Business Model Innovation Proposal
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When_and_how_to_innovate_your_1.pdf
When and how to innovate your business model
Edward Giesen, Eric Riddleberger, Richard Christner and Ragna Bell
B usiness-model innovation is critical to success in today’s increasingly complex and
fast-changing environment. So corporate leaders need to understand when to adapt
the business model and how to execute the change. Data from IBM’s Global CEO
Study 2008 and an analysis of 28 successful business-model innovators, produced insights
into both the best timing and process.[1,2]
Two questions can help companies develop their strategy and transformation approach for
the new economic environment:
B Under what conditions should companies adapt their business model?
B What capabilities and characteristics support the design and execution of successful
business-model innovation?
The answers define an organization’s strategic agenda for business-model innovation.
When to rethink the business model
Business model innovation can provide significant opportunities both during periods of
rapid economic growth and at times of turmoil. What is critical is to select the right type of
business model given the economic environment and emerging market opportunities, and to
address the set of internal factors that influence the organization’s ability to pursue the
required change.
Revisit the enterprise model during economic turmoil. Enterprise model innovation often
occurs during economic downturn as companies seek new ways to gain cost and flexibility
advantages. By adopting new partnering models such as new service models or even
outsourcing, organizations are able to more effectively scale down operations during a
downturn, but also create the additional access to resources to quickly scale up as new
opportunities arise.
Li & Fung is a good example of enterprise-model innovation. It is one of the largest
producers of fashionable clothing, but its core competency is neither fabrics nor design. In
contrast to many competitors, Li
& Fung orchestrates the activities
of a complex network of players
across the value chain without
owning many of the physical
assets that are required for
designing, producing, and
distributing stylish clothing. Li &
Fung is now taking advantage of
the economic environment byReprinted by permission of IBM. All rights reserved
DOI 10.1108/10878571011059700 VOL. 38 NO. 4 2010, pp. 17-26, Q Emerald Group Publishing Limited, ISSN 1087-8572 j STRATEGY & LEADERSHIP j PAGE 17
Edward Giesen, a Partner in
IBM Global Business
Services, leads the
Business Strategy Practice
across Europe, Middle East
and Africa and the IBM
Strategy and Change
practice in Belgium,
Luxembourg and The
Netherlands (edward.
[email protected]). He
also heads the IBM
Component Business
Modeling global
community.
Eric Riddleberger is a
Partner with IBM Global
Business Services and
leads the Global Business
Strategy Practice and the
Strategy and
Transformation Practice in
the Communications Sector
Richard Christner is a
Partner in the Internal
Strategy and
Transformation Practice
within IBM Global Business
Services (christnr@.
us.ibm.com). Ragna Bell is
the Strategy and Change
lead for the IBM Institute for
Business Value within IBM
Global Business Services
making select global acquisitions at favorable prices and by continuing to develop
partnerships.[4]
Exploit ongoing industry transformation. A joint IBM and Carnegie Mellon Tepper School
study analyzed the 2007 and 2008 financial performance of business-model innovators that
participated in the IBM’s Global CEO Study 2008. This analysis found the strongest margin
performance was realized by those companies that, like Li & Fung, entered the downturn
with significant financial means and leveraged their resources to drive industry-model
innovation.[5] We also found that during periods of extensive industry change, companies
can choose to shake up their industries – by harnessing disruptive technologies, going after
new customer segments or dislodging competitors. Companies that don’t respond quickly
will likely become uncompetitive in short order (see Exhibit 1).
In the rapidly evolving movie-rental business, for example, technology change and content
digitization has transformed the industry, spawning a succession of new business models.
Blockbuster has been challenged by fast-growing online competitors with disruptive
businesses models like Netflix. Over the last three years, Blockbuster’s response has been
gradual adaptation of its business model, adding for example, a ‘‘Total Access’’ package for
receiving DVDs through either rental stores or via mail and announcing a partnership with
CinemaNow to deliver movies on demand via the internet.[6] However, the incremental
approach has not been enough to stay ahead of industry transformation and the economic
downturn. As a result, Blockbuster is going through fundamental restructuring, including
closing nearly 1,000 video-rental stores.[7]
Key elements of a business model[3]
B What value is delivered to customers: customer segments, the value proposition, the specific ‘‘job
to be done,’’ what is sold and how it is sold.
B How the value is delivered: critical internal resources and processes as well as external
partnerships.
B How revenue is generated: the pricing model and forms of monetization.
B How the company positions itself in the industry: the company’s role and relationships across the
value chain.
Exhibit 1 Business model innovation during periods of extensive environmental change
Source: Adapted from Johnson G., Scholes K., and Whittington R., Exploring Corporate Strategy, 7th edition © 2005 Prentice-Hall, Pearson Education Limited
D eg
re e
of c
ha ng
e
Time
Incremental business model innovation Balance between environmental and
enterprise change
Misalignment Gap between environmental
and enterprise change
Transformation or demise Transformational business model innovation or demise
During periods of discontinuity,
companies will either disrupt or be disrupted
Change in the environment
Demise
GAP
Transformational business model innovation
PAGE 18jSTRATEGY & LEADERSHIPj VOL. 38 NO. 4 2010
Develop new value propositions and pricing models to fit customer preferences.
Revenue-model innovation may not deliver an advantage that is as sustainable as
industry- or enterprise-model innovation. But during times of economic turmoil, new
customer preferences and spending patterns are a significant impetus to changing the
pricing model and value proposition.
The auto industry is a good example. While most car manufacturers in the US drastically cut
prices in 2008 to cope with the severe recession, the Korean car manufacturer Hyundai
instead allowed consumers who lost their jobs after they bought their cars to return them
within the first year and have their debt cancelled. Hyundai’s value proposition was a
response to the high degree of uncertainty consumers were feeling, and the car maker also
extended their warranty to five years offering buyers even more security.[8]
Internal factors drive business model innovation. Internally driven changes – such as
product or service innovations – also create a need for a new business models. For
example, the development of a high-end instant-coffee technology developed by Nestlé
prompted the need for a completely new business model. In fact, it spurred the creation of a
separate company in the 1980s, Nespresso, a one-serve coffee product targeted at the
high-end consumer market.
To take this type of product to market, an organization has to address a number of key
questions:
B How much does the new product or service change the business model in general and, in
particular, the customer-value proposition?
B Does the existing pricing model need to be adjusted?
B What new technology, skills and resources need to be acquired?
B How will the overall operating model change?
Is it time to innovate your business model?
Every organization needs to review carefully whether the time is right to revisit its business
model, either to pursue new opportunities in its industry or to respond to competitive or
technology threats posed to its existing model. We have developed a structured set of
questions to help organizations understand the conditions that determine when they should
explore business-model innovation (see Exhibit 2).
Exhibit 2 Factors driving the need for business model innovation
D eg
re e
of c
ha ng
e
Incremental business model innovation Balance between environmental and
enterprise change
Misalignment Gap between environmental
and enterprise change
Transformation or demise Transformational business model innovation or demise
During periods of discontinuity,
companies will either disrupt or be disrupted
Change in the environment
Demise
GAP
Transformational business model innovation
VOL. 38 NO. 4 2010 jSTRATEGY & LEADERSHIPj PAGE 19
The three As of how to innovate your business model
Our research shows that new and innovative business models can succeed independent of
a company’s age, industry, or geography. And in addition to the 28 cases of successful
innovators, we analyzed select organizations that either tried to develop innovative business
models and failed, or simply missed the window of opportunity.[9] We identified a set of
characteristics that strong business-model innovators demonstrate consistently (see
Exhibit 3).
These characteristics – the ‘‘Three As’’ – are critical to the successful design and execution
of business-model innovation:
B Aligned – Leverage core capabilities and design consistency across all dimensions of the
business model, both internally and externally, that build customer value.
B Analytical – Use information strategically to create foresight, and prioritize actions while
measuring and tracking for rapid course correction.
B Adaptable – Link innovative leadership to enhance the ability to effect change and
institutionalize operational flexibility.
Aligned: creating internal and external consistency
According to a number of researchers, the set of internal factors that influence the
organization’s ability to shape business-model innovation have to be fully aligned.[10]
Internally, this requires organizations to start with the customer-value proposition and align
the ways in which revenue is generated and value is delivered. Externally, organizations
Exhibit 3 The ‘‘Three As’’ model for business model innovation
Visionary/innovation leadership
Strategic foresight
External alignment or “open” business models Ability to leverage existing assets and capabilities
Internal alignment between industry, revenue (including value proposition) and enterprise model
•
• •
• •
• •
•
• •
•
•
• Financial business modeling Effectiveness measurements
Lead and transparent processes Flexible and scalable technology Globally optimized operations Asset and cost flexibility
Leadership and change
Business intelligence and insight
Customer value
Industry model
Revenue model
Enterprise model
Operating model
Effective decisions to support “breakthrough” innovation Dynamic course correction
Analytical
Adaptable
Aligned
Source: IBM Institute for Business Value
‘‘ Use information strategically to create foresight, and prioritize actions while measuring and tracking for rapid course correction. ’’
PAGE 20jSTRATEGY & LEADERSHIPj VOL. 38 NO. 4 2010
need to orchestrate customers, partners, and suppliers through open collaboration and
partnership models. Finally, many successful business-model innovators leverage existing
assets and capabilities in new and unique ways.
Align internally to provide customer value. Understanding how the elements of
business-model innovation relate and how they create value are critical as an organization
adapts or changes its business model. We especially saw the importance of alignment when
comparing successful business-model innovations against those that failed.
Take the airline industry, for example. Carriers like Southwest Airlines and Ryanair
revolutionized the industry at the low end by introducing an innovative value proposition
consisting of low-cost, point-to-point air travel supported by strong customer service. To
deliver this model, Ryanair aligned all aspects of its organization and operations to be low
cost, such as a standardized fleet of aircraft to minimize repair and maintenance costs,
increasing bargaining power with suppliers, choosing secondary airports with lower airport
fees, and disaggregating the pricing model so that it could charge customers for all extras.
In contrast, several established airlines tried to deliver a low-cost proposition within their
high-cost operating models, including operations and processes, systems, and people.
These models were largely unsuccessful and typically failed within a few years of starting
operations.[11]
Align externally with partners through ‘‘open’’ business models. External alignment with
partners, suppliers, and customers is an important characteristic of an effective,
collaborative business model. The Global CEO 2008 study found that seven out of 10
CEOs focus on collaboration and partnerships in their pursuit of business-model
innovation.[12] A number of open business models are largely built on broad
collaboration and partnering, such as Li & Fung’s global production model, Eli Lilly’s
spin-off ‘‘InnoCentive’’ open innovation model, or the Linux operating system. However, our
research shows that virtually every successful business model demonstrates external
alignment and the ability to work with a large number of collaboration partners.
Use existing assets and capabilities. Successful business-model innovation takes
advantage of existing high-value assets and capabilities within the organization, such as
unique skills, talent, processes, or technology. Apple, for example, exploited the ability to
design user experiences effectively and applied it to the music industry when designing and
launching the iPod.
Nespresso: success through internal alignment
Nestlé’s Nespresso single-serve premium coffee business is a good example of how internal
alignment to its value proposition is critical to delivering success. Based on Nestlé’s product
innovation of the Nespresso espresso system, it initially explored different ways in which to
commercialize it in 1980s. After unsuccessful attempts to penetrate the restaurant and office
market, Nespresso was set up as a wholly-owned subsidiary in 1986 and started to align its
business model elements with delivering the high-quality coffee experience to high-income homes.
Given the extent of differences between the gourmet Nespresso Café and other Nestlé coffee
brands such as bargain-priced Nescafé instant coffee, this required a complete departure from
Nestlé’s traditional model. The success of Nespresso was largely linked to the ability to create a
separate, business model with independent leadership: serving a distinct customer segment
(high-end households versus the traditional mass market); through new distribution channels (mail
and Internet order and luxury stores versus traditional mass retail); different brand positioning
(high-end luxury brand versus traditional mass-market branding); and a new set of external
partnerships, including coffee-machine manufacturers who independently distribute their
machines and retain the profit.
The Nespresso model has proven successful and defendable. Nespresso achieved 35 percent
annual growth over the last decade, and even during 2008, at the height of the economic crisis, it
achieved 30 percent/year revenue growth.[13]
VOL. 38 NO. 4 2010 jSTRATEGY & LEADERSHIPj PAGE 21
Analytical: leveraging business intelligence for greater insight
Successful business-model innovators demonstrate a particularly acute understanding of
their customers and the value that their company can deliver to a new segment, through a
new delivery mechanism, or a new product or service. Increasingly, understanding
customers, markets, channels and competitors is based on sophisticated analytics that
provide better information needed to create advantage in new and unique ways.
Successful innovators use analytics to sift data from inside and outside the enterprise to:
B Create the strategic foresight needed to design the business models of the future.
B Understand their potential economic impact.
B Continuously measure and enhance performance.
Strategic foresight. Foresight is critical for organizations to understand new opportunities
and the potential impact of new technologies, emerging customer segments, or a new set of
product or service capabilities. For example, the insurance company Progressive has built
advanced customer and risk analytics into its business model, which allows it to serve a
higher-risk customer segment profitably. Li & Fung similarly has built analytics and foresight
into its strategic process. In their words, they use foresight and planning to ‘‘institutionalize
the process of reinvention’’.[14]
The ability to better understand potential future scenarios and how the organization can
benefit through new models is now more important than ever as organizations have to
operate – and make decisions – in a more complex and fast changing environment.
Financial business modeling. Financial business-modeling provides the ability to simulate
the interaction (and therefore financial impact) among different kinds of external scenarios
and internal changes based on the specific business-model innovation. Netflix, the
online-movie-rental giant, has used advanced analytics modeling effectively to support
pricing and purchasing decisions (see sidebar, ‘‘Netflix: Using analytics for intelligence and
insight’’ ).
Effectiveness measurements. Well designed measurements provide timely insight about
what is and is not working, better enabling an organization to adapt quickly to new and
changing business realities. The ability to sense and respond to change – both internally
and externally – is critical. Internally, this requires organizations to integrate fragmented
data and perform faster, better extraction and analysis to support business decisions.
Externally, it means that organizations have to be able to integrate data across a partners,
suppliers, and customers to make quick business decisions.
Adaptable: building flexibility into the business model
Business-model adaptability is becoming more important for organizations that need to
manage uncertainty in the current economic environment. Successful business-model
innovators can mimic the speed, flexibility, and mindset of start-up companies, which
describe some of the most radical business-model innovations, while exploiting the
Tata Motors: aligns with partners to deliver Nano
Tata Motors’ new Nano is based on the premise of delivering an affordable car for Indian families. In
order to deliver this value proposition at a revolutionary price point of US$2,500, Tata Motors had to
align its entire organization, supply chain and channels.
For Tata Motors to deliver a viable model at roughly a tenth of the price of a typical four-door sedan, it
had to reconfigure how a car is designed, manufactured and distributed. It redefined its supplier
strategy, choosing to outsource a remarkable 85 percent of the Nano’s components and to use
nearly 60 percent fewer vendors than normal to reduce transaction costs. Tata also brought in its
key suppliers early in the design phase and challenged them to act as partners to bring costs down
in unprecedented ways.[15]
PAGE 22jSTRATEGY & LEADERSHIPj VOL. 38 NO. 4 2010
advantage of existing capabilities, resources, and assets. When reviewing both start-ups
and established companies, we found that business-model adaptability was based on the
effective combination of leadership and change capabilities throughout the organization, as
well as an operating model that enables dynamic course correction and rapid execution
(see sidebar, ‘‘Bharti has built adaptability into its business model’’).
Leadership and change. Successful business-model innovators can and are willing to
pursue new opportunities and models while maintaining a ruthless focus on sustaining
current business. Successful business-model innovators are able to explore, experiment,
and pilot new models without putting the performance of existing models at risk.[16]
Analytics checklist
Does your business model leverage analytics for intelligence and insight?
Do you regularly assess the strategic opportunities in your environment, based on new and
disruptive models emerging in your industry?
How detailed and accurate is your customer, supplier, and partner information?
Do you deeply understand what your customers want or how they value your current offerings?
Does your organization have the means to understand the financial and business impact of different
business-model options?
Are you able to access and assess information in real time, both internally and externally, to allow
dynamic course correction?
Bharti has built adaptability into its business model
Bharti is one of India’s largest telecommunications providers – but it doesn’t own a network. It asked
the question, ‘‘What do customers really value?’’ The answer: multiple new and innovative services
delivered quickly, plus excellent service. Bharti is delivering against that proposition and
outmaneuvering its competitors by unshackling itself from investment and management of either
the network or the supporting infrastructure.
What Bharti put in place was a global partnering model by outsourcing its network management, IT
infrastructure and distribution. This allowed Bharti to pull in expertise from around the globe to give it
a fast start to capitalize on the market opportunity, control capital expenditures as its subscriber
base ballooned, and keep operational costs down. At the same time, Bharti was very clear about its
core focus in five areas: customer management, people management and motivation, brand
management, financing and regulation.[17] Bharti has grown its subscriber base to over 100 million
subscribers in 2009.[18] Even at the height of the economic crisis in 2008, Bharti was able to grow
revenue by 37 percent, with net income up 26 percent.[19] Bharti is now leveraging its financial
strength to explore expansion into new markets such as media and entertainment, financial services
and healthcare.
Netflix: using analytics for intelligence and insight
The video rental business Netflix has built advanced analytics into its business model and
continuously leverages insight and analytics to create advantage. The Netflix recommendations
engine, for example, is instrumental in helping consumers make rental decisions. Based on user
ratings, Netflix ‘‘crunches’’ consumers’ rental history and film ratings to predict what else they’ll like.
Today, over half of a consumer’s video rental queues are generated through advanced analytic
algorithms. Building on its recommendation engine, Netflix has also been able to drive the so-called
long tail of video rental, with only 30 percent of its movie rentals from new releases, compared with
70 percent for Blockbuster.
Netflix also uses data mining and analytics to make pricing decisions with studios for
hard-to-market movies.[20] Since launching its online mail-order video rental in 1999, total Netflix
subscribers have grown at a compound annual rate of 64 percent, reaching an estimated 9.4 million
subscribers at the end of 2008.[21]
VOL. 38 NO. 4 2010 jSTRATEGY & LEADERSHIPj PAGE 23
For some new business models, this may require separate organizational structures as
Nestlé’s Nespresso business did. For others, such as Apple’s iPod, it requires that existing
models support and reinforce each other. Leaders will need to exhibit the following
characteristics:
B Innovative leadership. A focus on innovation and a willingness to break with the status quo
are key aspects of managing for the new while maintaining the old. This includes a
willingness to explore breakthrough innovations that challenge the existing business.
Strong leadership and perseverance help overcome inherent organizational inertia.
B Effective decisions to enable breakthrough innovation. In addition to innovative
leadership, breakthrough innovation requires a culture of innovation and an
entrepreneurial mindset. Well-known innovators like Google or Apple constantly nurture
an entrepreneurial spirit within their organizations. For example, Apple started flying a
pirate flag from its headquarters as a symbol of maintaining a ‘‘rebel spirit.’’
B Dynamic course correction. In today’s fast-paced environment, dynamic course
correction is required to bring new business models to market. Business models can
be designed on the ‘‘drawing board,’’ but only the application and testing in the market –
often through pilot projects – provides the insight needed to understand if and how the
business model will succeed.
This requires flexibility to respond quickly to signals from the external environment,
economic results, and partnership alignment. It involves constantly reviewing what is
working and what is not, and adapting key aspects of the model accordingly, especially in
fast-moving industries like the media industry. For example, Netflix continues to adapt its
business model based on new technologies, such as adding streaming video to its
subscription model based on changes in technology and customer preferences.
Operating model flexibility. A flexible operating model entails four elements:
B Lean and transparent processes – In an increasingly complex environment, process
optimization and end-to-end process visibility are required to build flexibility and the
capability to change. Lean Six Sigma approaches, for example, build the elements of
continuous improvement into the operational process, allowing the organization to
change and adapt the model based on new business model requirements.
B Flexible and scalable technology – While technology innovation often enables – or even
creates – new business models, flexibility in the underlying infrastructure is critical to
allowing an organization to shift and adapt its business model, and deliver a platform for
rapid growth and scaling.
B Globally optimized operations – This requires processes that are replicable and
repeatable across different geographies, assets that are optimized based on a clear
distinction of what is core and what is non-core, the ability to manage processes
end-to-end and extensive partnering.[22] Most importantly, global integration provides
organizations with access to the right skills at the right cost at the right time, which
supports the successful delivery of business model innovation.
B Asset and cost flexibility – Shifting from fixed to variable assets enables faster response to
changes in market conditions. This requires a clear understanding of and focus on core
activities, with a willingness to partner and collaborate for non-core activities.
‘‘ Leverage core capabilities and design consistency across all dimensions of the business model, both internally and externally, that build customer value. ’’
PAGE 24jSTRATEGY & LEADERSHIPj VOL. 38 NO. 4 2010
Conclusion
In an increasingly complex and fast-changing business environment, organizations have to
rethink and revisit their business model more frequently than in the past. They need to
continually tweak and enhance their models, especially during periods of economic turmoil
and increased industry transformation. But designing the right business model is only the
first step. To increase execution success, organizations need to ensure their business
models are aligned with customer value (and continually updated), are analytical (they gain
insight from differentiated intelligence), and are adaptable (they are enabled by a flexible
operating model).
Notes
1. IBM Corporation. ‘‘The enterprise of the future: IBM global CEO study,’’ May 2008, www-935.ibm.
com/services/us/gbs/bus/html/gbs-ceo-study-implications.html In a follow-up to the IBM Global
CEO Study, a joint team from the Carnegie Mellon Tepper School of Business and IBM analyzed the
2007 and 2008 financial performance (revenue growth and operating margin expansion) of 194
business model innovators participating in the original study, for which a complete set of data was
available.
2. The 28 best practice cases were selected from two key sources. We revisited the BusinessWeek
listing of the most innovative companies in the context of their performance in the 2008 economic
turmoil. ‘‘The world’s most innovative companies,’’ BusinessWeek, April 24, 2006, www.
businessweek.com/magazine/content/06_17/b3981401.htm We then added strong business
model innovators that were top performers during the economic downturn of 2008-2009. See
Berman, Saul, Steven Davidson, Sara Longworth and Amy Blitz, Succeeding in the New Economic
Environment: Focus on Value, Opportunity and Speed, IBM Corporation. 2009.
3. The literature on business model innovation is increasingly aligned on definitions and core
dimensions. See, for example: Osterwalder, A. and Y. Pigneur, Business Model Generation (OSF,
2009); Johnson, Mark, Clayton M. Christensen and Henning Kagerman. ‘‘Reinventing your business
model.’’ Harvard Business Review. December 2008.
4. Li & Fung acquisitions during the economic downturn include Wear Me Apparel in the USA and the
Miles Fashion Group in Germany. Inman, Daniel, ‘‘Li & Fung buys Wear Me Apparel for up to $402
million,’’ FinanceAsia.com. October 21, 2009, www.financeasia.com/article.aspx?CIaNID ¼ 115106
5. IBM Corporation, The Enterprise of the Future: IBM Global CEO Study 2008, IBM Corporation. May
2008, www-935.ibm.com/services/us/gbs/bus/html/gbs-ceo-study-implications.html. See Note 1.
6. De la Merced, Michael J. ‘‘Blockbuster hires help to restructure its debt,’’ The New York Times.
March 3, 2009, www.nytimes.com/2009/03/04/business/media/04blockbuster.html
7. CBS News, ‘‘Blockbuster will close up to 960 stores,’’ September 15, 2009, www.cbsnews.com/
stories/2009/09/15/business/main5313438.shtml
8. Colvin, Geoff, The Upside of the Downturn: Ten Management Strategies to Prevail in the Recession
and Thrive in the Aftermath. Portfolio, 2009. Hyundai also introduced a five-year warranty model and
was able to boost sales for August 2009 by 47 percent over the previous year, as many US car
manufacturers continued to struggle.
9. For selection of business model innovators, see Note 2. For a set of ‘‘counter-pairs,’’ we analyzed
companies that pursued business model innovation with limited success and compared them with
strong innovators.
10. The literature on business model innovation is increasingly aligned on definitions and core
dimensions. See, for example: Osterwalder, A. and Y. Pigneur. Business Model Generation. 2009;
Johnson, Mark, Clayton M. Christensen and Henning Kagerman, ‘‘Reinventing your business
model,’’ Harvard Business Review, December 2008.
11. Maynard, Micheline, ‘‘More cuts as United grounds its low-cost carrier,’’ The New York Times.
June 5, 2008, www.nytimes.com/2008/06/05/business/05air.html
12. IBM Corporation. The Enterprise of the Future: IBM Global CEO Study 2008, IBM Corporation, May
2008, www-935.ibm.com/services/us/gbs/bus/html/gbs-ceo-study-implications.html
VOL. 38 NO. 4 2010 jSTRATEGY & LEADERSHIPj PAGE 25
13. Saltmarsh, Matthew, ‘‘The sweet smell of success at Nestlé,’’ The New York Times, February 19,
2009, www.nytimes.com/2009/02/19/business/worldbusiness/19iht-nestle.4.20317285.html. Nestlé
does not publish Nespresso profit separately, but provides revenue and revenue growth
information: Nestlé press information, ‘‘The Avenches milestone in the Nespresso success story,’’
www.nestle.com/Resource.axd?Id ¼ CF489C89-60D4-4A6E-8590-091D6D5E0672
14. Interview with Dr William K. Fung, Group Managing Director, Li & Fung Ltd. IBM and 50 Lessons.
2009, www.preview20-935.events.ibm.com/services/us/gbs/bus/html/gbs-built-for-change.html
15. Johnson, Mark, Clayton M. Christensen and Henning Kagerman, ‘‘Reinventing your business
model,’’ Harvard Business Review, December 2008.
16. O’Reilly, Charles, and Michael Tushman, ‘‘Ambidexterity as a dynamic capability: resolving the
innovator’s dilemma,’’ Research in Organizational Behavior, Volume 28 (2008), pp. 185-206. (Also
Harvard Business School Working Paper, No. 07-088, 2007.)
17. Interview with Manoj Kohli, Chief Executive Officer and Managing Director, Bharti Airtel Limited. IBM
and 50 Lessons. 2009, www.preview20-935.events.ibm.com/services/us/gbs/bus/html/gbs-built-
for-change.html
18. Leahy, Joe, ‘‘Bharti boosts rural Indian subscriber base,’’ Financial Times. July 23, 2009, www.ft.
com/cms/s/0/78de7afc-77ac-11de-9713-00144feabdc0.html
19. Bharti Web site, www.bharti.com/136.html?&tx_ttnews percent5Btt_newspercent5D ¼ 317&
tx_ttnews percent5BbackPid percent5D ¼ 116&cHash ¼ c9cb9d3479
20. Mullaney, Timothy, ‘‘Netflix – the mail-order movie house that clobbered Blockbuster,’’
BusinessWeek, May 25, 2006, www.businessweek.com/smallbiz/content/may2006/sb20060525_
268860.htm
21. Netflix Web site. http://ir.netflix.com/
22. Lubowe, Dave, Judith Cipollari, Patrick Antoine and Amy Blitz, The ROI of Globally Integrated
Operations: Strategies for Enabling Global Integration, IBM Corporation, 2009.
Corresponding author
Edward Giesen can be contacted at: [email protected]
PAGE 26jSTRATEGY & LEADERSHIPj VOL. 38 NO. 4 2010
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