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Sustainable and successful innovation requires an adjustment to the business model

Sustainable and successful innovation requires an adjustment to the business model

Introducing innovation processes at all levels and establishing a culture of innovation capable of being an effective "driving force" behind innovations are elementary basic principles in innovation management. However, successful innovation will only enjoy sustainable success if the business models are optimally designed to support innovation. The way to go about this is described by TMG Consultants Dr. René Niethammer and Dr. Alexander Stern in their recent book "Innovation Excellence".

There is no doubt that innovations offer companies huge opportunities for growth, and yet they so often meet with obstacles to implementation. A lot has been discovered recently about the processes for the optimum implementation of innovations, and numerous companies have introduced and established these over the years. But why do only some of these companies enjoy success as a result, while probably a larger proportion only derive mediocre opportunities for success from their innovation strategies and processes?

Often those responsible limit themselves to introducing comprehensive innovation processes throughout the company, associated with measures to support a suitable innovation structure that functions as a sustainable guarantee for, and "driving force" behind, the successful development of innovations. However it is not uncommon that a third facet is needed for innovations to be successful on a sustainable basis, namely the adaptation of the existing business model. A business model can roughly be divided into the following components:

  • Creating value with products and services
  • Introducing these to customers in the best possible form and finally
  • Deriving the best possible profits from them

Only when companies achieve the optimum orientation of their business models towards innovation can sustainable success arise from innovation. An optimum business model can enable processes and corporate culture to be organised and structured consistently to offer support for success. However, many companies pay too little attention to this organisational facet, thereby wasting a great deal of potential capacity for innovation.

In many companies, the organisational structure of the research and development (R&D) department has grown up over years or decades on the basis of a traditional organisational structure and is accordingly set in its ways. Effective and efficient innovation processes, starting with the R&D department, require an orientation towards a high level of internal and external exchange of knowledge and expertise, customer proximity and integration, and a responsible attitude towards innovation that includes a certain tolerance of error, bringing the whole together to form a complete business model. These complex aspects are often difficult, if not impossible, to integrate with the existing, often strongly internally-focussed, organisational structures. In many companies, R&D tends to be structured along the lines of the jobs in hand or in accordance with technologies, systems or components. If this organisational structure is reflected in the customer processes and organisation, a great loophole can soon be detected in customer relations and customer-oriented project processing. The same often also applies to the business model - while the innovative business model is oriented towards system solutions with a high proportion of service innovations, the R&D department is structured along the lines of self-sufficient components, thus covering only a limited segment of the innovations incorporated in the current business model. The segment of innovation, often more important for giving a company a unique edge, is therefore under-represented or not accountably anchored in the organisational structure.

On the basis of these facts, we have developed analytical stages and methods by means of which companies can use their strategy, market and competitor environment, customer profiles, technology platform and overall business model to derive the ideal organisational structure for their R&D, thereby creating a successful and sustainable framework for innovation. This reorganisation expenditure will give a further boost to opportunities for innovation and a distinct innovation culture.

Informationen to Book:

Innovation Excellence  
Wie Unternehmen ihre  Innovationsfähigkeit systematisch steigern
Hg. v. Serhan Ili  
Hardcover, 516 Seiten
Symposion Publishing, Düsseldorf 
1.  Auflage, 2012

Short info to Book (PDF)


Volker Lindemann
TMG Consultants GmbH
Schrempfstraße 9
70597 Stuttgart
Tel.: 0711-76 96 76-0