Open Innovation for Small Business


Open Innovation for Small BusinessOpen innovation may seem to be the preserve of big business. After all, it is often associated with long established monstrosities like Proctor and Gamble and IBM. But it is an approach that can be used by all companies, especially start-ups and small businesses. After all, when a business comprises just the owner-operator or a handful of partners or employees, it lacks diversity of mind. Yet, diversity feeds creativity and innovation.

As you doubtless know, open innovation is the action of involving in your innovation process people from outside your company. It may be as simple as inviting a trusted supplier to help you develop ideas or as elaborate as launching a web site to collect innovative proposals from the public. For the most part, however, open innovation focuses on the fuzzy front end of innovation: that is idea generation and development.

Initial Considerations

Before you get started on your open innovation actions, you need to consider a number of issues that will help you determine the best approach as well as prevent you from making disastrous mistakes.

How Much Are You Willing to Share?

Open innovation means sharing information that most senior managers prefer to keep secret. It may mean sharing confidential information about how your product is manufactured, it may mean letting people know your marketing strategy for the near future, it may reveal certain problems or weaknesses about your company. That can be hard to do.

By the same token, if you invite the public to share ideas on an open platform, your competitors can also read those ideas and act upon them!

So, one of the first decisions you have to make is how much and what information you are willing to share with whom. You need not share everything with everyone. You may simply decide to involve your suppliers more directly with your product conception and design process. That would make them privy to confidential information, but your lawyer can draw up non-disclosure agreements that would ensure anything you share remains secret. In any event, most suppliers are aware that giving away their customers’ trade secrets is a sure route to a destroyed reputation.

Intellectual Property

Before you even hint to an outsider that you want to involve her in your innovation process, you need to consider intellectual property issues. If an outsider suggests an idea to you, that does not make it yours. Indeed, you could develop such an idea into a highly successful product only to be sued inside out by the idea contributor if she can prove ownership of the idea – such as a patent.

The easiest solution is to have a legal expert draw up a disclaimer that grants your company all rights to any ideas generated in any open innovation initiative that you launch and have participants sign the agreement before getting their ideas. If you are capturing ideas from the public via an on-line tool, this disclaimer is normally an on-line agreement the user accepts by clicking a clearly labelled button acknowledging that acceptance.

Disclaimers are used by nearly every organization running an open innovation initiative. The downside to them is that some people may be reluctant to share their incredible ideas with you only to let you profit from them. So your initiative will need some kind of reward system. But we will get back to that in a moment.

You may also run into the scenario that a patented concept is shared with you. In this case, the patent owner is almost certainly not going to grant you free rights to exploit her idea – that’s why she patented it. In such a scenario, you will have to license from her the right to use the idea.
Incidentally, intellectual property is not normally an issue with internal innovation. The employment contracts you have with your employees should make it clear than anything developed on company time is company property. If this is not the case, or you have no employment contract, you need to do something about this immediately!

Rewards

Your customers, of course, will always be happy to share with you ideas about how to make your product better – at least in their minds – and will generally share those ideas with no expectation of reward, beyond a better product. But such ideas are inevitably incremental improvements on existing products and not breakthrough innovations that will propel your company into the international limelight and make you and your shareholders filthy rich. For the latter sort of ideas, you need to offer some kind of compensation or reward for ideas and their development.

The kind of rewards you offer depend on the open innovation initiative you intend to launch and who will be participating. Rewards may be favored supplier status or exclusivity deals with suppliers who contribute ideas that you decide to implement. For instance, a well known pharmaceutical company runs open innovation initiatives with suppliers. Those suppliers whose ideas are implemented are required to share ideas with other suppliers, but they get favored status status enabling them to do more business with the pharmaceutical company.

When working with the public or customers, however, rewards will usually need to be money or products. For instance, if you run a competition, you will normally need to offer a cash prize for the idea or ideas implemented. Alternatively, if you invite outsiders to participate in a day long brainstorming event, you will probably be expected to pay them for their time. Such payment could be in cash or it could be in kind: such as products your company makes.

Actions

There are number of open innovation actions you can launch. These can invite all the world and their grandmothers to participate or can focus on a select group or can be restricted to people whom you invite. Each action has its advantages and disadvantages.

Suggestion Web Sites

One of the most visible open innovation actions these days are suggestion web sites that invite customers and the general public to submit ideas on how to improve a company’s products and services. No rewards are offered and some of these site boast 1,000s and 10,000s of ideas. This may seem awfully seductive: you just make a web site and wait for your customers to submit gazillions of ideas.

Don’t. Open suggestion web sites are an administrative disaster! They give no direction on the kinds of ideas wanted.. They simply ask for ideas. As a result, very few of the ideas received are in any way relevant to your business. Worse, you will see many idea submissions repeated again and again – after all, who is going to review 10,000 ideas to see if someone else has submitted the same suggestion? And a lot of ideas will actually be complaints about your products. But those are not the real problem with suggestion web sites.

The real problem is the 1,000 or 5,000 or 10,000 ideas. Stop and think how long it would take you and your team to read all of those ideas and determine which are worth taking further? In my experience it will take 5-10 minutes per idea on average. So even 1000 ideas will take over 80 hours, or two working weeks to review! Can you afford that? Moreover, based on my experience, no more than 2% of the submitted ideas will be actionable – and they will be incremental product and service improvements unlikely to have more than a trivial effect on your bottom line.

Public Competitions

A better alternative to simply asking the public for ideas is asking the public for specific solutions to problems. This concept has been around for ages, but was recently made famous by the Ansari X Prize which offered a reward of US10 million to the first non-government team to launch a manned spacecraft into space twice within two weeks. The prize was eventually won by a team led by Burt Rutan who not only won the prize, but was also bombarded with investment offers and business proposals.

Since then, companies such as Hypios and Innocentive have launched similar initiatives on a smaller level. Companies and non-profits can post on the their web sites challenges together with prizes which typically range from US$5,000 to US$1,000,000. Problem solvers, either as individuals or teams, can submit solutions. The submitters of the selected solution win the prize. Many of the challenges on these sites are highly technical or scientific in nature and require a detailed solution. But all kinds of problems can be posted. A small handful of similar sites are also doing business. If you need innovative technical ideas to solve problems, one of these sites might be a suitable place to solicit ideas.

Of course you could also launch an innovation challenge on your own company web site and promote it through local media. However, the advantage to using a well known, international site, that specializes in promoting challenges, is that you have access to an international collection of expert problem solvers. The downside can be that substantial rewards will be expected.

Another approach, which can be effective for technical and scientific innovation, is to partner with a local university and invite students to submit solutions. This would have the benefit of tapping into the creative expertise of young people as well as the possibility of identifying potential future employees. At the same time, you give university students the opportunity to work on real-world problems and get real-world feedback on their suggestions.

Private Brainstorms

The alternative to inviting the public to suggest ideas is to invite a very select group of people to suggest ideas as well as begin developing them. This is something my company has done to great success on a number of occasions. As an example, a company which makes heavy duty construction equipment was looking for a way to simplify the design of a complex component. Doing so would reduce their manufacturing costs as well as increase the reliability of the component – and hence their equipment. They invited employees from one of their suppliers as well as their own employees to submit and collaborate on-line using an innovation process management software (Jenni). Within a couple of weeks, they had a handful of great ideas, several of which were combined in order to substantially reduce the complexity of the component. They will save a lot of money thanks to the ideas.

On another occasion, a European non-profit, working with cultural heritage sites, wanted to explore how such sites could generate additional value to visitors by using new technologies. Representatives of museums, tourist attractions and historical sites went to Brussels for a day of brainstorming. People were put into smaller, diverse groups and given exercises based around specific creative challenges. A number of intriguing ideas were generated and have since been implemented across Europe.

In scenarios such as these, the external participants have a stake in finding and developing innovative solutions, so no additional reward is necessary. However, you may also wish to bring together people who have no stake in the solution, but who have expertise you would like to tap into. In such instances, you may have to provide a fee for their time. Although this adds to the cost, it does permit you to bring greater diversity to the problem solving table – and that can lead to a high level of creativity in the idea generation.

Quick and Dirty Open Innovation

In addition to the structured approaches we’ve looked at already, there are a number of quick and dirty solutions you can use in order to tap into the creativity of others. For example, I use Facebook primarily as a means of keeping in touch with friends, sharing jokes and seeing which on-time classmates look older and fatter than me! Aside from occasionally promoting my book, Facebook is a non-business space as far as I am concerned. As a result, it can be a great place to post questions to a diverse range of people who are often willing to give feedback.

LinkedIn, the professional networking site, has special interest groups and forums for asking questions – which can provide places for requesting ideas and getting suggestions. However, your competitors are probably hanging out on LinkedIn as well. So you need to think about what you share there.

In addition, there are numerous bulletin boards and specialized networking web sites where you can post questions and get solutions. Again, others in your line of business may hang out in such places, so the ideas you get will not be secret. Nevertheless, you can get some great ideas and feedback from people in these groups. Moreover, a business which would be a competitor in Johannesburg is a potential resource for information and ideas if they are based in New York (assuming you both focus on local markets, of course).

Be Careful About What You Ask Customers

Henry Ford once said that if he had asked his customers what they wanted, they would have said faster horses. There is great truth in this. Asking customers what they want will generally lead to product improvement ideas. But it seldom, if ever, leads to breakthrough innovation. Indeed, if a customer has an incredible yet viable idea that is a radical improvement on your product, she is more likely to launch a business making and marketing her improved product than to share her idea with you. In other words, she is your future competitor!

Nevertheless, you are in the business of pleasing your customers better than your competitors are capable of doing. So it is important to communicate with those customers and potential customers in order to ask them questions. But your questions should be more focused on gathering insights that you can use to develop radical new products and services.

Great questions to ask include:

  • “What do you use our product for?” You may find that some customers are using your product in ways you never intended. Once you know this, you can look at ways to make the product more suited to this alternative use. More importantly, you may discover a whole new way to market your product? You might go one step further and ask “What unusual or unexpected things do you do with our product?”
  • “What do you wish to achieve when you use our product?” Clearly Henry Ford’s customers wanted personal transport that would get them to their destinations faster.
  • “What are you unable to do with our product?” This again may identify that people wish to use your product in ways other than you intended. Find out what those ways are and identify how you can change the situation.
  • “What else do you do when you use our product or service?” This may identify additional opportunities to sell products to your existing customers.
  • In addition to asking questions, it is useful to visit places, where customers use your product, and observe. How do they use your product? What else are they doing? What other products are in this environment? What seems to cause difficulties?

    You can also run brainstorming sessions in environments where customers use your products. Invite in a few customers and suppliers and get to work. Actually putting yourself into your customers’ shoes while brainstorming is great for insight and inspiration.

    Putting It All Together

    Open innovation is an approach every company, from the one-man-band to the world’s biggest multinationals, can use. It has the advantages of bringing new perspectives, insights and inspiration to your idea generation and development process. Nevertheless, you need to consider how much internal information you wish to share with whom and ensure that you retain – or can license – the intellectual property to ideas that you receive. You also need to design initiatives that generate relevant ideas that meet your business needs.

    Link to the original article: Open Innovation for Small Business by Jeffrey Baumgartner.

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    What to look for in a company Board


    board

    At any company level, the board of directors has a direct impact on the organization’s product strategy, hiring, fundraising and much more. And startups have to be very selective in choosing board members who will advise the company in the right direction.  In the big company realm, both the media and the company’s shareholders have questioned Yahoo’s board, which continues to employ a floundering Carol Bartz as CEO and supports a bizarre product and business strategy. Then you look at Facebook, where founder Mark Zuckerberg has strategically assembled an all-star board to help the company grow as a public company and expand into new directions. Most recently, Facebook added Netflix co-founder and CEO Reed Hastings to its board, joining Marc Andreessen, Jim Breyer, Donald E. Graham, Peter Thiel and Zuck himself. Hastings not only will add his experience in taking a web company public, but he will also help Facebook navigate potential movie and TV show streaming opportunities. Facebook has a rock solid board—almost every member has been a strong innovator in the past few decades.

    As we saw with HP, even huge, established companies need to make changes in board structure as a company’s strategy shifts. HP added five new board members early this year as new CEO Leo Apotheker took the reins. Of course, fast forward seven months and HP has announced that it will bediscontinuing operations surrounding the TouchPad and all webOS phones, a major move for the company and certainly one that was influenced by the board.

    The fact is that the board plays an extremely important role in some of the major events for any company with shareholders. The board helps manage and make decisions about financing, acquisitions, product strategy and even an IPO. So it goes without saying that entrepreneurs are faced with challenging decisions assembling a board.  For big public companies, this has always been the case, but the role of the board at startups is also changing.  I interviewed a handful of early-stage investors (and former entrepreneurs)—Jeff Clavier, Keith Rabois, Dave McClure, and Paul Lee—to find out what startup founders should know about picking and managing a board.

    Lightbank partner Paul Lee echoes this thought, telling me that entrepreneurs have to be “very careful” about how they put their board together. “Each stage is different in terms of who you bring on,” he explains. “With an early startup in Series A funding, a smaller board is better because disparate voices make agility as a startup harder. When you get to five members, it is more difficult to come to a consensus.”

    Of course, there’s a balance between finding board members who both challenge the company as well as reason with the founders when necessary. Having both is crucial, says Lee. He also feels strongly that giving equity to board members without any investment is not the right formula for many early-stage startups. “Entrepreneurs want board members to be vested in the company, and the board members need to have some skin in the game to serve the company best.”

    In later stage companies, it makes sense to add seasoned execs who have run a successful companies in the role of the “CEO Coach.” In Facebook’s case, Hastings could fill that role. Another recent example of this was showcased by LinkedIn. In 2010, LinkedIn added former Ask.com CEO George “Skip” Battle to its board, as well as Netflix’s CMO Leslie Kilgore pre-IPO.

    In the past, Lee says that the board used to be seen as a “collector item” of sorts, where it was an opportunity to add prestige to a company by adding well-known board members and CEOs. Board members basically sat there and looked pretty. Now, he explains, the board has become a more integrated part of a company where board members have actual responsibilities and are held accountable.

    Well known angel investor Jeff Clavier, who runs his fund SoftTech VC, agrees with Lee that the role of the board has evolved in the past decade. As micro-venture funding started to come into play in funding startups, angel investors can’t sit on as many boards as they invest in. He says that in early rounds where there are 12 different investors (which happens pretty often these days), entrepreneurs have to make a strategic decision as to which investor or VC should take a board seat. With a group of rock-star investors, it can be difficult to choose who should join the board and who has the time for the role.

    Clavier says that board member roles have become more proactive. As opposed to just sitting on monthly calls, more entrepreneurs are giving board members tasks outside the meeting such as helping recruit talent. For example, Clavier tells me that Zynga’s CEO and founder Marc Pincus would allocate certain jobs to board members, who had to produce a report on the status of tasks at meetings. He says that a successful startup brings together strong investors and advisors and engages them both in and outside the boardroom.

    In fact, he compares early stage startups to houses with a bunch of holes in the foundations. One way to fill those holes is adding the right board members and advisors. As opposed to ten years ago, there are many more outside individuals involved in a startup’s progress from an idea to an actual company, and Clavier advises entrepreneurs to create a support network with a board. For example, many startups have created both boards of advisors as well as boards of directors. And he believes it is important for mid-stage, more mature companies to add experts from outside the investment community to a board. For example, the  addition of former Ticketmaster CEO Sean Moriarty to online event tickets platform Eventbrite last year.

    Keith Rabois, who is currently the COO of Square and an angel investor, has a unique perspective on the changes in boards over time, having been on both sides of the equation. He relates the experience of selecting a board to getting married with no possibility of divorce.

    Jokes aside, similar to Zuckerberg, Rabois and Jack Dorsey have built an all-star board at Square. Kleiner Perkins Partner and former Morgan Stanley Internet analyst Mary MeekerVinod Khosla, and former U.S. Treasury Secretary Larry Summers all joined the mobile payments company’s board this year. Sequoia partner Roelof Botha also sits on Square’s board.

    Rabois tells me point blank that very few investors are actually capable of adding a lot of value to company boards. But in Square’s case, all of the VCs on the board had prior careers that made their additions a natural fit for Square. He says that Boetha’s experience as CFO of PayPal made him an ideal addition. And Khosla’s insight as an entrepreneur and CEO of a multi-billion dollar company (Sun Microsystems) added a lot of value to Square. Meeker has made a career out of studying and analyzing what makes a successful technology company and this brought a new level of expertise to the payments company, says Rabois.

    Square’s board meets every two months, and Rabois says there is really no set agenda in the board meetings. The group starts by reviewing the financial and business performance of the company, and focuses on several long and short discussion items that arise.

    As for how boards have evolved over time, Rabois feels that today’s best entrepreneurs have moved away from a model where investors are supervising companies and are looking to bring more value-add to boards with seats. But how to extract value from a board can be a challenge for many young entrepreneurs. His advice to entrepreneurs is to recruit board members and advisors that you can learn the most from. And he says entrepreneurs should get into the discipline of having regular reviews with investors and board members.

    Another trend that is taking place in current board structures is that founders are retaining board control longer, even as the company matures. Q&A platform Quora only has three board members, after taking an $11 million round of funding from Benchmark in 2010. Founders Adam D’Angelo and Charlie Cheever both have seats as well as Benchmark’s Matt Cohler.

    Angel investor Dave McClure advises startups to keep control for as long as they can, and be judicious about selecting board members. In fact, McClure, who has invested in hundreds of companies, only sits on three boards himself. Of course, that doesn’t mean that founders should eliminate the board altogether, but McClure says it should be a gradual process. His belief is that if a startup has two founders, both should have seats, and it should add an investor in a Series A round, then perhaps another investor in a Series B round, as well as an independent “expert” of sorts.

    He also says that the more recent trend of 15 to 20 investors piled into a round with no board seats can be problematic. “Everyone is along for the ride and no one is watching what is going on at the company,” he explains. And I’ve heard similar sentiment expressed from others in the investing community as well.

    There are so many stories in Silicon Valley of board members shirking their responsibilities to early-stage startups by making it only to one out of every three meetings and worse. And board members that has different goals from entrepreneurs could easily block a major exit for a startup, or even a new funding round. The general consensus from all the investors and entrepreneurs I spoke to is to choose your board very, very wisely, and don’t rush into any decisions about naming board members.

    Credit: This article was written by Leena Rao. The original post can be found here.

    Photo Credit/Flickr/Gibffe

    Nine Best Practices for a More Effective Elevator Pitch


    Nine Best Practices for a More Effective Elevator Pitch  Whether you’re rallying support for a new innovation idea, seeking investors for a new business, partners to help sell your services, or new prospects to fill your pipeline, an effective elevator pitch is critical.

    And although it’s fine to tinker with the specific words and delivery over time, we should all have a specific, crisp and pre-meditated understanding of what we want to say, what we want that to communicate, and what impression and/or next step we want to drive with the recipient.

    Below are nine specific best practices I believe will help lead to more effective, successful elevator pitches that energize and mobilize your audience.

    1. Answer the right question

    The typical starting point for giving your elevator pitch is the question, “What do you do?” Don’t answer that question, at least not directly. Instead, assume you have been asked the question “Tell me what you do for your customers.” What’s what they really want to know, and it’s the best way to show what you do, vs. describing how you do it.

    2. Clarify the problem you’re solving

    Don’t assume that your audience understands the nature or scope of the problem. Succinctly summarize what’s wrong with the current environment. Paint a picture of the current pain, or future pain, your target audience is heading towards if they don’t do something different. This can be a general problem statement, or quick reference to an expected future situation or result that’s clearly unacceptable.

    3. Focus on benefits & outcomes, not solutions

    Focus on the ends, not the means. Describe what you’ll enable for your customers, not how you get them there. I don’t want to buy a drill, I want to buy holes. Nobody really wants to hire a sales & marketing consultant, they just want more sales. If you sell sales, talk about that outcome and what it can mean for the customer’s business or life.

    4. Make your “we do this by” statement short

    Of course, you do something to achieve that magical outcome. And it’s important to reference how you get there. Just do it quickly. This is an elevator pitch, not a full business summary. More details on how you do it can come later.

    5. Give a proof of concept example with metrics

    Back up your benefit/outcome statements with proof that you’ve done it before and can do it again. Give a short example or two of a current or past customer, what you achieved for them in quantifiable terms. This, quickly, will bring your value proposition to life and make it real.

    6. Make eye contact, smile, be engaged

    I can’t tell you how many people I’ve seen use the right words, but with no energy. With their head down. With little to no clear passion for what they’re doing. Eyes wandering all over the place. Look the recipient of your elevator pitch in the eye, and keep their undivided attention. Pull them in with your words, as well as your physical reaction and emotions as you tell your story.

    7. Choreograph your body language and arm movements

    This may feel a little awkward at first, but it can make a huge difference. Think about how specific gestures, arm movements, basically any relevant physical movement can accentuate the points you’re making. Work on different options for how these movements might work, run them by someone else who knows your story to make sure they work, and practice them until they feel natural.

    8. With video specifically, use a visual or prop (and more than one speaker)

    Props might be a little weird for off-the-cuff elevator pitch requests, but in a prepared video it will make you stand out and further bring your story to life. That said, is there something small but significant you could keep in a jacket pocket at all times that serves as a prop or metaphor to help explain what you’re doing? Also, especially in video format, featuring more than one speaker can keep the viewer’s attention more successfully if there’s a natural transition between each speaker’s content and role.

    9. Invite next steps (but don’t go for the close)

    The next step (or call to action) doesn’t have to be specifically for whomever you’re sharing your elevator pitch with. Maybe you offer a free consultation with any new, prospective customer. Maybe there’s an audit tool you offer that helps quantify the specific opportunity and potential outcome. Figure out the specific offer or “ask” that doesn’t go for the hard close, but invites the listener or recipient of your pitch to engage further and ask for more.

    How good is your elevator pitch? PGi (creators of iMeet) and Selling Power Magazine are cosponsors of the 2011 Sales Pitch Contest. Record your best video sales pitch (no longer than 60 seconds) and upload it by October 27, 2011, for a chance to win.

    Written & published originally for Selling Power Magazine: Nine Best Practices for a More Effective Elevator Pitch

    Five Reasons Companies Fail at Business Model Innovation


    Five Reasons Companies Fail at Business Model InnovationBusiness model innovation is the new strategic imperative-by now, this is becoming more generally acknowledged. But companies routinely fail at self-reinvention because they are so busy pedaling the bicycle of their current business models they leave no time, attention, or resources to design, prototype, and test new ones. Even where investments are made in innovation, those efforts are focused on new products and services delivered through today’s business models and on making the current models operate more efficiently. These are important to do, without doubt. But they are hardly sufficient in the highly networked 21st century, when business models don’t last as long as they used to and incumbents increasingly face the risk of disruption.

    Having watched many companies over the years as they recognize the imperative to change, yet somehow stay stuck in their old grooves, I’ve noted some patterns in their experience. Here, I think, are five important reasons that companies fail at business model innovation:

    1. CEOs don’t really want a new business model.

    The most obvious reason companies fail at business model innovation is because CEOs and their senior leadership teams don’t want to explore new business models. They are content with the current one and want everyone in the organization focused on how to improve its performance. The clearest indication that a company and its leaders aren’t interested in business model innovation is when any discussion about emerging business models and disruptive technology is viewed and treated solely as a competitive threat.

    2. Product is king. Nothing else matters.

    The lines are blurring between product and service. Business models that are exclusively focused on products are vulnerable to being disrupted by models that blend both product and service to significantly change the value proposition. Think iPod. Apple didn’t bring the first mp3 player to the market. It changed the way we experienced music by delivering on a value proposition that bundled product (iPod) and service (iTunes). Industrial era thinking and NAICS industry codes reinforce the habit of characterizing a business model as being either product or service focused, but this is a false choice constraining business model innovation. Sometimes a proud product heritage can get in the way.

    3. Cannibalization is off the table.

    Part of the thinking by line executives in most organizations goes like this: “the last thing we want to do is risk any of our current business. It’s hard enough being at war with the competition in a battle for market share. Why would we want to compete against ourselves?” These sentiments tend to be voiced whenever new business model ideas threaten to cannibalize existing sales. When executives look at new opportunities they see them through the lens of the current business model and view them as competing with the current way the organization creates, delivers, and captures value. Organizations fail at business model innovation because they blindly take cannibalization off the table even if a new business model may have significant upside potential.

    4. ROI hurdles are too aggressive for fledgling models.

    There’s no easier way to prevent business model innovation than to assess potential new models using the same economics and financial metrics as projects to improve the performance of the current business model. Financial metrics utilized to assess alternative projects to improve the current business model reflect the cost structure and required returns to sustain and grow in the context of today’s model. New business models are likely to have very different economics and must be assessed in that context. Most new business models will be dismissed out of hand if judged by the economics and constrained by the ROI requirements of the current model. Organizations fail at business model innovation because they apply the wrong financial lens in assessing the attractiveness and feasibility of new business models.

    5. Rogues and renegades get no respect.

    Many organizations fail at business model innovation because they shoot their renegades. Or, if they don’t shoot them, they wear them down until they leave. Business model innovators go against the corporate grain. They see entirely new ways to create, deliver, and capture value. If those that are tasked with sustaining and growing today’s business models are allowed to reject those with the perspective and insight to help design the next one, business model innovation efforts will fail. Organizations must learn to celebrate and support people within the organization who are willing to challenge the status quo, to bring totally different perspectives on delivering value to the table, and to take experimental risks to explore new models.

    There you have it: my version of the five reasons organizations fail at business model innovation. I’m interested to hear from readers, the managers of the world who fight this battle every day, if I’ve left any other big reasons out. Even more, I’m eager to stop admiring the problems and start exploring ways around them. Business model reinvention is the new imperative for all enterprises who want to stay relevant in a changing world. What can their leaders do to make success more likely?

    You can also see this post here on the HBR Blog site.