What’s Your Role In Business Model Innovation?

According to IBM’s Global CEO Study 2006, CEOs are focusing almost 30% of their innovation efforts on business models. This gives business model innovation practically equal prominence with product/service and operational innovations, which traditionally have received the most attention.

IBM’s data also shows that companies who put twice as much emphasis on business model innovation, compared to underperformers, have grown their operating margins faster than competitors.

Equally important, the report finds that CEOs are looking to customers and partners for innovation insights and resources to move projects forward. A Forrester Research report last summer adds fuel to that fire, noting that 75% of CEOs across industries now view external collaboration as indispensable to innovation.

Forrester has been covering the rise of “innovation networks,” global partner ecosystems that co-develop and co-market new products, services, and business models. Companies embracing innovation networks are willing to co-innovate with customers to gain rapid market feedback, partner with external sources on R&D, look outside existing supply chains for services and skills, and access talent wherever it exists in the world.

The question CIOs must ask themselves is where they fit into this picture. In quite a few organizations, the IT organization still has to earn his stripes, so to speak, when it comes to understanding the business and proactively driving efforts to align IT initiatives with business strategy. A Forrester report earlier this year, however, finds that 78% of business execs don't believe the IT organization contributes business innovations to their firms.

It’s time to change that tune. IT leaders can start taking steps to provide the enabling infrastructure of collaboration that’s so necessary to business model innovation, says Navi Radjou, the Forrester vice president specializing in how globalized innovation is driving new market structures and business processes, and the author of these Forrester reports.

Investing in tools such as employee portals to enable people-to-people collaboration, as well as in a services-oriented architecture framework that will make it easier to integrate your systems with those of your partners, are the obvious moves to make here.