HBR’s 10 Must Reads on Business Model Innovation
HBR Editors and Various Contributors
Harvard Business Review Press (July 2019)
Business models determine how well components of an organization work together, for better or worse
This is one in a series of volumes that anthologize what the editors of the Harvard Business Review consider to be “must reads” in a given business subject area, in this instance business model innovation. Each of the selections is eminently deserving of inclusion. If all of the eleven articles were purchased separately as reprints, the total cost would be almost $100 and the practical value of any one of them far exceeds that. Given the fact that Amazon US now sells this volume for only $17.09, that’s quite a bargain. The same is true of volumes in other series such as HBR Guide to…, Harvard Business Review on…, and Harvard Business Essentials. I also think there is great benefit derived from the convenience of having a variety of perspectives and insights gathered in a single volume.
In all of the volumes in the HBR 10 Must Read series that I have read thus far, the authors and their HBR editors make skillful use of several reader-friendly devices that include “Idea in Brief” and “Idea in Action” sections, checklists with and without bullet points, boxed mini-commentaries (some of which are “guest” contributions from other sources), and graphic charts and diagrams that consolidate especially valuable information. These and other devices facilitate, indeed accelerate frequent review later of key material.
As indicated, there are eleven articles in the book, including one “bonus” classic: “Reinventing Your Business Model,” co-authored by Mark W. Johnson, Clayton M. Christensen, and Henning Kagerman. Those who read HBR’s 10 Must Reads on Business Model Innovation will be well prepared to “rethink how their organization creates, delivers, and captures value — or risk becoming irrelevant.”
More specifically, they will learn how to
o Assess whether or not their core business model is going strong or running out of gas
o Fend off free and discount entrants to their market(s)
o Reinvigorate growth by adding a business model
o Adopt the appropriate best practices of lean startups
o Develop a platform to provide foundational support for their key product(s)
o Make business model innovation an ongoing discipline throughout their enterprise
Here are a few brief excerpts, shared to give you a sense of the thrust and flavor of the cutting-edge thinking in three articles.
First, from Joan Magretta’s “Why Business Models Matter”:
Business models “are anything but arcane. They are, at heart, stories — stories that explain how enterprises work…Because a business model tells a good story, it can be used to get everyone in the organization aligned around the kind of value the company wants to create. Stories are easy to grasp and easy to remember. They help individuals to see their own jobs within the larger context of what the company is trying to do and to tailor their behavior accordingly. Used in this way, a good business model can become a powerful tool for improving execution.”
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Next, from “Reinventing Your Business Model,” co-authored by Mark W. Johnson, Clayton M. Christensen, and Henning Kagerman. They identify five situations in which multiple business models may be appropriate. Here are the first two:
1. “The opportunity to address through disruptive innovation the needs of large groups of potential customers who are shut out of a market entirely because existing solutions are too expensive or too complicated for them.” For example, Tata’s Nano
2. “The opportunity to capitalize on a brand new technology by wrapping a new business model around it (Apple and MP3 players) or the opportunity to leverage a tested technology by bringing it to a whole new market (say, by offering military technologies in the commercial space or vice versa).”
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And then, from Sarah Cliffe’s interview of Rita Gunther McGrath:
Cliffe: Say you’re meeting with a company that wants to reinvent its model. Who should be in the room?
McGrath: Wait, back up. First, you need to have processes in place that cause you to challenge the existing assumptions in your model…So the first step is to build mechanisms that cause you to examine your assumptions. One question I encourage people to ask is, ‘What data would lead you to make a different decision?’ Be sure you’re not getting only the information that confirms your preexisting beliefs. Then you can think about what nontraditional information to seek out. You need to get unfiltered information by talking to customers directly and by going through experiences they go through. You want to get out of the room, in other words.”
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Obviously, no brief commentary such as mine can do full justice to the scoped and depth of valuable information, insights, and counsel provided in this volume. I full agree with the HBR Editors: “If you read nothing else on reinventing your business model, read these definitive articles from the Harvard Business Review.”
I presume to add two points of my own. First, there are no business innovation or strategy issues. Rather, there are only [begin italics] business [end italics] issues. Also, it is very important to think in terms of enterprise architecture as your organization’s primary strategy.