Skip to content
Product cover

Creating Value Through Business Model Innovation

March 20, 2012 | Raphael Amit, Christoph Zott | Strategy

Companies are increasingly turning toward business model innovation as an alternative or complement to product or process innovation. This article defines a company's business model as a system of interconnected and interdependent activities that determines the way the company "does business" with its customers, partners and vendors. In other words, a business model is a bundle of specific activities — an activity system — conducted to satisfy the perceived needs of the market, along with the specification of which parties (a company or its partners) conduct which activities, and how these activities are linked to each other.

Business model innovation can occur in a number of ways: (1) by adding novel activities, for example, through forward or backward integration, (2) by linking activities in novel ways, or (3) by changing one or more parties that perform any of the activities. Changes to business model design can be subtle; even when they might not have the potential to disrupt an industry, they can still yield important benefits to the innovator.

The article offers a number of examples of business model innovation and poses six questions for executives to consider when thinking about business model innovation.

Purchase Options

Educator and Student Discounts Available. Learn more »

  BENCHMARKS  
Loading Time: Base Classes  0.0005
My Controller Construct  0.0003
Build Nav  0.0005
Controller Execution Time ( Products / Route )  0.1333
Total Execution Time  0.1339
  GET DATA  
No GET data exists
  MEMORY USAGE  
1.5547 MB
  POST DATA  
No POST data exists
  URI STRING  
store/creating-value-through-business-model-innovation
  CLASS/METHOD  
products/route
  DATABASE:  MITSLOAN_DEV   QUERIES: 68  (Hide)
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0004  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0004  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0004  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0009  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0006  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0007  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0008  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'cd71f3f61171a28b4a28cf22eac0d486'
ORDER BY `created_at` DESC 
0.0006  

SELECT SQL_CALC_FOUND_ROWS cat_id
FROM (`product_categories`)
WHERE `status_id` =  'A'
AND `url_friendly` =  'creating-value-through-business-model-innovation'
AND `parent_id` =  1 
0.0033  

SELECT c.parent_id, c.format_id
                    FROM products AS p, products AS c
                    WHERE p.prod_id = c.parent_id AND
                        c.avail_id IN ('A','B','D') AND
                        c.type_id = 'V' AND
                        (
                            c.sku = 'creating-value-through-business-model-innovation' OR
                            if(c.format_id = 'Certificate', '', p.url_friendly) = 'creating-value-through-business-model-innovation'
                        )
                    LIMIT 1 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  563 
0.0003  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '563' 
0.0006  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '563'
ORDER BY `sort` ASC 
0.0006  

SELECT `cat_id`
FROM (`product_categories__products`)
WHERE `prod_id` =  '563' 
0.0001  

SELECT *
FROM (`product_flags__products`)
WHERE `prod_id` =  '563' 
0.0002  

SELECT `sku`
FROM (`products__xsell`)
WHERE `prod_id` =  '563'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.1006  

SELECT `products`.`parent_id`
FROM (`transaction_lines`)
JOIN `products` ON `products`.`sku` = `transaction_lines`.`sku`
JOIN `product_categories__products` ON `products`.`parent_id` = `product_categories__products`.`prod_id`
WHERE `products`.`avail_id` =  'A'
AND TO_DAYS(transaction_lines.updated_at) < (TO_DAYS(NOW()) - 90)
AND `product_categories__products`.`cat_id` IN ('249') 
GROUP BY `products`.`parent_id`
ORDER BY COUNT(*) DESC
LIMIT 6 
0.0002  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '361' 
0.0004  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '361' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '361'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '3961' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '3961' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '3961'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '35' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '35' 
0.0003  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '35'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '179' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '179' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '179'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '489' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '489' 
0.0003  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '489'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '2465' 
0.0001  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '2465' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '2465'
ORDER BY `sort` ASC 
0.0003  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '563'
AND `kind` =  'image_600x600'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0001  

SELECT *
FROM (`media`)
WHERE `media`.`media_id` =  '277' 
0.0001  

SELECT *
FROM (`mime_types`)
WHERE `mime_types`.`extension` =  'jpg' 
0.0001  

SELECT *
FROM (`media_metadata`)
WHERE `media_id` =  '277' 
0.0003  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '563'
AND `kind` =  'gallery_image'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0004  

SELECT *
FROM (`products`)
WHERE `avail_id` IN ('A', 'B', 'C', 'H') 
AND `parent_id` =  '563'
AND `type_id` =  'V'
ORDER BY IF(position = 0, 1, 0) ASC , `position`, `title` 
0.0001  

SELECT `c`.`format_id`, `c`.`price`, `c`.`sale_price`
FROM (`products` AS c)
WHERE `c`.`prod_id` =  '564'
LIMIT 1 
0.0002  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '564'
AND `kind` =  'thumbnail'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0002  

SELECT `product_categories__products`.`cat_id`
FROM (`product_categories__products`)
JOIN `product_categories` ON `product_categories__products`.`cat_id` = `product_categories`.`cat_id`
WHERE `product_categories__products`.`prod_id` =  '563'
AND `product_categories`.`parent_id` =  1
AND `product_categories__products`.`cat_id` NOT IN (1, 261)  
0.0005  

SELECT `cat_id` AS id, `parent_id` AS parent, `status_id`, `name`, `description`, `url_friendly`, `page_title`, `meta_keywords`, `meta_description`, `position`, `updated_at`
FROM (`product_categories`)
WHERE `cat_id` != 1
ORDER BY `parent_id`, IF(position = 0, 1, 0) ASC , `position`, `name` 
0.0003  

SELECT *
FROM (`product_categories`)
WHERE `status_id` =  'A'
AND `parent_id` =  1
AND `cat_id` NOT IN (1, 261) 
ORDER BY `name` 
0.0002  

SELECT *
FROM (`site_settings`)
WHERE `option_key` =  'announcement' 
  HTTP HEADERS  (Show)
  SESSION DATA  (Show)
  CONFIG VARIABLES  (Show)