Constant reinvention, constant reevaluation of business model and transcending industry boundaries are the keys to building invincible companies, Professor Yves Pigneur from the University of Lausanne said in July to the webinar audience of an ongoing series sponsored by Yonsei University School of Business and the Yonsei Business Research Institute.
Professor Pigneur is the co-author of the international bestseller “Business Model Generation” and in 2020 “The Invincible Company,” the topic of the webinar.
Before explaining the main subject of the webinar, Professor Pigneur outlined the business model canvas technique that he devised a decade ago in “Business Model Generation.” Specifically, he said, an enterprise's business model consists of nine business model generators: key partners, key resources, key activities, value proposition, customer relationship, channels, customer segments, revenue streams, and cost structure.
His “canvas” technique helps companies develop new business models by explaining these nine building blocks of business models in multiple dimensions. He then explained how companies can use portfolio management, business model patterns, and cultural innovation to achieve solid and sustainable growth.
[Professor Yves Pigneur]
First, Professor Pigneur said a company's business model portfolio can be divided into two stages, the first an “exploiting” model and the second an “exploring” model. In the first stage, a company relies upon a business model that has already proven profitable. In comparison, the “exploring” stage involves researching and developing new business projects. However, he noted, companies that successfully navigate the first stage often fail before they can generate profits with their new business models.
Next, he explained the “Invent” and “Shift Patterns” that he called two innovative and effective business model patterns. Which one a corporation uses depends on the direction of its business.
“Invent patterns” are divided into “frontstage disruptions” and “backstage disruptions,” depending on which elements of the nine building blocks of business models are used. “Frontstage disruptions” use the customer and channels elements creatively. In contrast, backstage disruptions refer to business models derived by adjusting key partners, key activities, and key resources. Professor Pigneur used Britain’s Dyson company as an example of a frontstage disruption and Dollars Shavers Club as an example of a business model developed from a backstage disruption.
In comparison, Shift Patterns represents the transformation of existing business models with new patterns. An example is HILTI, which sought to transform its business model from product-oriented to service-oriented.
Finally, Professor Pigneur emphasized the importance of innovation in corporate culture to ensuring the continuing competitiveness of an enterprise. A company should proactively research and manage both its obstacles and factors for success, in the process transforming the behavioral patterns and results within the organization. In addition, corporate managers ideally should seek to reorganize the organizational culture to ensure a balance of power between the departments in charge of the exploring and exploiting business models. To conclude the webinar, Professor Pigneur emphasized the importance of balanced investments in both new and existing business model development.