The Business Model Innovation Factory
How to Stay Relevant When The World is Changing

Blockbuster's executives saw Netflix coming. Yet they stuck with their bricks and mortar business model, losing billions in shareholder value. They were "netflixed." Business models don't last as long as they used to. Historically CEO's have managed a single business model over their entire careers. Today, all organizations must be capable of designing, prototyping, and experimenting with new business models. The Business Model Innovation Factory provides leaders with the survival skills to create a pipeline of new business models in the face of disruptive markets and competition.

Avoid being netflixed. Your organization must be a business model innovator to stay competitive in today's turbulent world.

• Author Saul Kaplan is the founder and chief catalyst of the Business Innovation Factory (BIF), a real world laboratory for exploring and testing new business models and social systems. BIF has attracted a global community of over five thousand innovators and organizes the internationally renowned BIF Collaborative Innovation Summit

Acknowledgments xi

Introduction xiii

I What You Have Always Done Isn't Working Anymore 1

1 Don't Get Netflixed: Your Current Business Model Isn't Going to Last Much Longer 3

Blockbuster Gets Netflixed 5

Even Netflix is in Danger of Being Netflixed 10

2 Business Models 101: Creating, Delivering, and Capturing Value 17

How Does Your Company Create Value? 19

How Does Your Organization Deliver Value? 21

How Does Your Organization Capture Value? 29

Putting the Entire Business Model Story Together 32

3 Why Organizations Fail at Business Model Innovation 35

10 Reasons Companies Fail at Business Model Innovation 40

II Connect, Inspire, Transform: 15 Business Model Innovation Principles 51

4 Connect: Business Model Innovation is a Team Sport 55

Principle 1. Catalyze Something Bigger Than Yourself 55

Principle 2. Enable Random Collisions of Unusual Suspects 60

Principle 3. Collaborative Innovation is the Mantra 64

Principle 4. Build Purposeful Networks 68

Principle 5. Together, We Can Design Our Future 72

5 Inspire: We Do What We Are Passionate About 77

Principle 6. Stories Can Change the World 77

Principle 7. Make Systems-Level Thinking Sexy 81

Principle 8. Transformation is Itself a Creative Act 84

Principle 9. Passion Rules—Exceed Your Own Expectations 87

Principle 10. Be Inspiration Accelerators 90

6 Transform: Incremental Change Isn't Working 95

Principle 11. Tweaks Won't Do It 95

Principle 12. Experiment All the Time 99

Principle 13. Off the Whiteboard and into the Real World 102

Principle 14. It's a User-centered World—Design for It 108

Principle 15. A Decade is a Terrible Thing to Waste 110

III Creating a Business Model Innovation Factory 115

7 R&D for New Business Models 117

Innovate through Connected Adjacencies 119

8 Leading and Organizing a Business Model Innovation Factory 131

Staffing a Business Model Innovation Factory 134

Skills and Experience to Staff a Business Model Innovation Factory 137

Wanted: Business Model Designers 142

Resourcing a Business Model Innovation Factory 143

Overcoming the Politics of Business Model Innovation 145

9 Experimenting with Business Models in the Real World 149

Give Me Rhode Island 154

A Better Place 157

Putting the Customer in the Business Model Driver Seat 163

IV Business Models Aren't Just for Business 165

10 Nonprofits Have Business Models Too 167

11 R&D for New Social Systems 179

Measure Innovation Outputs 181

Education Rant 183

12 What's Your Personal Business Model? 191

Stay on a Steep Learning Curve 193

Embrace Vulnerability 195

Blessing and a Curse 197

About the Author 201

Index 203

SAUL KAPLAN is the founder and chief catalyst of the Business Innovation Factory (BIF), a real-world laboratory for exploring and testing new business models and social systems. BIF has attracted a global community of over 5,000 innovators and organizes the internationally renowned BIF Collaborative Innovation Summit. Saul shares his innovation musings on Twitter (@skap5) and his blog (It's Saul Connected), and as regular contributor to the Harvard Business Review, Fortune, and Bloomberg Businessweek.