Adapt or die: how will you innovate your business model?

A dynamic and inspiring group of professionals and managers from business, academia and the social sector gathered at Rotterdam School of Management, Erasmus University (RSM) for an inspiring afternoon seminar to discover how to embrace change and implement new insights to ensure the sustainable and competitive success of their companies. The seminar about business model innovation was the fourth edition of the powerful RSM Erasmus Business Series, and took place on 25 November in Amsterdam.



“Organisation don’t really have a choice; they must adapt or die,” RSM Professor Henk Volberda told the audience, emphasising that that an organisation can only survive if it keeps exploiting and exploring. At the fourth edition of the RSM Erasmus Business Series, Prof. Volberda challenged the 100 participants to explore why they should reinvent their business models and how that would affect performance.

Based on his extensive research into how and when managers can change a firm’s business model, which was also published in his book Reinventing business; how firms innovate their business model, Prof. Volberda revealed the managerial dos and don’ts for business model innovation, and the appropriate transformation trajectories and management roles for business model innovation.

Prof. Volberda stressed that is not easy to change a business model. “Many firms fall into the business model trap, for example refining routines and fixating on existing technologies. They keep on investing in existing technologies and try to create a perfect fit with business environment,” he said.

Hypercompetition

The trick for changing your business model is not to listen to your existing customers, according to Prof. Volberda. “If you do that, you’re stuck with difficult customers and don’t make margins. So, focus on a new consumer market; it’s about market creation.”

While the audience was challenged to think about the meaning of ‘creating value’, Volberda said that many companies are turning from stable competition to hypercompetition, which includes the two types of business model innovation: replication and renewal. “Replication is an incremental innovation of exiting business models with low short-term risks, but high long-term risks,” said Volberda. “Renewal is creating new relationships with new customers in new markets. It has high risks, but its potential benefits are also very high.” During a break-out session, the audience shared which business model innovation their organisations apply: fixation, replication, renewal, or dual focus.

Participants of the seminar, who represented companies such as ABN AMRO, Staples, Philips, Aon Risk Solutions, TNO and Ahold Europe, explored what types of leadership are necessary to implement and guide the business model innovation process and how this influences performance. “Now I can see where my company is, have a better overview of what our business model is and how I can move into a new stage in our business model,” said Natalia da Rosa, manager at Porcelana Bárbara. “We can think more about going into renewal.”

Levers of business model innovation

Business models are directly related to performance, said Prof. Volberda. “With fixation being the point of reference, research shows that organisations have a performance benefit of 8 per cent when you focus on renewal. It’s 13 per cent when focusing on replication and 18 per cent when you focus on dual focus.”

Prof. Volberda said there are four levers of business model innovation: technology, management, organisational forms and co-creation. “Companies ideally benefit from a combination of levers, for example when turning to could computing like Ericsson did, self-managing teams in a manufacturing setting like DSM did, vertical integrated forms like Zara did, or co-creation with suppliers, customers or even competitors like Procter & Gamble did.” He warned that too much replication can have negative effects, for example when dealing with disruptive innovation.

“While your performance is going up, your competitive position is under pressure,” said Volberda. “But for now, don’t deny your position compared to competitors.” He added that another threat is losing valuable talent. “Skilled people will leave your company; they’re excited about new business models elsewhere. Be aware of what’s happening. Follow the early warning signals and change your business model.”  

After the audience reflected on their own business models and explored the possibilities of innovation and renewal, the seminar concluded with networking drinks.

RSM Erasmus Business Series

The RSM Erasmus Business Series is a thought-provoking, impactful, and interactive series of seminars covering a range of business topics. Each seminar is in English and aims to inspire professionals, and develop their understanding of current business issues. Previous seminars explored sustainable competitive advantage, gender-balanced leadership, and the relevance of leadership. The RSM Erasmus Business Series are organised by RSM Executive Education and take place in Amsterdam. The next edition will explore how to use storytelling in business. www.rsm.nl/ebs.

Rotterdam School of Management, Erasmus University (RSM) is ranked among Europe’s top 10 business schools for education and among the top three for research. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who carry their innovative mindset into a sustainable future thanks to a first-class range of bachelor, master, MBA, PhD and executive programmes. RSM also has offices in the Amsterdam Zuidas business district and in Taipei, Taiwan. www.rsm.nl

For more information on RSM or on this release, please contact Marianne Schouten, Media & Public Relations Manager for RSM, on +31 10 408 2877 or by email at mschouten@rsm.nl.

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