Business Model Innovation

Availing taxi service has been simplified by Uber – the business model disruption erupted, taxi owners called for a massive strike globally, “how can simple mobile applications company without owning a single taxi can change the way this multi-billion dollar business has been done for decades?”

On the day of mass taxi strike, bookings on Uber has shot-up to 800%+ when compared to a regular business day; this helped Uber in a massive way with free publicity, mass viral marketing, more mobile app downloads, prime-time news coverage across geographies. Uber went on expansion spree with more mobile users were downloading its application without even targeting. Eventually no one is stopping anyone from using Uber, it’s a business model disruption like once dream of flying made possible by Wright Brothers first powered flight, the mode of long-distance commuting changed. 

When e-commerce for ticketing was introduced, the way you book or buy tickets completely changed. Today travel ticketing, hotel booking are the major e-commerce spend globally.

Razor and Blade Business Model!!

Gillette for decades sold the razor at clearance-give-away prices, but sold the blades for a bomb. Who saw this as an opportunity to implement in their own business “Business Model Innovation”?

• HP did it, sold its inkjet printers at low-cost with a premium pricing on ink
• Nestle Nespresso creatively copied this model, by selling cheap coffee machines and expensive coffee
• Amazons Kindle, sold cheap digital readers to sell e-versions of books at high price when no material and shipping cost is involved
• Apple iTunes, disrupted the music industry by giving free iTunes application but charging for every music download, made music CD’s and DVD’s obsolete very soon, also made downloaded music not shareable between multiple users which was the major leap forward in protecting IP in digital content

There are 55 such business model patterns identified by researchers at University of St.Gallen, which was borrowed from an industry/business to different industry/business.

What is your business model innovation?

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