What are the key differences and similarities between business model innovation and product innovation?

Business Model Innovation (BMI) and Product Innovation (PI) both revolve around creating, delivering, and capturing value, but they operate at different levels of the business ecosystem. BMI focuses on reimagining the fundamental components of your business model, such as value proposition, customer segments, revenue streams, cost structure, or key resources and activities. On the other hand, PI involves developing or enhancing the features, functions, benefits, or design of your products or services to meet customer needs and desires.

Gosto da abordagem sobre inova??o que diz que a inova??o é a capacidade de resolver contradi??es e gerar dinheiro novo. Logo, se existe uma contradi??o a resposta para ela é uma inova??o. Por exemplo, como vender para quem n?o tem recursos? Como ter mobilidade sem ter um automóvel? Como se hospedar sem fazer uso de um hotel ou até mesmo como vender mais e crescer sem ter uma equipe de vendas? Provavelmente para cada quest?o acima você identificou respostas de novos produtos ou modelos de negócios que no passado foram vistos como modelos inovadores que resolveram tais contradi??es e geraram valor para alguém. Portanto, uma excelente forma que come?ar a discutir inova??o nas empresas é come?ar pelas contradi??es!

If you look at Doblin's Ten types of innovation it defines it brilliantly: Business model innovation is about how you configure your business 1. Your profit model and how you make your money 2. Network or connections with others that create value (Ecosystems) 3. Structure and alignment of talents and assets 4. Process unique ways you do your work Product is about the offering and can be divided into 1. Product performance and Distinguishing feature and functionality 2. Product system Complementary products and services (a bank that offers mortgages also offers home insurance)

Business Model Innovation (BMI) and Product innovation (PI) are two VERY DIFFERENT THINGS and people often get them mixed-up. BMI is usually about finding new markets for your existing products (e.g., blue ocean strategy), segments you didn't think about before, use cases or different monetisation avenues. ALL FOR EXISTING PRODUCTS on the basis of consumer insights. PI is "deep innovation" it requires to build something from scratch, fuelled by need and user/customer insights. There are blurred lines where we could argue endlessly, but really groundbreaking innovation happens when you hit both: Uber - BMI on monetisation, value capture and sharing profits with new parties; whereas there's PI where you need an extremely good match tech

La innovación en modelo de negocio generalmente es el resultado de todo un portafolio de innovación. Sin duda los nuevos modelos de negocio tienen el poder de contribuir en la sostenibilidad de las compa?ías de manera novedosa y diferenciada. La innovación en producto requiere no solamente de innovación incremental, requiere nuevos rumbos y focos que se nutren del CORE actual de negocio.

While both BMI and PI aim to generate value and differentiate offerings, they differ in the nature and degree of value creation. BMI has the potential to disrupt industries by fundamentally altering market dynamics and creating entirely new customer segments or markets. It can also deliver incremental value by optimizing existing business processes or revenue streams. Conversely, PI can introduce radical value by addressing unmet customer needs with innovative products or services. It can also provide incremental value by enhancing the performance or quality of existing offerings.

BMI is about reimagining the way a business operates. It involves changing how a company creates, delivers, and captures value. This could mean altering revenue streams, distribution channels, or customer segments. For example, shifting from a product-based to a service-based model. PI focuses on developing new products or improving existing ones. It’s about introducing new features, technologies, or designs to meet customer needs more effectively. PI typically aims to enhance a specific aspect of the customer experience or address a new market need within the existing business framework. While BMI often requires a fundamental shift in business strategy, PI usually operates within the existing business model.

Plantearse desde la estrategia lo que queremos lograr con la innovación es fundamental. Los nuevos modelos de negocio (BMI) traen consigo retos profundos de transformación empresarial, por lo que deben verse de manera integral y no desde un solo frente. La innovación en producto (PI) si bien tienen un valor muy potente desde la vista de usuario también es importante mapear sus impactos y alcance.

While BMI aims to transform the fundamental structure of how a company creates, delivers, and captures value, focusing on long-term strategic changes, PI focuses on enhancing existing products or developing new ones to meet customer needs and gain a competitive edge in the market. The expected outcomes of BMI include creating new business models, expanding market reach, and increasing long-term profitability, whereas PI outcomes typically involve launching innovative products, improving customer experience, and boosting sales and market share.

One thing I’ve found helpful in distinguishing BMI from PI is understanding the kind of value they aim to create. BMI has the potential to disrupt entire industries by redefining market boundaries and reaching new customer segments. It’s a way to shift the game completely. PI, while also transformative, usually focuses on product or service enhancements—solving new customer problems or improving existing ones. Both, however, have one common goal: creating unmatched value for the customer. In my experience, the key is to decide when to pursue one over the other depending on your company’s strategic objectives.

Both BMI and PI face challenges and risks that require careful management and experimentation. BMI may pose challenges due to the complexity of modifying multiple aspects of the business simultaneously, requiring alignment and collaboration across different functions and stakeholders. It may also entail risks such as cannibalizing existing revenue streams or encountering resistance from customers or competitors. Similarly, PI can be challenging due to the uncertainty inherent in developing and testing new technologies, features, or designs. It may also involve risks such as high development costs or market uncertainty.

I believe that in business model innovation (BMI), we face the challenge of fundamentally changing how we operate and generate value, which can be risky due to uncertainty about market ease of use and ability to implement. However, by disrupting industry norms and creating new markets or customer segments, we can achieve significant, differentiating value. In product innovation (PI), the challenge lies in developing products that meet customer expectations and surpass existing solutions, facing investment risks and being accessible in the market. Both types of innovation carry their own challenges and risks, but can provide opportunities for growth and differentiation in the market.

In my experience, the challenges and risks with both BMI and PI can be mitigated. For PI, agile development reduces the risk of high development costs and market failure by testing the product market fit early on, and in most cases leads to a better performing product. BMI may be risky but if if you're not cannibalizing your own revenues, then someone else will come along and do the same thing!

For product based companies, BMI represents a significant challenge because touching the business model will likely impact its positionning on the value chain. Product as a service for example, requires a complete shift from a product + maintenance mode to a guaranteed level of service for a fee model. This does require a service culture and skills a product-centered company does not natively have so it's a consequent challenge.

Desde mi experiencia debemos escalar involucrando las áreas de negocio relacionadas, entendiendo los cambios, regulación y talento necesario para hacerlo. No es un tema tecnológico, es un tema profundo de procesos y transformación organizacional. Mapear los riesgos y desafíos debe ser una responsabilidad del equipo que transforma e innova dentro del negocio no de un área o persona.

Both BMI and PI can benefit from employing the Lean Startup methodology, which emphasizes iterative cycles of building, measuring, and learning to validate assumptions and gather feedback from customers. This approach minimizes waste, uncertainty, and risk by utilizing tools such as the Lean Canvas, customer discovery, Minimum Viable Product (MVP), experimentation, and pivoting based on learning and feedback.

In meiner Praxis kombiniere ich unterschiedliche Innovationsmethoden, um sowohl Produkt- als auch Gesch?ftsmodellinnovationen zu entwickeln. Für Produktinnovation haben sich Systematic Innovation, TRIZ, Design Thinking bew?hrt. Für Gesch?ftsmodellinnovationen: Business Modelling, Gesch?ftsmodellmuster All das sollte in einen agilen Prozess gegossen werden, um Schritt für Schritt sowohl zum Produkt- als auch zum Gesch?ftsmodell - zu lernen. Hier eignet sich die Lean Start-up Methodik mit Build-Measure-Learn. Im Grunde geht es um regelm??iges Feedback einholen und lernen.

Desde mi experiencia: 1. Definir un buyer person y segmento de clientes. 2. Observar y dise?ar siempre de la mano del cliente 3. Alinear temas financieros y retornos 4. Definir un MVP 5. Dedicar equipo interdisciplinario 6. Definir hipotesis 7. Prototipo 8. Escalar

A inova??o de produto frequentemente emprega metodologias como design thinking, prototipagem rápida e testes de usabilidade para desenvolver e refinar novos produtos. Por outro lado, a inova??o de modelo de negócio utiliza ferramentas como o Business Model Canvas, Lean Canvas e mapeamento de stakeholders para reconfigurar a forma como a empresa opera e cria valor. Apesar dessas diferen?as, ambas as inova??es compartilham a utiliza??o de pesquisa de mercado, feedback do cliente e ciclos iterativos de experimenta??o para validar e ajustar suas ideias.

Considero as ordens de design propostas por Richard Buchanan, manifesta??es de design e também as considero um framework metodológico poderoso. Acredito que isso torna sua dissemina??o mais digerível e didática. A primeira ordem refere-se ao design gráfico, comunica??o visual e símbolos. A aplica??o mais básica do design. A segunda ordem aborda o design industrial com a constru??o de produtos e ambientes. A terceira ordem trata-se do design de intera??o com desenho de servi?os, experiências e interfaces. A quarta ordem aborda o design de sistemas com o desenho de processos, negócios e impacto na cultura organizacional.

BMI: Tesla's disruptive approach to the automotive industry goes beyond producing electric vehicles; it encompasses a holistic transformation of the automotive ecosystem. Through innovations such as direct sales, over-the-air updates, and energy storage solutions (Powerwall, Powerpack), Tesla has redefined how consumers perceive and interact with automobiles, challenging conventional business models and driving sustainable transportation forward.

Business Model Innovation case Amazon Prime: Amazon's introduction of the Prime subscription model transformed e-commerce. It provided customers with benefits like fast shipping, streaming services, and exclusive deals, leading to increased customer loyalty and revenue diversification. Product Innovation Case Tesla Model S: Tesla's Model S electric car redefined the automotive industry with its long-range capabilities and cutting-edge technology, making electric vehicles more appealing to a broader audience.

Existen muchos ejemplos asociados a modelo de negocio y producto. Algunos de los ejemplos podrían ser: Amazon: Revoluciono la forma en que compramos Iphone: Revoluciono la forma en nos comunicamos Uber: Revoluciono la forma en que nos transportamos Rappi: Nos introdujo en el modelo de super app Nu: Rompió el paradigma de banco 100% digital

A company I know used to sell industrial equipment to a major player in the defense sector. They were facing a critical challenge because of the increasing competition from cheaper made in asia products. They were about to lose the client. The company switched to a service model: It would deliver the equipment and the operators on site and the client would pay for the consumption on a "pay as you go" model. This both allowed the company to keep this client and significantly improve its revenues and margin. Key takeaway: For some customers in the manufacturing industry, not having to invest in CAPEX and staff is on its own enough benefit to agree to pay more for the same end result in service mode.

One notable BMI case is Netflix's transition from a DVD rental service to a subscription-based streaming platform. This shift revolutionized the entertainment industry, challenging traditional cable television models and adapting to changing consumer preferences for on-demand content. On the other hand, Apple's introduction of the iPhone is a great PI case. The iPhone's innovative features, such as the touchscreen interface, App Store ecosystem, and intuitive design, set new standards for smartphones and influenced the entire technology landscape.