Business model innovation and strategic productivity

Jul 18, 2024

Chander Velu, an expert in business model innovation and professor at Cambridge, and Sir Charlie Mayfield, former head of John Lewis, dive into how strategic business model shifts can enhance productivity. They discuss the four Vs of innovation, the importance of overcoming cognitive barriers in large firms, and share insights on John Lewis’s transition to online retail. The duo emphasizes that true returns come from deep business model transformations, especially for SMEs facing unique challenges. They also highlight the role of digital technology and sustainability in shaping the future of business.

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INSIGHT

Four Vs Explain Business Model Value

A business model defines how a firm creates, captures and networks value through four Vs: proposition, creation, capture and network.
Transforming these components can raise productivity by improving input-output ratios and unlocking new growth.

ANECDOTE

John Lewis Used Catalogues To Kickstart Online Sales

John Lewis launched johnlewis.com after acquiring a failing dot-com and used a printed catalogue to drive early online traffic.
Repeated catalogues proved sales momentum that melted buyer resistance and institutionalized new production processes.

INSIGHT

Online Sales Change Retail Economics

Moving from physical stores to online shifts a retailer from fixed-cost to variable-cost economics, changing cash generation dynamics.
That shift demands heavy investment in automation and supply-chain tech to restore scale advantages and profitability.

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Why is business model innovation the key to an organisation’s productivity? What does it take to do it right? New technologies and new business practices don’t just come out of the blue. They happen because firms embed them in their processes so they can create a valuable proposition for their customers. This episode explores the challenges and opportunities for both large incumbents and small and medium-sized enterprises (SMEs) in adopting new business models, particularly in the context of digital transformation and the transition to a net-zero economy.

Host Professor Bart van Ark is joined by:

Sir Charlie Mayfield, former executive chair of John Lewis. Chair of QA Limited and founder and chair of Be the Business.
Chander Velu, Professor of Innovation and Economics at the Institute for Manufacturing in the Engineering Department at Cambridge University.

For more information on the topic:

Chander Velu, Business Innovation: A Blueprint for Strategic Change, Cambridge University Press, 2024.
Wit Wannakrairoj and Chander Velu (2021), Productivity growth and business model innovation, Economics Letters, Volume 199, February.
The Productivity Institute, Business Dynamism: is turbulence good for productivity?, Productivity Puzzles Podcast, March 2024.
The Productivity Institute, Government policy and business productivity: does it help or harm?, Productivity Puzzles Podcast, April 2024.
The Productivity Institute, How do business leaders think about productivity?, Productivity Puzzles Podcast, May 2024.
The Productivity Institute, Should we be worried about business dynamism?, blog.
The Productivity Institute, Government policy and business productivity: does it help or harm?, blog.
The Productivity Institute, How do business leaders think about productivity?, blog.

About Productivity Puzzles:

Productivity Puzzles is brought to you by The Productivity Institute, a research body involving nine academic institutions across the UK, eight Regional Productivity Forums throughout the nation, and a national independent Productivity Commission to advise policy makers at all levels of government. It is funded by the Economic and Social Research Council.