Business Model Innovation is a relatively new concept. In the book, "Mastering the Hype Cycle," Jackie Fenn and Mark Raskino note that the term "business model" arose in the mid-1990s. The concept of business model has gone through three stages of the Hype Cycle: Technology Trigger; Peak of Inflated Expectations; Trough of Disillusionment. Business model and its associated concepts may now be on the "Slope of Enlightenment" and advancing towards the "Plateau of Profitability." This is good news for practitioners of business model innovation.

Inspite of increasing use of the term "business model," many people still have 'psychological inertia' regarding the concept of business model innovation. Such people often ask, "Why should a business adopt a formal tool or methodology for business model innovation?" It's not that business model innovation does not have value. Rather, some people have difficulty in perceiving the value or benefits of business model innovation. Moreover, innovation always has associated risks that some people may not want to deal with or manage.

After mulling over reasons to convince people to adopt business model innovation, I came to the conclusion that business model (value chain) innovation is one of 6 tollgates for Blue Ocean Success. In general, Blue Ocean Success involves extraordinary success such as very high profit or return on investment with little or no direct competition. Without a highly successful business model (value chain) innovation, the chance of a business achieving Blue Ocean Success virtually evaporates.

Below is a document that features the concept of Blue Ocean Success as well as 6 interdependent tollgates for achieving Blue Ocean Success. The concept and tools of Blue Ocean Success can easily be married with those of the Business Model Canvas.



The 6 Tollgates of Blue Ocean Success
Tollgate 1. Employee (Team) Success
Tollgate 2: Product/Service Design Success
Tollgate 3: Customer Success
Tollgate 4: Business Investor Success
Tollgate 5: Value Chain (BUSINESS MODEL) Success
Tollgate 6: ECOSYSTEM (Industry) Success


The 6 tollgates can also be perceived as a hierarchy of goals or constraints as a business moves closer towards Blue Ocean Success. One implication of the Business Success Tollgates is that businesses that have high investor success (Tollgate 4) are more likely to be interested in business model innovation. Highly successful businesses such as Microsoft, IBM, and Wal-Mart are interested not only in business model (value chain) success but also in ecosystem success. The truth is that businesses at all stages need business model innovation.

According to the hierarchy of tollgates, the chance of achieving Business Investor Success is greater the more a business has gone through the tollgates of employee (team) success, product/service design success, and customer success. These tollgates of success must be aligned with business model success in a perpetually iterative process. This is another reason for having a formal and innovative business model and consequently, for using the Business Model Canvas and its tools.

I must iterate that the Business Success Tollgates and other tools for Blue Ocean Success are fully compatible with the ideas and tools of the Business Model Canvas as well as Blue Ocean Strategy and the Balanced Scorecard. A key benefit of the Business Success Tollgates is that it provides a visual and logical (almost self-evident frame or context) for integrating business model innovation in general and the Business Model Canvas in particular with strategic as well as bottom-line activities of business.

I'd be interested in hearing your thoughts.

Best,
Rod.

Business Ocean Success Management_Tools.pptx