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April 12, 2006

Strategic innovation | Strategic economies

We ended this article the analysis of the different elements that composen a business concept, putting attention to both last aspects that can multiply the capacity to generate benefit. First of them it is in if the model it has some of the denominated strategic economies, mainly economies of scale, capacity to concentrate themselves in a certain niche of market and to become leader or, the other way around, capacity to use resources such to serve to very different markets creating sinergias between all of them.

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Strategic innovation | Entry barriers

To have a barrier of entrance difficult to surpass on the part of the competitors is another one of the possible multipliers of benefits. If a company sends to the market a concept of really innovating business, is evident that during a period she will be the unique one in developing it.

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Strategic innovation | Capitalising client feedback

Another way to enter the dynamics of the increasing yields is similar to the one of the effect network that we commented in the previous article, but this is in the capacity that has a company to offer a better product as it increases his number of clients. He is the one that we can denominate positive effect of the feedback company-client.

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Strategic innovation | Increasing returns

One of the main multipliers of the benefits occurs if our model of business can enter a dynamics of increasing yields. This situation we found it when a company, as it grows, still has more possibilities of growth, and in addition to exponential form, since the fact to arrive at one first stage from expansion is the one that allows him to initiate one second phase of growth, that simultaneously will allow him to arrive at third and so on.

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Strategic innovation | Profit multipliers

Once analyzed three of the elements that cause that a business concept has capacity to generate wealth (efficiency, exclusive feature and coherence) we entered to analyze the fundamental element of this capacity. One is the multipliers of benefits that can cause that the yields go off dice in a while and, consequently, is worth the trouble to assume the risk of taking the concept ahead.

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Strategic innovation | Business concept coherence

The third element to value the capacity of generation of future wealth of a business concept, along with the efficiency and the capacity to be unique, is the degree of coherence of its internal elements (mission, vision, processes, reach of market, form to arrive at the objective public, etc.).

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Strategic innovation | Business concept exclusivity

The second element to value the capacity of generation of future wealth of a business concept (first it is the efficiency) is in the fact if the model he is unique or no. If it has discovered a new industry or a new market that had before not been explored. If it has developed a totally new form to arrive at the clients. If the execution of the model is totally innovating forehead to the traditional way to act.

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Strategic innovation | Business model efficiency

I today retake the analysis of the different elements that compose a concept of business and how we can introduce modifications that more innovators do. Within the group that makes reference to the capacity of generation of wealth of the model, we found like first element the efficiency of the model, is to say if by the product that we do our clients are arranged to pay, direct or indirectly, more money than the one than costs us to us to produce it.

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Strategic innovation | Wealth generation

In the last articles we have been analyzing the different elements that compose a concept of business and how we can be refexionando on each one of them with the objective to introduce modifications that more innovators do as a whole. Even so, with this it does not have is enough.

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Strategic innovation | Strategic alliance

The last one of the elements that we will analyze within the concept of value network is the one of the alliances or coalitions of companies. Let us remember that all the elements of the value network (strategic suppliers, suppliers, partners and, finally, alliances) have quite diffuse conceptual limits and that often they are overlapped, depending on the situation specifies that we analyze.

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Strategic innovation | Partnering

Following in the scope of the value network, we found a concept in the last emergent years and that, sometimes, badly have been used. It is the concept of "partner". On the one hand, the line that separates the concept of strategic supplier of the one of a conception of "partner" is very thin.

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Strategic innovation | Value chain

Within the concept of value network the first element that we found is the one of the suppliers. From the way as we managed the relations with our suppliers can be derived innovating initiatives in our model of business. In fact, we could say that to define a strategy in this field it is a fundamental aspect for, like minimum, to cause that our present model continues being competitive.

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Strategic innovation | Innovation network

A fourth group of elements that form the business concepts is that that we could denominate like the "network of value" that turns around the company. The concept of value network talks about to all those necessary activities for the development of the business model, or are internal or external, but that are not made by the own structure of the company.

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Strategic innovation | Price structure

The structure of prices of our products and services offers to us, probably, one of the most interesting elements to introduce innovations in our model of business. This circumstance we have been seeing it of increasing form and in different sectors in the last years.

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Strategic innovation | Client relationship

The dynamics of relations that we establish with our clients is another one of the elements of the form how we interacted with them. Marketing goes less and less oriented to the specific transaction and more and more to maintain a relation continued and lasting with the clients, who allow us to maximize the operations that we will do with them throughout a period of expanded time.

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Strategic innovation | Knowledge about our clients

Several times I have commented the capital importance to have the maximum knowledge of our clients and potential clients. This it is a key element for the configuration of our form to interact with them and, therefore, of our concept of business.

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Strategic innovation | Innovation marketing

The form that we must to arrive at our clients and potential clients determines and forms one of the elements of our model of business. To analyze it to introduce changes that differentiate us from the other companies and they allow us to arrive from one more a more imaginative form and innovating to our market it can mean a great difference in the development of the business.

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Strategic innovation | Clients

In the last articles I have been describing and analyzing a model (based on the one of Hamel) of "deconstrucción" of the concepts of business in different elements, to be able to analyze them in depth and to introduce, in case that it is possible, scopes of innovation in each one of them.

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Strategic innovation | Process innovation

The last one of the elements that compose the strategic resources of the company is formed by the different basic processes that the company has developed with time. When we spoke of processes we are speaking of all those activities that take to that the company develops its business.

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Strategic innovation | Strategic assets

The strategic assets are that set of goods, tangible or intangible, which the company has been generating and which have become essential to develop a competitive advantage in their market. We would be speaking of real estate patrimony, machinery, patents, marks, know-how, data bases of information of clients, etc.

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Strategic innovation | Core competencies

There is a second group of aspects relative to the business concept that makes lack analyze with depth to establish if, through its involution or modification, we can develop a more innovating model. It is what we can denominate strategic resources of the company, that they include the core competencies, the strategic assets and the nuclear processes.

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Strategic innovation | Value proposition innovation

The third element that conforms the strategic nucleus of the business concept is related to the set of aspects that allow us to differentiate to us from our competitors. In this case, we would have to analyze deeply which is the proposal that makes the company to the market and, if it is it, in what is different from the rest of companies that attack the same market.

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Strategic innovation | Innovation in marketing

To analyze the reach of the product and the market, within the strategic nucleus of the business that already we defined, is the following passage in a process of introduction of innovations in the business concept. In this point which we must define it is at what types of market (objective public, geographic segments, scopes) we are arriving with our present products and what type of variations we could introduce to extend the market, to devise new uses, to arrive at different segments, or to sell other products to the traditional markets.

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Strategic innovation | Innovation strategy

The first group of aspects to analyze as far as the model of business of a company is the one that we could denominate strategic nucleus of the business. This nucleus comes determined by the mission from the business, the reach of the product that commercializes the company and from the market to which it serves, and the capacity of differentiation that allows him to compete with other companies in the same market.

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Strategic innovation | Business model innovation

Since or I have commented several times, I am of the opinion from which the greater innovations come normally associate to the shifts of concept or paradigm more than to new technologies, although these are a necessary instrument and often essential pair that can be produced the change of concept. In the case of the enterprise world, those would come from the changes in the concepts or models of business, since I have come analyzing in some scopes and sectors in the last articles.

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About the Author

Francesc Llobet is an Internet entrepreneur and a strategy business consultant in the fields of innovation, internet marketing and ebusiness.
Based in Barcelona, Catalonia (European Union), he is the founder of Sappiens.com, The Knowledge Community and Founder and CEO of Adverstore.com, Advertising for everyOne!. He maintains InnovationThink, eMarketingThink OnlineAdvertisingThink and A Startup Story, blogs where he writes on Innovation, Internet Marketing, Advertising and Startups. To know more..

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