6 Business Innovation Models: Which One Does Your Company Need? (2023)

You’d be hard pressed to find a CEO that is unwilling to evolve their business. The past two years have forced many companies to reconsider their practices: for many, it’s become an “innovate or die” kind of scenario.

Technologies develop in all kinds of ways, and innovation doesn’t always mean implementing fresh and advanced solutions. It can also mean adding preventive measures to anticipate any possible effects different circumstances can have on a business. For instance, according to the 2021 survey by PWC, 71% of CEOs are “extremely concerned” about cyber threats, making the rush for technological advancement in business even more dire. But this isn’t all there is to innovating one’s company.

In our increasingly digital landscape, having a solid innovation model that serves as the foundation for corporate processes is integral for any business that wants to succeed.

This article will explore the most prominent innovation models of today and help you figure out which one suits your business best.

6 Business Innovation Models: Which One Does Your Company Need? (1)

Section 1

6 Business Innovation Models

Identify, advance, and implement ideas in a way that stimulates your continued success.

In spite of what the words “innovation model” might suggest, those who adopt them aren’t out to make major technological breakthroughs in most cases. The breakthroughs innovation models do facilitate have to do with the way companies handle their processes.

Companies use innovation models as frameworks to identify, advance, and implement ideas in a way that stimulates their continued success. An innovation model is essentially a set of concrete principles and methods aimed at expanding and/or protecting the company’s market share.

Innovation models as a whole can be split into six kinds.

6 Business Innovation Models: Which One Does Your Company Need? (2)

Inventor Model

This is the type of company most people will think of when they hear the word “innovation”. Probably because these corporations position themselves as, well, innovators. Their leaders play no small part in fostering that brand image: a charismatic visionary will not only push for new and bold ideas, but also entice both the team and the public to novelty ventures.

Inventors are disruptive. They don’t just aim to improve an existing product, they aim for breakthroughs. As a result, their products and services have the potential to create a real paradigm shift in the market.

(Video) Business Model Innovation - Amazon, Spotify and Tinder

Because of this high-risk and high-reward approach, it’s not uncommon for their inventions to be subject to scrutiny. For example, the now revolutionary iPhone was largely criticized back when it was first announced.

“There’s no chance that the iPhone is going to get any significant market share. No chance,” the former CEO of Microsoft, Steve Ballmer, said to USA Today in April of 2007. And by the end of 2020, iPhone had 23.4% of the global smartphone market share.

Primarily built on: disruptive innovation

Examples of inventor-type companies: Apple, Tesla, Netflix

Problem Solver Model

Problem solvers provide solutions to common obstacles. They do extensive research of the market to directly address the prominent issues their customers face.

The Problem Solver model is outcome-driven. It gathers data on the tasks customers want to do, but can’t for whatever reason. So, the company adjusts its processes to deliver the tools customers could use to achieve their goals.

What distinguishes Problem Solvers from Inventors is that the former deliver the products customers were asking for, while the latter deliver the products customers didn’t know they needed.

GoPro is a great example of a Problem Solver company. As online video sharing platforms became more and more popular, the demand for compact high-quality cameras increased dramatically. People wanted to share their experiences without having to drag a 5kg camera around – and GoPro helped them do exactly that.

Primarily built on: demand for a solution

Examples of problem solver companies: Nike, Starbucks, GoPro

Refiner Model

Refiner companies are defined by their superior processes. They have figured out the ultimate way to deliver their products or services to customers and have honed that new approach to perfection. For them, efficiency is key to surpassing the competition.

IKEA is a great example of a company that has figured out how to deliver affordable, yet quality furniture. It’s all about the winning combination of minimalistic designs and many of the pieces being sold disassembled, which helped drastically reduce manufacturing costs.

What’s more, IKEA stores are known for their expansive layouts. “A great store will give you the sense of comfort and familiarity and will also give you the pleasure of discovery,” says neuromarketer and author of “The Buying Brain” Dr Pradeep. “That is when retail becomes retail therapy.”

Primarily built on: superior processes

Examples of refiner companies: Zara, Toyota Motor, IKEA

Conqueror Model

Conquerors focus on constantly extending their reach by conquering more and more markets, be it through tackling different industries or through global expansion.

Scaling to different markets is often a very expensive and risky venture. Therefore, this approach requires a company to have enough resources to support a broader network and be able to sustain itself in case of failure.

Amazon is the perfect example of a conqueror-type company. What started as an online bookstore has gradually grown into a worldwide delivery service that encompasses a multitude of retail sectors.

As of September 2021, Amazon plans to hire 55,000 staff globally for corporate jobs and roles in robotics, research, and engineering to further fuel the company’s expansion drive.

Primarily built on: resources

(Video) Business Model Innovation

Examples of conqueror companies: Amazon, Nestle

Protector Model

Protector-type companies are focused on retaining their place in the industry. This means being on a constant lookout for potentially disruptive innovations and neutralizing threats by means of partnerships and acquisitions.

The companies that follow this approach are common to fields that are slow to change, such as insurance and pharmaceuticals, as well as luxury brands. What’s more, this tactic is generally used by well-established companies with decades of reputation to uphold.

Brand recognition and customer trust are the baseline of this model’s success. It’s incremental, meaning it relies on making small continuous improvements to its service or product over time, while monitoring the current industry trends and potential competitors.

Pfizer is an example of a renowned pharmaceutical company that actively uses acquisitions to maintain and expand its industry share, with the most recent acquisition being Trillium Therapeutics Inc.

Primarily built on: brand recognition

Examples of protector companies: Pfizer, Rolex

Trend Follower Model

Trend Followers are laser focused on quickly responding to trends, either by adopting and improving on their competitors’ innovations or by implementing their own.

The Trend Follower model is built on product adaptation. The company must be able to quickly respond to the needs of the market, adjusting its products to meet the demand as fast as possible while delivering the best possible value.

Xiaomi rose to fame by offering a variety of affordable tech products, always ensuring that the features-to-price ratio of each new phone was more appealing than that of competitors. In 2020, Xiaomi became the world’s largest consumer IoT (Internet of Things) company, with more than 210 million IoT devices (excluding smartphones and laptops) sold across more than 90 countries.

Primarily built on: product adaptation

Examples of trend follower companies: Tencent, JPMorgan Chase, Xiaomi

6 Business Innovation Models: Which One Does Your Company Need? (3)

Section 2

So which innovation model do you choose?

(Video) The single biggest reason why start-ups succeed | Bill Gross

How does one find an innovation model that’s actually beneficial to the firm?

An innovation model is not a one-size-fits-all sort of deal. What works for one industry may not work for another, and blindly tracing popular companies’ innovation strategies is unlikely to end well for your business. So how does one find an innovation model that’s actually beneficial to the firm?

It’s all about context. Two contexts, in fact: the industry context and your company’s. In the first case, you have to consider the current market climate.

Take for example Blackberry’s failure: a company that once dominated the smartphone market was too slow to adapt to the new industry rules, and thus, declined. In a constantly evolving field such as mobile tech, playing defensively without putting in enough resources to upgrade the core product is a death sentence.

But that’s not to say there’s an end-all-be-all innovation strategy for any particular field. Companies working in the same industry can succeed while using wildly different innovation models. And that’s where individual context comes into play.

Ask yourself these general questions:

  • How important is innovation to the company’s strategy?
  • How important is innovation to the company’s competitive position in the larger market?
  • How will innovation enhance the company’s distinct advantages and capabilities?

These will help you solidify why your business needs an innovation model in the first place. Once you realize the concrete benefits of adopting one, you can get to deciding which innovation model will be the best for achieving said benefits.

The model you choose has to accentuate your business’ inherent strengths. To find out which innovation model will work for you, consider the following questions:

  • Do you see innovation as a defensive tool or a growth engine?
  • How strong is your current competitive position?
  • How durable are the sources of your current competitive advantage?
  • How important is your brand?
  • How strong is your brand equity, relatively speaking?
  • How do your innovation capabilities compare to your competitors’?
  • How much are you willing to invest in innovation?
  • How quickly does your industry change?
  • What benefits will your company gain from following the industry trends?

Looking at your competitors is also a great way to determine what works and what doesn’t. Consider the models your competitors aren’t using or using unsuccessfully. If you can use these unpopular models well, you’ll gain a massive advantage over the competition – just make sure said models actually suit your business.

Think of the costs involved – not just the monetary ones, but also how much time you need to spend on implementing the desired upgrades. Finally, see how the different options align with your company’s long-term goals and resources. By the end of it, you should have a pretty clear idea of which model your business should go for.

6 Business Innovation Models: Which One Does Your Company Need? (4)

6 Business Innovation Models: Which One Does Your Company Need? (5)

Section 3

How do you implement an innovation model?

(Video) Board of Innovation's Business Model Kit

Finding a suitable innovation model is only half the battle. The challenging part is actually integrating it into your processes. Innovation models are not some vague archetypes. There are specific rules you need to follow in order to make them work.

Start with laying out all the aspects the model requires to properly function:

  • your organizational structure;
  • your culture code;
  • the processes and tools you use for idea generation, commercialization, and portfolio management;
  • the metrics you use to track and drive results.

Having done that, you can start figuring out the smoothest way to implement your new corporate innovation model.

Say, your company wants to go for the high-risk Conqueror model. In that case, you need to ensure that its market position and financial situation are secure enough to withstand possible setbacks. This can be assessed by checking internal metrics, such as your working capital.

On the other hand, Problem Solvers need to directly target the needs of their clients. Therefore, their innovation models are most effective when the companies invest in customer research and advanced analytics.

And what if you want to use a Trend Follower model? Due to the nature of the industry, this one is easiest to implement if your company deals in consumer goods. What the company can do to boost its chances of success with this model is implement a flatter organizational structure to maximize speed to market.

Really, whatever innovation model you decide to use, research is integral for making a smooth transition. Consult your team members and industry experts to get the fullest picture possible, and start taking your first steps towards innovation!

6 Business Innovation Models: Which One Does Your Company Need? (6)

Section 4

Conclusion

Each innovation model can be a powerful drive for a company when applied correctly. The most important thing is figuring out which one suits your business best. Carefully adjust all your processes in accordance with your model of choice. If you take proper time to assess all the factors involved and gradually implement the needed changes, your company will find itself on a fast track to success.

If you struggle with figuring out the exact innovation model your business needs or feel uncertain about what measures to take in order to implement it effectively, consider consulting a reputable expert. Bamboo Group has experience in nurturing startups from a range of domains, and will be glad to help your business grow. Feel free to contact us here!

FAQs

What are the six innovation models? ›

Six Innovation Models

Our research revealed six distinct innovation models: creator, solution builder, leverager, expander, defender, and fast follower.

What are business innovation models? ›

What Is Business Model Innovation? Business model innovation is the art of enhancing advantage and value creation by making simultaneous—and mutually supportive—changes both to an organization's value proposition to customers and to its underlying operating model.

What is a good example of business model innovation? ›

Business Model Innovation Example: The Video Game Industry

When video games were first created, the consoles that housed them were expensive and bulky, which put them out of reach of most consumers. This gave rise to arcades, which would charge customers to essentially purchase credits needed to play the games.

What are the 5 innovation models? ›

For instance, Rothwell (1992) describes five generations of innovation models: technology push; demand pull; coupling; integrated and systems integration/networking.

What are the 6 aspects of innovation? ›

An innovative environment is built on 6 foundational elements. A place where people can be collaborative, responsible, experimental, value-focused, autonomous and transparent.

What are the six 6 Common examples of innovation in higher education? ›

New Innovations in Teaching and Learning in Higher Education
  • Engaging Students through Practice.
  • Student-Centred e-Learning.
  • Technology for Learning.
  • Simulation.
  • Effective Transformation.
  • Curriculum Innovations.

What are the six business models? ›

There are 6 main types of ecommerce business models, namely Business-to-Government (B2G), Business-to-Business (B2B), Business-to-Consumer (B2C), Consumer-to-Consumer (C2C), Consumer-to-Business (C2B), and Business-to-Business-to-Consumer (B2B2C).

What are the 7 business models? ›

Types of business models and examples
  • Retailer model. A retailer is the last link in the supply chain. ...
  • Fee-for-service model. ...
  • Subscription model. ...
  • Bundling model. ...
  • Product-as-a-service model. ...
  • Leasing model. ...
  • Franchise model. ...
  • Advertising or affiliate marketing model.
Jul 14, 2022

What are main business models? ›

Types of Business Models. There are as many types of business models as there are types of business. For instance, direct sales, franchising, advertising-based, and brick-and-mortar stores are all examples of traditional business models.

What is the most common business model? ›

Retailer. This is probably the most common business model around. Essentially, you have products – either your own or from manufacturers – and you sell them to consumers. This can be done in a physical store or as an e-commerce company.

Is Netflix a business model innovation? ›

Netflix is a subscription-based business model making money with three simple plans: basic, standard, and premium, giving access to stream series, movies, and shows.

Is Starbucks an innovation? ›

The brand prides itself not on being a coffee company serving people, but a people company serving coffee—and has grown a dedicated following of customers because of it. For decades now, Starbucks has delivered remarkable growth and has become a leader in innovation in the market.

What are the seven 7 types of innovation? ›

Here are eight different types a company may adopt to improve its business practices:
  • Product innovation. ...
  • Service innovation. ...
  • Process innovation. ...
  • Technological innovation. ...
  • Business model innovation. ...
  • Marketing innovation. ...
  • Architectural innovation. ...
  • Social innovation.
Sep 18, 2022

How many innovation models are there? ›

In a sense, the ten types of innovation model can be used as a scale to evaluate which aspects to improve on and can give you concrete examples that aren't only focused on product or technology innovation.

What are the 7 innovation priority sectors? ›

Innovation Priority Sectors

While the NIS focuses on promoting innovation at large, it aims in parallel to lead innovation in 7 primary national sectors, namely renewable and clean energy, transportation, technology, education, health, water and space.

Which is the sixth generation model of innovation? ›

The sixth generation, according to Marinova and Phillimore (2003), requires interaction networks and innovations systems, which is in conformity with Bochm and Frederick (2010), but goes further by inserting the innovative milieu, such as the model's central element.

What is the 6th wave of innovation? ›

6th wave (2020?-).

Digitalization implies a high level of information technologies in goods and services as well as for their management and operations. The 6th wave has also been labeled as the fourth industrial revolution.

What are some good innovation ideas? ›

Below are 10 examples of innovations that are turning problems into progress.
  • A bag that slow cooks food. (Photo: WIPO) ...
  • Bottle light bulbs. (Photo: Liter of Light) ...
  • Energy-producing roads. ...
  • 1 dollar microscope. ...
  • Medical drones. ...
  • Mobile water safety check. ...
  • Solar rechargeable hearing aids. ...
  • Wearable breast cancer detector.

What are the 6 strategies? ›

Specifically, six key learning strategies from cognitive research can be applied to education: spaced practice, interleaving, elaborative interrogation, concrete examples, dual coding, and retrieval practice.

What are the main types of innovation? ›

What are the major types of innovation? Essentially, there are three types of innovation: radical, incremental, and disruptive. They may vary depending on the niche, market, brand essence, services, and products offered.

What are 6 most popular forms or models of e commerce give example for each model? ›

Top Six E-commerce Business Models:
  • Business to Business (B2B) This business model is when one business sells to another. ...
  • Business to Consumer (B2C) ...
  • Consumer to Consumer (C2C) ...
  • Consumer to Business (C2B) ...
  • Business to Government (B2G) ...
  • Consumer to Government (C2G)
Sep 30, 2020

What are the 9 business models? ›

Let's take a look.
  • The servitisation (subscription) business. ...
  • The platform-based business. ...
  • The social, authentic business. ...
  • The employee-centric business. ...
  • The partner-centric business. ...
  • The customer value-obsessed business. ...
  • The constant-innovation business. ...
  • The data-driven business.

What are the 4 types of models? ›

9 types of modelling explained
  • Runway models. A runway model works most commonly on the catwalk, which is the runway at fashion shows where designers showcase their work, such as a new clothing line. ...
  • Fashion/editorial models. ...
  • Commercial models. ...
  • Photographers. ...
  • Textile designers.
Nov 30, 2021

What are the 3 types of business models? ›

Business models come in a variety of forms. Direct sales, franchise, freemium, and subscription models are among the common kinds.

How many types of business models are there? ›

8 Types of Business Models & the Value They Deliver.

What is McDonald's business model? ›

The company makes money by leveraging its product, fast food, to franchisees who have to lease properties, often at large markups, that are owned by McDonald's. Franchisees are lured by the impressive margins that make McDonald's franchises an almost guaranteed moneymaker.

What type of business innovation model is Apple? ›

Apple's business model is based on innovation and consumer-centric devices. They are able to keep their base due to easy-to-use designs and data migration to new product lines. Microsoft built its success on the licensing of software such as Windows and Office Suite.

What is Spotify business model? ›

It uses a freemium revenue model that offers a basic, limited, ad-supported service for free and an unlimited premium service for a subscription fee. Spotify relies heavily on its music algorithms and its community of users and artists to keep its premium experience delightful.

Is Amazon a business model? ›

Amazon operates on the business model of a two-sided marketplace. It provides a platform for the buyers and sellers to easily interact and trade with each other without much hassle or difficulties.

What is Coca Cola's innovation? ›

The first product to launch under Coca-Cola Creations is Coca-Cola Starlight, created with the vision that – in a world of infinite possibilities – somewhere in our universe, another kind of Coca-Cola, another way of connecting with each other might exist.

Is Apple an example of innovation? ›

Apple is well-known for its innovations in hardware, software, and services. Thanks to them, it grew from some 8,000 employees and $7 billion in revenue in 1997, the year Steve Jobs returned, to 137,000 employees and $260 billion in revenue in 2019.

Is Nike an innovative company? ›

The company spent five years developing what it has called "its most significant clothing innovation since Dri-Fit." Nike (NKE) - Get Free Report began its existence by building better shoes for runners.

What are the 10 innovative technologies? ›

  • Computing Power. Computing power has already established its place in the digital era, with almost every device and appliance being computerized. ...
  • Smarter Devices. ...
  • Datafication. ...
  • Artificial Intelligence (AI) and Machine Learning. ...
  • Extended Reality. ...
  • Digital Trust. ...
  • 3D Printing. ...
  • Genomics.
Jan 24, 2023

What are the ten 10 types of innovation explain the same? ›

We also learned that 10 sides of Innovation in Doblin 10 Types of Innovation Model consist of Customer Engagement, Brand, Channel, Service, Product System and Product Performance, Process, Network, Structure and finally the Profit Model of our Organization/Company.

What are the 8 S's of innovation? ›

From the research, they identified eight essential elements of innovation success: Aspire, Choose, Discover, Evolve, Accelerate, Scale, Extend, and Mobilize. The authors note that there is no proven formula for innovation success but argue that there is a strong correlation between these essential elements and success.

What are the three models of innovation? ›

Although experts hardly agree on a definitive set of innovation types, there are generally three categories: product, process, and business model innovation.

What are the 5 innovation platforms? ›

5 innovation platforms are evolving and converging at the same time: Artificial Intelligence, Robotics, Energy Storage, DNA Sequencing, and Blockchain Technology. Convergence across technologies could amplify their potential.

What are the 4 innovation strategies? ›

Innovation strategies can be classed as proactive, active, reactive and passive (Dodgson et al.

What is the most common type of innovation? ›

Incremental Innovation is the most common form of innovation. It utilizes your existing technology and increases value to the customer (features, design changes, etc.) within your existing market. Almost all companies engage in incremental innovation in one form or another.

Which of the following is sixth generation model of innovation? ›

The 'sixth-generation' model emerged when Chesbrough (2003a, b) postulated the open innovation paradigm, which highlights the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.

How many business models are there? ›

8 Types of Business Models & the Value They Deliver.

What are the 6 technological revolutions? ›

Medieval technological revolution (930–1200 AD) Renaissance technological revolution (1340–1470 AD)
...
History
  • Financial-agricultural revolution (1600–1740)
  • Industrial Revolution (1780–1840)
  • Technical revolution or Second Industrial Revolution (1870–1920)
  • Scientific-technical revolution (1940–1970)

Who proposed 7 sources of innovation? ›

Peter F. Drucker, known as the father of modern management, suggested that purposeful, systematic innovation begins with the analysis of the opportunities and classifies "Seven Sources of Innovative Opportunity".

What is an example of process model of innovation? ›

Examples: One of the most famous and groundbreaking examples of process innovation is Henry Ford's invention of the world's first moving assembly line. This process change not only simplified vehicle assembly but shortened the time necessary to produce a single vehicle from 12 hours to 90 minutes.

What is strategic innovation model? ›

Strategic innovation is an organization's process of reinventing or redesigning its corporate strategy to drive business growth, generate value for the company and its customers, and create competitive advantage. This type of innovation is essential for organizations to adapt to the speed of technology change.

What are the six innovation discussed in how we got to now? ›

The innovations here belong to everyday life, not science fiction: lightbulbs, sound recordings, air-conditioning, a glass of clean tap water, a wristwatch, a glass lens.

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