September has arrived. The shakeup is in full swing. And while the medium is variable, BMi (Business Model Innovation) is the mechanism, and that’s what we will explore in the following post.

With old-world businesses on the downfall, the #NewEraBiz is shooting up through the cracks to fill the gaps; but to make the this process happen requires new models, new business models to be precise.

While everything new and exciting gets broadly categorized under the umbrella of innovation, let’s break down the different types:

  • technological innovation brings new technologies to our lives that increase efficiency, enhance comfort and aid us in discovering the unknown;
  • social innovation brings new processes, concepts and structures to help meet the world’s most pressing social needs;

Yes these types of innovation are fundamental pillars of society, but they are not the key variable in the ‘world-changing’ equation; business model innovation is. And if necessity is the mother of invention, BMi is the mother of big change and sustainable impact.

What is BMi?

A business model is defined as the rationale of how an organization creates, delivers and captures value. Innovation is defined as executing new ideas to create value.

Business model innovation is a process of reinventing the business model itself in order to deliver and capture enough value associated with the new creation to bring it to market. While the actual definition is tricky, SustainAbility ‘settled’ on the following definition:

“ a new or novel form of exchange at some point along a company’s value chain.”

+ How Firms Innovate Their Business Models for Sustainability

Not exactly posterboard material for inspiration, but very practical in the sense that a company wants to SHIFT on their current value chain by and develop a new model to capture that value.

Because without a new mechanism to capture value, and generate sustainable cashflow, we are left with another technology that collects dust on a workbench or another social venture that inspires a few people in a boardroom but never actually reaches its intended target. To bring the types of ideas to fruition that make fossil fuels obsolete or access to clean water universal, there needs to be a business model there to back it.

Why?

According to the authors of the upcoming book ‘The Risk Driven Business Model …’ (HBR, 2014) who have studied hundreds of business models in their thesis:

“we often see that groundbreaking technology rarely achieves mass adoption without a corresponding innovation in the business model around the sale/use of the technology.”

We could substitute ‘social innovation’ in for ‘technology’ as well, but overall, the point is clear, we need to focus on the target:

“there are numerous innovative technologies that are waiting for an innovative business model that will facilitate their use and adoption, and there are numerous business model innovations that can make everyday activities more sustainable.”

To be able to survive through the ups and downs of bringing something truly innovative to the market, we need to create models that will enable organizations to profit and grow sustainably. BMi is the foundation, the fundamental building block for the #NewEraBiz.

Let’s look at three examples from all different parts of the world to illustrate this point:

Inspiration

Tesla: US-based electric car pioneer led by iconoclast Elon Musk

BMi: developed battery-swap system so that drivers can charge cars (approx. 90 sec) faster than they can refuel conventional cars at a gas station. Tesla identified the biggest barrier to mass-scale adoption of electric cars as the battery, so they developed an innovative way to deal with this problem that would put them on even footing with gas-powered cars. While drivers will have to drop the fresh battery off on the return leg of their journey and pay a ‘transport fee,’ this BMi could be enough to convert a few more customers to Tesla, enough to build critical mass.

Fast Pack Swap Event from Tesla Motors on Vimeo.

+ More about Tesla from the Lumos Blog

M-Pesa: simple SMS money-transfer system that revolutionized Kenya and other surrounding African markets

BMi: Vodafone realized the solution to this problem was not a high-tech mobile solution, but a low-tech communication one. So they built a bare-bones SMS app and trained a countrywide network of M-Pesa agents to collect and transfer the money; in the process, they created a new business model for one of the world’s most successful ‘mobile’ apps.

+ more on M-Pesa from the Lumos Blog

Catarse: the top crowdfunding platform in Brasil, Catarse is building a platform that empowers Brazilians to reinvent their collective realities via collaborative financing

BMi: While still a work in progress, Catarse is starting to move away from Kickstarter’s product-driven rewards model and focus on tapping into the power of Brasil’s social capital. Using a subscription-based curation model, where campaigns are categorized and packaged based on social issues and then targeted at specific members of the community, Catarse hopes to hone in on more specific themes and drive social innovation through its network. Catarse makes 13% on all funds raised through its platform.

+ More on Catarse from the Power of Sharing

In all three cases, the technology used to initiate the solution takes a back seat to the BMi. Each example showed the potential for scalable social impact, but didn’t stray from the objective of developing a sustainable business model.

Let’s look at three strategies to answer the next part of the #NewEraBiz BMi equation:

How?

Target select networks of people who are most closely affected by the problem you are trying to solve and take an open and transparent approach to engaging with them.

Use social media and rich medium (ie. video) to open the conversation, reach out to community leaders and influencers, and use feedback to form market-entry strategies.

example: Catarse published a blog prior to launching in order to engage the Brasilian creative community and source their first four projects

Work with a local partner. Make use of any technology that already exists. Align incentives so that everyone is motivated to make the venture work.

example: M-Pesa worked with mobile operator Safaricom and microfinance institute Faulu to develop their pilot project and entry strategy into the Kenyan market.

When you have a vision, the only way to make it a reality is by continuously experimenting.

example: Tesla’s battery-swap system. Will it lure more people towards Tesla? More than likely, but there is only one way to truly find out.

Overall, the SHIFT is happening and the #NewEraBiz is gaining progressively more momo with each passing day. But we need more, much more. To accelerate the SHIFT and drive greater impact, we need to focus less on the ideas and more on the model. While the medium is variable, the mechanism is BMi – let’s make it happen!

What great examples have you seen of BMi?


+ BMi: FINANCE
+ DIGITAL: InterC Strategy


PLAN – the Business Model