Why is Business Model Innovation Important?
If you want to keep up with the market pace, you need to learn to innovate at every step. Therefore, these business model innovation involves the use of new technologies, different processes, unique ideas, and futuristic products.
Digital transformation and Business innovation go hand in hand with the company’s overall development and market value. Successful implementation of business innovation indicates higher profits, greater revenue, increased customer demand, and improved reputation in the market. Some of the examples of business innovation models are:
- Power by the hour business model of Rolls Royce.
- Sharing Economy model for Airbnb
Therefore, to make it more clear and to highlight why Business Model Innovation is important, we have mentioned the following points –
- Thrive in Competition
Since the 21st century, monopoly is long gone. No business company or organization is having a monopoly over the market and trade. Instead, digital transformation has enabled the establishment of more and more companies, therefore, increasing the competition. To thrive in the competition and maintain its stronghold in the market, every company regularly updates its business model, adopts new processes, and enjoys the customer base.
- Higher Returns
Another one of the perks of Business Model Innovation generates higher returns for the organization. Business Model innovations are 5-8% more profitable than any other product or process innovation. In these cases, the Total shareholder Return percentage exceeds that of the competition. Therefore, stressing the importance of constant digital transformation and business innovation to outgrow in the market.
- The success of Technological and Product Innovations
Business Model Innovation is strongly inter-related with other types of innovation, namely technological and product innovation. Once you have a superior business model, you could easily make your latest product or technology successful in the market. This is mainly because the stronger business model attracts more customers and is considered more credible by the clients.
- Changing Customer Demands
Everyone is evolving day by day, causing a large possibility of potential disruption. The customer demands and expectations are continuously changed, leading to fluctuating sales and the customer base.
To meet the demands of customers and follow the latest market standards, the incorporation of digital transformation is a must-have option. Every organization needs to regularly update its business model by making strategic changes to the product design or organizational setup and employees.
- Higher Performance
Innovations in technology, product, and business design have to lead to increased efficiency of the employees. It has also promoted faster manufacturing and made the production processes far less hectic or time-consuming. Every kind of digital transformation and business innovation enhances the overall performance and productivity of an organization.
- Talent Attraction
These days people are more socially and culturally aware of society and nature. They tend to work in a sustainable environment that offers the right amenities and value for their talent. Everyone wants to work in a socially responsible company with higher rates of employee satisfaction and recognition.
Therefore, business model innovation paves a robust way towards success for any company. As they keep on upgrading regularly, they tend to stay strong in the competition. A proper business model innovation plan generates higher production output, higher returns, the company’s market success, and much more.
To understand these essentials of innovation, you need a mentor who can introduce you to the unknown dimensions of the business world. So, if you are looking for such an institution then, MIT ID is one of the best institutes that will help you imbibe these essentials of innovation in your business ethics to enamel the entrepreneur in you.