Editor's letter

Citation

Randall, R.M. (2007), "Editor's letter", Strategy & Leadership, Vol. 35 No. 6. https://doi.org/10.1108/sl.2007.26135faa.001

Editor's letter

The subject of this special issue is business model innovation and renewal. Four sets of world-class experts offer practical advice:

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  Bala Chakravarthy and Peter Lorange of IMD demonstrate an innovative set of strategies for the continuous renewal of a business model.

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  Henry Chesbrough, Executive Director of the Center for Open Innovation at the Haas School of Business, University of California, Berkeley, shows how to use the Business Model Framework to guide innovation.

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  Pierre Loewe and George Chen of Strategos explain how leaders can tailor their innovation program – including renewing their business model – to fit their situation.

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  A team of IBM Global Business Services consultants offer three ways to successfully innovate your business model, with key suggestions for older, larger companies.

The degree of difficulty of implementing their recommendations should not be minimized. Business model innovation is dauntingly risky, and business model renewal is one of the most demanding leadership challenges. For those attempting it, here’s some wise perspective from innovation authority Geoffrey Moore, who we interviewed in the previous issue of Strategy & Leadership (Vol. 35, No. 5):

Geoffrey Moore: Radical changes in business models are normally failures and so should only be attempted under the direst circumstances as, for example, those that IBM faced in the early 1990s. But incremental adjustments to business models are necessary on an ongoing basis. Each involves renegotiating the current relationship with one’s business network, exporting some work formerly done internally out to other companies serving either as partners or outsourcers, and importing work formerly done externally to increase your own value-adding capabilities. Over time companies can shift their business model dramatically, as we see when many manufacturers no longer manufacture much but have become branding and design houses …

S&L: Is the central strategic challenge for many companies today, how to reinvent and evolve while trying to deal with an aging business model? How can leaders best facilitate this process?

Moore: Yes, I think so. But I think focusing too much on business model may be a mistake. It is a very trendy notion these days, but innovation in any dimension of economic competition can create superior returns, and monkeying with your business model is the single hardest form to bring about, since it requires not only securing buy-in from your own work force and management team, and from the target customer, but also from the business ecosystem partners with whom you are currently doing business …

Seen in the light of Moore’s cautions, business model renewal is a core leadership function, one fraught with perils and rewards. The articles in this issue provide tested guidelines on how leading firms have risen to the challenges and avoided the pitfalls.

Good reading.

Robert M. Randall Editor