A six-step approach to business model innovation

Abstract

In both theory and practice, business model innovation is acknowledged as an important means to gain a competitive edge. Designing a new business model, however, requires profound knowledge, experience and skills. To support the task, practitioners can rely on a set of techniques, namely cases, component-based approaches, taxonomies, conceptual models, causal loop diagrams and design patterns. We argue that these techniques only provide valuable support during specific steps of the design process. In addition, there is a tendency towards focusing on model-internal consistency while neglecting the organisation’s actual mission and external business environment. Therefore, this study proposes a complementary six-step approach to business model innovation, which is based on the principles of ‘networked thinking’. This holistic and systemic approach comprises features of established techniques and explicates assumptions about the organisation’s specific business situation. It gives entrepreneurs, decision makers and managers a better handle on structuring, communicating and evaluating different business model designs.