Business Model Innovation – a fancy term for a simple idea!


Last month, I happened to attend Subscribed 2014 in San Francisco. Among several tracks focused on subscription economics, was a session on the topic of business model innovation (BMI).  Business model innovation, as you may have heard, is a hot topic currently debated in many corners of the internet and in published articles.  It’s certainly timely in terms of subscription economics, but it got me thinking ‘what are some good examples of BMI, and is there a connecting thread’?   More so, is there anything we can learn from these examples to apply to healthcare?

Consider Tesco™ – a leading multinational grocery retailer firm headquartered in UK which figured out the formula for success in the South Korean market through business model innovation. They identified a key market segment of everyday train commuters, along with studying their habits of grocery shopping and smartphone usage. Using this information, they built virtual shops with product pictures and QR codes plastered on commuter trains, making essentials of grocery shopping simple, convenient and easy for an average super busy shopper.

Another example is AmazonTM, a company which changed the paradigm of retail shopping by making it simple from the convenience of home and mobile devices. Infact, the company may be considered a leader in constantly pushing the principles of business model innovation. Most recently they launched KindleTM Unlimited, an all-you-can-eat ebook subscription service, with more than 600,000 books that KindleTM ereader and app users can choose from. Priced at $9.99 per month, the subscription covers both ebooks and a selection of a large number of audiobooks[1]. This “NetflixTM of books” idea is not new with other firms like Oyster and Scribd already offering a similar model, but Amazon has a clear advantage in access to a much larger inventory, marketing and channels to make them successful.

In 2013, T-Mobile®, one of the largest mobile carriers in USA, created waves by breaking the shackles of contracts and limited (read expensive) phone upgrades to an average consumer. No more contract boundaries, freedom to leave if service is not good, choice of any device were some of the many makeover plans offered by the company.  T-Mobile® has already reported success with their “uncarrier” plan strategy[2] and has also fueled competitive wars in the telecom industry.

In this context, I must also bring up GoogleTM. Their simple innovative tactics to delight an everyday internet user intrigue me. This July 4th weekend, I bought online tickets to take my nephew to a concert in Madison. While in Madison, I decided to look for a nice restaurant to eat in. So I googled “Restaurant in Madison” from my smartphone.  The first result that the ChromeTM browser showed was that I need to get to a certain concert in one hour – sort of an alert that before you decide to eat, make sure you know that your concert is coming up. Or in other words, it gave me the facts to make the right decision.  Yes, GoogleTM has my GmailTM account and tracks what I am up to. Yes, it was scary at first, but then the value of getting that information just when I needed it eased my concerns around security. GoogleTM simply made it easy for me to think and decide…ultimately, making my life easy.

What is common among these companies and business model innovation ideas?  Undeniably, a razor sharp grip on consumption behaviors backed by a thorough execution strategy. From a consumption perspective, it is extremely important to know:  (a) who is the user (not just the buyer)? (b) What factors slow down usage or more importantly what factors can drastically speed up usage? (c) How to make it dirt simple and quick to use the product.

And the difference between an idea and a successful idea is clearly execution with a well thought through distribution, channel and marketing strategy.

But note that business model innovation is not always about product innovation. Many a times, it can be about ensuring that the same product is easy, accessible and simple to consume for the everyday user.

So how is the business model innovation coming to healthcare? Are you waiting for one? Are you working on one? How do we make it easier and faster for the end consumer of healthcare – the patient him/herself to get to the right diagnosis and right treatment?

We are surrounded by product innovations, intelligent machines, analytics warehouses, sensor technologies. The tools are here. Now the simple question is how we use these tools to make it quick and easy for healthcare providers to deliver healthcare and for the patients to consume healthcare. That will mark a business model innovation for healthcare IT companies.




Tesco is the registered trademark of TescoPLC

Google, Chrome and Gmail are registered trademarks of Google Inc.

Amazon and Kindle are trademarks or trade dresses of Amazon in the U.S. and other countries

T-Mobile is a registered trademark of Deutsche Telekom AG

Netflix is a registered trademark of Netflix, Inc.

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