To thrive, businesses must constantly evolve, or they risk becoming commercially obsolete. In today's economy, the key to maintaining a competitive edge lies in the ability to generate groundbreaking business ideas that transform industries. Companies that regularly reinvent their operations often flourish, typically at the expense of less adaptable competitors. Therefore, organizations should focus on fostering and nurturing a range of new business concepts. To do this, innovation must be both a skill and a routine process within the organization. This can only be achieved if everyone in the organization understands the need for bold, radical innovations, the potential of novel business models, the role each individual can play in driving innovation, and the established design rules that guide the development of new business concepts. Ultimately, the primary challenge for businesses is to continuously reinvent themselves and the industries they serve. The mantra for the new millennium is simple: Develop revolutionary new business concepts and models, or perish.
In the forthcoming years, refining an existing business model will not be enough. Only corporations that ignite industry transformations with completely novel business concepts and radical models will thrive. The competitive truth of today's business world is that minor, sequential enhancements are no longer sufficient. Instead, the imperative is that all existing business concepts quickly lose their economic efficiency. Therefore, businesses should focus not on improving past successes but on devising new and revolutionary ways to conduct business in the future. The changing nature of markets implies that future competitive battles will not be between similar products and services but between different business concepts, with victors dominating hybrid markets consolidated from several smaller markets. New wealth will be generated by those who can transform old business models and create revolutionary new ones that create new markets, serve new customers, and generate entirely new revenue streams. Revolutionary new business ideas always result from fortunate foresight, arising not from formal planning sessions but from the mind of someone with the right combination of desire, curiosity, ambition, need, and chance. Business evolution over the last century shows a shift from product and technology development (1900-1950), to innovative marketing (1950-1990), and finally to leaps of human imagination developing original new business concepts since 1990. In response to shareholder demands for better results, companies have cut costs, focused on selling more existing products and services, undertaken financial engineering, and entered into mergers and acquisitions. However, these are temporary measures. Eventually, a point of diminishing returns is reached, making it clear that all business models run out of steam. What's needed is a complete business revolution – the development of a radical, highly profitable new business model. Without it, companies fail to gain a competitive advantage. Companies generating extraordinary wealth have highly differentiated, often controversial, business models. They employ unique capabilities, access unique assets, offer unique value propositions, and are uniquely positioned in the marketplace. To determine if your business model is unique enough, consider your approach to customer value, your reputation among competitors, recent strategy changes, any erosion of competitive advantage, and your ability to attract world-class talent. The first step to escaping the diminishing returns trap is admitting your current strategy and business model may be reaching the end of its productive life cycle.
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