Purchase the book.
Reinvent Your Business Model shows the way to get there. It dispels the common misconceptions about what a business model is and isn’t – and provides a practical framework for how one really works. Successful incumbents face unique challenges in creating the new – as the very capabilities that make them successful actively inhibit exploration and innovation. View the quick guide to Reinvent Your Business Model.
Reinvent Your Business Model will equip a new generation of innovators with the insights and the tools that they need to develop a repeatable business model innovation capability and seize the white spaces where the greatest growth opportunities lie.
“Why can’t powerful, well-financed companies be as innovative as nimble start-ups? With Johnson’s book they can- it’s a realistic playbook that shows us how to get out of our own way and become as good at breakthrough innovation as we are at sustaining the core.”
—ALEX GORSKY
CEO, Johnson & Johnson
Business Model Fundamentals: The Four-Box Model
Digital Growth Depends More on Business Models than Technology
For startups, 2009 was a good year. More than 20 companies launched at that time, including Uber, Slack, Pinterest, and Blue Apron, eventually achieved $1 billion-plus valuations. Given that those companies were all venture-financed and emerged from Silicon Valley, you might assume that the key ingredients that have ensured their success were cutting-edge technologies, digital platforms, and customer bases that were chiefly made up of digital natives. You would be wrong.
Yes, those companies had great technologies, platforms, and demographics, but the secret of their success turns out to be much more prosaic. Each was able to satisfy real customers who needed real jobs done — and by jobs, I mean a fundamental problem in a given situation that needed a solution. In other words, they had great business models.
Every successful company, whether it knows it or not, owes its success to its business model. I explained this in an article that was published in Harvard Business Review in 2008, before any of those companies began, and, now, 10 years later, that still holds true, as more and more of the business discourse is focused on digital transformation. A digital platform, or a digital solution, may enable a new epoch of transformative growth, but when you get under a company’s hood and look to see what’s really driving it, the engine of transformation turns out to be its business model.
In my article, I identified the four interlocking elements that, taken together, create and deliver value to both companies and its customers:
Customer Value Proposition (CVP), which is a way to help customers get a job done. The more important the job, the lower the level of satisfaction with other companies’ attempts to solve it, and the better and cheaper your solution is than theirs, the more potent your CVP.
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20 Examples of Business Models
Affinity Club
e.g. MBNA
Partner with membership associations and other affinity groups to offer a product exclusively to its members, exchanging royalties for access to a larger customer base.
Automation-enabled services
e.g. Betterment, IBM Watson
Harness software that automates processes previously requiring human labor and cognition to reduce operating costs.
Brokerage
e.g. Century 21, Orbitz
Bring together and facilitate transactions between buyers and sellers, charging a fee for each successful transaction.
Bundling
e.g. Fast-food value meals, iPod/iTunes
Make purchasing simple and more complete by packaging related products together.
Crowdsourcing
e.g. Wikipedia, YouTube
Outsource tasks to a broad group that contributes content for free in exchange for access to other users’ content.
Data-Into-Assets
e.g. Waze, Facebook
Use data management and analysis processes to capture value from having access to or ownership of data.
Digital Platforms
e.g. OpenTable, Airbnb, Uber
Enable value-creating interactions between external producers and consumers through open, participative infrastructure with set governance conditions.
Disintermediation
e.g. Dell, WebMD
Deliver directly to the customer a product or service that has traditionally gone through an intermediary.
Fractionalization
e.g. Time-sharing condos, NetJets
Allow users to own part of a product or service but enjoy many of the benefits of full ownership at a fraction of the price.
Freemium
e.g. Spotify, LinkedIn, Dropbox
Offer basic services for free but charge for upgraded or premium services.
Leasing
e.g. Luxury cars, Xerox, MachneryLink
Make high-margin, high-cost products affordable by having the customer rent rather than buy them.
Low-Touch
e.g. Southwest, Walmart, Xiameter
Offer low-price, low-service version of a traditionally high-end offering.
Negative Operating Cycle
e.g. Amazon
Generate high profits by maintaining low inventory and having the customer pay up front for a product or service to be delivered in the future.
Pay-As-You-Go
e.g. Amazon Web Services, car2go
Charge the customer for metered services based on actual usage rates.
Razors/Blades
e.g. Gillette, personal printers
Offer the higher-margin “razors” for low or no cost to make profits by selling high-volume, low-margin “blades.”
Reverse RAZORS/BLADES
e.g. iPod/iTunes, Amazon Kindle
Offer the low-margin “blades” at no or low cost to encourage sales of the higher-margin “razors.”
Product-to-Service
e.g. IBM, Hilti, Zipcar
Rather than sell the products outright, sell the service the product performs.
Standardization
e.g. Minute Clinic
Provide lower-cost standardized solution to problems that once could be addressed through high-cost customized products or services.
Subscription Club
e.g. Netflix, Five Four Club, Dollar Shave Club
Charge the customer a subscription fee to gain access to a product or service.
User Communities
e.g. Angie’s List
Grant members access to a network, generating revenue through membership fees and advertisements.
“Most managers think the key to growth is developing new technologies and products. But often this is not so. To unlock the next wave of growth, companies must embed these innovations in disruptive new business models. That’s what Mark Johnson’s book so convincingly demonstrates.”
—CLAY CHRISTENSEN
Professor of Business Administration, Harvard Business School
APPLE’S EPIC REINVENTION: THE IMPACT OF ITUNES
Mark W. Johnson is co-founder and senior partner at Innosight, a growth strategy consulting firm, which he co-founded with Clayton Christensen in 2000.
Mark’s most recent work has focused on helping companies envision and create new growth, manage transformation, and achieve renewal through business model innovation, and he is a frequent writer and speaker on these topics.
In addition to Reinvent Your Business Model: How to Seize the White Space for Transformative Growth, Mark is also coauthor of the book Dual Transformation: How to Reposition Today’s Business While Creating the Future, a blueprint for how successful companies can leverage disruptive change to fortify today’s business and create tomorrow’s growth engine.
Twitter: @Mark_W_Johnson
Contact us for Mark’s speaking engagement information.
Download Mark’s Speaker kit.
Author Videos
In the News
April 23, 2019
HBR Live in London: Reinvent Your Business Model
Join Mark Johnson and Harvard Business Review in London, April 23.
DECEMBER 14, 2018
Digital Growth Depends More on Business Models than Technology
In HBR, Innosight senior partner and cofounder Mark Johnson discusses the power of business model innovation.
December 4, 2018
FORBES India: Big Misses from Leading Businesses
This Forbes India piece mentions Ford and Xerox’s failed business models from ‘Seizing the White Space’ by senior partner Mark W. Johnson.
NOVEMBER 8, 2018
Forbes: New Business Models- Not Technology- Will Transform the Legal Industry
Business model transformation in law and other lessons from ‘Reinvent Your Business Model’ by Mark Johnson are discussed in this Forbes piece.
November 2, 2018
Wall Street Journal: It’s All About Business Model Innovation, not New Technology
Principles from ‘Reinvent Your Business Model’ by co-founder Mark Johnson and the importance of business model innovation are discussed in this Wall Street Journal piece.
OCTOBER 26, 2018
Techonomy: When Business Models Matter More Than Tech
Innosight co-founder and senior partner Mark Johnson discusses the importance of a well-thought-out business model in technology.
OCTOBER 16, 2018
Innovation Leader: (better) Business model Innovation
Innosight’s Mark Johnson in a podcast with Innovation Leader.
OCTOBER 15, 2018
SARDER TV: Mark johnson interview
Innosight co-founder and senior partner Mark Johnson talks business model innovation and “Reinvent Your Business Model” on Sarder TV.
September 14, 2018
Inc. : THE TOP 10 BUSINESS STRATEGY BOOKS OF 2018
Innosight’s Mark Johnson’s new book “Reinvent Your Business Model” makes Inc. Magazine’s top 10 business strategy books of 2018.
August 8, 2018
National center for the middle market: SEIZE THE WHITE SPACE: Q&A WITH MARK W. JOHNSON
Innosight’s Mark Johnson discusses how companies can innovate to achieve transformative growth and explore beyond their core business, or “seize the white space” in this Middle Market piece.
JULY 27, 2018
American Express OPEN forum: BUSINESS MODEL BASICS: HOW RETHINKING YOUR PLAN CAN HELP YOU SCALE
Innosight’s Mark Johnson discusses how rethinking your business model can help your company achieve growth and scale in this new piece.
JULY 13, 2018
cORPORATE BOARD MEMBER: How A Board Can Encourage A Company To Innovate
Innosight’s Mark Johnson is featured in this Board Member piece sharing insight on how growth strategies for the future should look different than the past.
JULY 12, 2018
MARKETWATCH: THE RISK JEFF BEZOS TAKES WITH AMAZON.COM OFFERS STOCK INVESTORS A VALUABLE LESSON
Mark Johnson, author of the new book ‘Reinvent Your Business Model’ shares insight on seizing white space opportunities for transformational new growth.
JULY 11, 2018
cHANGETHIS: Breakthrough Technologies Don’t Create Transformative Growth. Breakthrough Business Models Do.
Innosight’s Mark Johnson discusses why technology alone is not enough to propel the kind of sustained growth that can transform your whole enterprise.
JUNE 25, 2018
Innovation Leader: Pointers 2018
Learn more about “Three Principles for Engaging Employees in Business Model Innovation” by Mark W. Johnson, Innosight co-founder and author of new book, Reinvent Your Business Model: How to Seize the White Space for Transformative Growth.
May 29, 2018
HBR: How Ford is Thinking About the Future
Ford’s Chariot urban commuter venture shows how to deal with the uncertainty of new business models by testing and learning one’s way forward.
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