The digital rule book: Not just innovating, but reinventing, business models

Posted on: May 25, 2016 by Jean-Christophe Spilmont

In this series on business reinvention, I’ve been exploring how companies can successfully transform years of assets and change corporate culture. In this second part, I look at how organizations must transform their business models and embrace change.

Rule number 2: Not just innovating, but reinventing, business models

It's well known that, while incremental innovation is good, the greatest success comes from disruptive innovation – from total reinvention.

Digital is certainly disruptive. It changes everything: distance (everyone is just a microsecond away on the Internet); time (everything is getting closer to real time); complexity (today's computational power can solve more problems); cost (digitization enables zero marginal cost) and we're entering a predictive - or even prescriptive - world.

More importantly, digital opens up new opportunities for completely overhauling existing business models. Innovation is no longer just about looking for technological progress; it’s about considering the possibilities it opens up and the potential impacts.

After all, with each customer now just a swipe away and the winner taking all in today’s 'superstar' economy, the search for a business model that guarantees excellence becomes crucial. Just providing better service is no longer enough: businesses must provide the ultimate experience. Doing more with less is no longer enough: you must do better with less. Guaranteed security is no longer sufficient: you must build trust. Incremental innovation is no longer enough: you must completely reinvent your business models. In a nutshell: don’t just target that extra 10 percent – target that extra 10-fold instead!

Of all the challenges we see – Customer Experience, Business Reinvention, Operational Excellence and Trust and Compliance – Business Reinvention is the most complex, yet the most crucial. It’s not something that can be done in ivory R&D towers and it's not something you can ask your customers for the answer to either. As Henry Ford is credited to have declared in the middle of the last century: “If we had asked people what they wanted, they would have said faster horses.”

As history has shown, disruptive innovation actually comes from unexpected places: anywhere from the interface between R&D and the consumer to field trials and errors. This is precisely what a connected digital world favors.

What’s more, in today's changing landscape, enterprises must behave more like investors. They must try and they must experiment – and they must ‘fail fast and fail often’.

After all, retailers, banks, telecom and media companies and others stand at the forefront of this revolution because they experiment. To help them do so they have created and nurtured open innovation ecosystems that are both internal and external incubators for partners and even customers. Within these ecosystems they have created hackathons, APIs, open innovation platforms and more.

These companies have allowed themselves to be fully open to change and opportunities that have come from the outside in.

Rule number 3: Breaking longheld beliefs

As digital redefines the world, companies should not be afraid to rupture long-held industry models: they should not be wary of evolving from ‘ownership’ to ‘pay-as-you- go’, from ‘mass market’ to ‘mass personalization’ or from ‘customer’ to ‘co-supplier’, for instance. Though doing that is never easy.

An open mind is more than just expected: it’s vital. An American Management Association study determined that only 10 percent of innovation investment at global companies today is focused on developing new business models. However, 40 percent of the 27 companies born in the last quarter century that grew their way into the Fortune 500 in the past 10 years did so through business model innovation.

Companies that have created this open-minded approach are definitive examples of those that will succeed. We already see it today in the energy market with smart grids, emerging in the transport industry with the collaborative economy and in the services industry with automation replacing labor.

But we're just at the beginning. If longheld beliefs are broken we may, in fact, find tomorrow’s landscape turns out to be even stranger than the one we’re currently expecting.

Look out for my final post in this series where I explore how businesses can position themselves for reinvention and embrace new technologies such as analytics and Artificial Intelligence.

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About Jean-Christophe Spilmont
Head of Strategy & Portfolio at Atos Big Data & Security service line and member of the Scientific Community
Jean-Christophe Spilmont is head of Strategy & Portfolio at Atos Big Data & Security service line, and thought leader in Digital Transformation at Atos Global Marketing. Over the past years, he helped Group Bull accelerate innovation and growth in Digital, as global head of Market Intelligence and global head of Strategic Marketing Programs, notably around vertical usages (Industry 4.0, Digital Finance, Smart Government…) and core enabling technologies (IoT, Big Data, Cloud, Security,…). Prior to this, he held several management position as Communications & Sales Enablement Director of Evidian, Marketing Manager of Bull France Digital activities and consultant at Integris. He also co-founded the Open World Forum, the premier European Event in Open Source innovation. Jean-Christophe Spilmont is an ESSEC and ENSAIA/INPL Alumnus.