IBM Global CEO Study Highlights Focus on Business Model Innovation

Last week I came across Irving Wladawsky-Berger's blogpost about IBM's Global CEO Study 2006 (Irving is Vice President of Technical Strategy and Innovation at IBM). It was quite interesting to read that the survey highlights the importance of business model innovation. On IBM's website you can find a brief executive summary. Among other things the report states:

  • Business model innovation is becoming the new strategic differentiator. "The business model we choose will determine the success or failure of our strategy," one study participant said. In contrast to the findings of the 2004 survey, innovation in the enterprise's business model garnered nearly as much attention as innovation in a company's core processes and functions.
  • Business model innovation can pay off. In the financial analysis for the study, companies that have grown their operating margins faster than their competitors were putting twice as much emphasis on business model innovation as underperformers.

What I would really be interested in is to find out how these executives and IBM define what a business model actually is and what business model innovation consists of. I am also very curious to learn more about how these CEOs foster business model innovation and what kind of conceptual tools they use to do that...

I suspect that currently companies still very much focus on analytical techniques for choosing among alternatives, while they would be better off applying skills from the design world that focus on shaping new and innovative alternatives. Richard J. Boland from Case Western Reserve University very nicely puts this in the book "Managing as Designing" where he states:

what is needed in management practice and education today is the development of a design attitude, which goes beyond default solutions in creating new possibilities for the future.

I for my part will try to contribute to improving the toolset for business model innovation by launching a collaboratively written book on "Business Model Design and Innovation". If you are interested in participating please contact me by email.

FYI: The IBM survey was done with 765 CEOs, business executives and public sector leaders from 20 different industries, 11 geographic regions, from mature and emerging markets (e.g. China, India, etc.). The study is available on IBM's website.