As a result of this column you and your organization will: Discover how to create a radical new business model, or reinvigorate an old one. Identify what makes or could make you different than anyone else? Copy Cisco’s agility to not become wedded to any one technology. Think about how many CEO’s have been fired by companies like Dell, Merrill Lynch , and AT&T. The message is clear: deliver big, or die fast. Many well-established companies have under performed in the marketplace over the last several years. The reasons are obvious. Rather than significant change, top management at these under performers is trying to do the same things just slightly better while newcomers are doing new things the old companies never imagined.

• Are you and your company guilty of the “old model behavior?”
• Have you let others define customer expectations?
• Do competitors see you as a rule taker or a rule breaker?
• Has your strategy remained the same for the last two years?
• Has there been erosion in your price premium or cost advantage?

Has it been getting more difficult to attract talent?If you answered yes to any of these questions, you should start taking steps immediately to change and innovate ways to differentiate yourself from your competitors.

First, admit that your business model, or at least part of it, is finished, dead and buried. As an example, Sun Microsystems estimates that 20 percent of its in-house technical knowledge becomes obsolete every year.

If you doubt that even the greatest strategies have a short life, think about this. Only twelve of the companies in the S&P 500 managed to deliver top-quartile shareholder returns for more than five of the last 10 years.

However, companies can’t change, innovate and create a radical new business model, or reinvigorate an old one unless they first understand what the components of a business concept are.

Initially, you must determine what is your business mission…your overall objective? Virgin Atlantic Airways redefined its mission as giving passengers a great experience. Amazon.com moved from selling books to offering everything from lawn supplies to toys.

Secondly, to change and innovate, you must realize and embrace what makes or could make you different than anyone else? What unique core competencies, strategic assets, or processes do you possess that can be used as sources of innovation.

Do airlines want to own engines? Of course not! They want planes in the air. An engine manufacturer started selling power by the hour. The real need wasn’t for the engine; the need was for reliable power. Recognizing this “true” need, GE invested half a billion dollars to help Boeing launch the 777. Instead of just supplying the engines, GE participates in the profits.

On-the-other-hand, competitors sometimes change and innovate by…joining together against some larger obstacle. When Boeing became a monopoly, European manufacturers formed a coalition to build Airbus and got 476 orders to Boeing’s 391.

For change and innovation to be successful all the elements of your business model must work together. Four Seasons Hotels makes sure that every aspect of its business model pampers its guests.

Innovative business models can boost profit in three ways: size, focus, and scope.

• The size of Wal-Mart means greater efficiency, purchasing power, and the muscle to enforce discipline on a fragmented industry.
• BMW exemplifies focus. It does not want GM’s business. It makes a special driving machine for high-end customers…nothing else.
• Scope is demonstrated by Four Seasons Hotels and Cisco. Four Seasons Hotels make sure that every aspect of its business pampers its guests. Cisco enjoys one of the broadest product selections in the world of data networking. Its agility allows Cisco not to become wedded to any one technology.

Nevertheless, in order to successfully find and adapt this type of thinking, all the elements of your business model must work together. Scope involves sharing assets to create a variety of products and services. Once you have turned your traditional thinking into a non-traditional direction, you have begun the process of surviving and thriving in the business place of today.

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