill Gates created at that time was “A computer on every desk and in every home”.
Does this prove that only visionary leaders create truly successful and innovative companies? Innovation, to realize a value proposition, can occur everywhere in an organisations business model. A fresh perspective allows the leader to forget about the existing customers and look at the entire world as the future market. His big idea is business agility and he is so right since the missing part in business model innovation is the process moving from your current business model to a better future. The names of the processes suggest that they could be useful, however in reality the opposite is the case. Business model innovations have a disruptive character and focus on the whole business model. The only way to push for radical innovation is to accept the uncertainty and thereby accepting that with more traditional planning we can not predict the future. Many other companies that innovated within the boundaries of their current industry logic often left the stage early. Often, particularly in turbulent times, cultural innovation is an imperative for management.
Still not all organisation have made this effort and those who did not always manage to live up to those set standards. Those values, once defined, impact every aspect of your organization and of the whole business model.
When I started my work at Microsoft Australia the organisation was at first view a fairly successful subsidiary, achieving its revenue targets and outperforming other subsidiaries in some areas of the business. When every body in your industry is bringing out new products like in the TV set industry or in the PC industry, then this is no innovation.

Innovation is when you update your one phone only once a year a bit and a major overhaul comes every second year while your competitors bring new devices to the market every months. They talk about markets, read Gartner technology forecasts and predict the future by analyzing the past, but most of them have never met a customer in person and have never programmed or have developed a product that is later sold. We believe that not the Minimal Viable Product (MVP) should be tested but the Minimal Viable Business Model (MVBM) where you test the value proposition, your offer and the distribution & communication channels before going full speed ahead. We forget that in economically successful countries like Germany or Switzerland, we have many Mittelstand companies or mid-sized family owned businesses that are suppliers of core technology to the world but not known in the world.
Two of our core values, we shared in the team, were beauty and reduction to the essentials. Unfortunately, it is a perfect example where the values promised to customers and the real behavior outright contradict. The American Environmental Protection Agency (EPA) had accused the firm of faking pollution tests and thereby cheating on regulators, the public and customers. And it is not cheating software but the whole behavior that let a whole company come up with a software to cheat. Bill Gates core value proposition was productivity gains, Steve Jobs was design and function, Jeff Bezos is price and customer service, Mark Zuckerberg is social sharing and Elon Musk is sustainable clean energy. Truly innovative organisations constantly challenge the status quo and look for different and better ways of achieving the vision.
A good example is Elon Musk with his broader perspective and the creation of multiple companies all supporting his true vision in a very different way. Both processes have the hidden assumption that with more and better planning you can anticipate the future. There is a need for business model innovations in any industry due to the Internet, the demand for clean energy, globalization, and due to the rise of Asia. When looking at new business models it is often clear that they have not been developed from scratch. Could you do the same and sacrificed some reach of your sales channels for a much more rich interaction with your customers? Could you learn from the newspaper industry with their subscription model that makes customer pay you in advance before they get the product? Surprisingly, Alex’s business model canvas does not have values as a key building block of a business model either.
At a closer look the organisation had issues in areas like customer and partner satisfaction as well as employee retention. The company appointed a new Managing Director and with his appointment a cultural transformation journey began. Innovation is when you see your “telephone” not as a device but as an access gate to whole new world. So if you want to learn about German and Swiss powerhouses, you have to learn German to read the book or find a publisher that is willing to translate the book ;-).
Norbert is a seasoned manager in the high-tech industry who wants to bring business model innovation to Australia.
Would Microsoft be the same company today if the mission would never have existed and Bill Gates visions would have not influenced the product and research agenda in the way he did? This of course allows you to begin the process of designing a business model that delivers to both the customer and the business. Traditional business motivations are usually a push approach. Many models that have changed an industry are merely refurbished versions of another model by another industry. The most worrying factor was that departments were fighting each other over resources and a culture of back stabbing was quite common. He hired a Consulting firm that was specialized in building “Conscious Businesses” and our organisation transformed within 2 years in an amazingly positive way. These tacit assumptions might be right for a world of sustaining innovations, in a world of more-of-the-same.
Our leadership team, which I was part of, experienced a dramatic change in how we interacted with each other and how we connected our businesses in a much more meaningful and holistic way. Our customer satisfaction increased substantially and our employee health index (a measure of subjective employee satisfaction) became world leading within the company.

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