The Importance of Business Model Innovation

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Comparing new business models with old models is not as difficult as it seems.
Business school professors often promote the idea of leveraging existing business models instead of creating new ones.
Entrant companies are more successful than incumbents because they do not have existing models to leverage.
Business model innovation is crucial for growth and overcoming disruption.
Examples of business model disruption include newspapers facing online advertising and conventional telephony being disrupted by Voice over IP.
Incumbent companies need to engage in business model innovation to compete with disruptors.

The theory of disruptive innovation endures as a way to make a complicated and expensive product simpler and more affordable. But the originator of disruptive innovation argued that disruptive innovation isn’t just about simplifying technology — it also requires a new business model.