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Beacons for Business Model Innovation

Applying pattern recognition tools can empower companies to pick and develop breakthrough winners in their innovation portfolio


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Business Model Innovation is a hot topic in management thinking, even though there seems to be little agreement about what it looks like. By using analytic tools that provide better decision-making insights, executives can vastly improve their innovation success rate — and ensure their business model investments generate bigger returns.

This article discusses two critical diagnostic tools. Ten Types of Innovation® classifies innovation activities organizations pursue. Research shows that while most companies focus on innovations in their offering — their product performance, product system and services — the biggest opportunities are anchored in innovations that deliver a new business model and customer experience. The second tool, Economic Value Estimation® (EVE) pioneered by pricing strategist Tom Nagle, is a simple framework which breaks down the economic value of an offer into its component parts and compares this value to a next-best competitive alternative.

By taking advantage of the insights these tools offer, corporate leaders can analyze which Business Model Innovation projects offer the most value for customers, allowing them to pick the winners and shut down the losers.

As used in this document, "Doblin" means the innovation practice of Monitor Deloitte within Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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