Inventing new business models is a crucial aspect of the long-term success of most corporate organizations. However, the lifespan of listed companies shortens, according to Statista, which suggests that organizations are coming short in their ability to create new business models and reinvent themselves.
This article aims to explore the key reasons behind these struggles and shed light on potential solutions.
Corporates resist change
One of the primary reasons why corporates seem to struggle with creating new business models is resistance to change. Established organizations often become entrenched in their existing business models, which makes sentences.
The current business model has probably proved successful in the past and it might still do. However, it does not mean that it always will. This resistance can hinder their ability to adapt to evolving customer needs and market dynamics.
Overcoming resistance to change requires a culture that encourages experimentation, risk-taking, and openness to new ideas, but this is easier said than done.
Lack of Agility
Often, organizational structures within corporates are hierarchical and bureaucratic, leading to a lack of agility in responding to the necessity for change. Traditional decision-making processes and lengthy approval cycles can stifle innovation initiatives.
Successful business model innovation management requires a more flexible and agile approach, with cross-functional teams empowered to make rapid decisions and iterate on ideas. Embracing agile methodologies and fostering a culture of empowerment can help address this challenge.
Short-Term Focus
Corporations often prioritize short-term gains over long-term investments. Quarterly financial targets and investor pressure can create a myopic focus on immediate results, sidelining long-term strategic thinking.
To overcome this hurdle, organizations must strike a balance between short-term financial goals and the need for sustainable growth. Encouraging leaders to champion innovation and creating incentives that reward long-term success can help shift the focus toward strategic business model innovation.
What else can corporates do to better their ability to innovate?
The first step is to start fostering a culture of innovation throughout the organization. This includes encouraging employees at all levels to contribute ideas, experiment with new approaches, and embrace risk-taking.
Additionally, corporations should invest in dedicated resources and processes specifically aimed at managing business model innovation.
GroundControl for example, is software for corporates to help de-risking the search for new business models by making the process transparent, structured, and measurable.
Finally, organizations should accept that business model innovation costs a lot of resources, and it takes time, effort, and a lot of mistakes before finding new profitable business models.