Lets Make 2012 the year of West Midlands Innovation

by Colin Bell Email

The West Midlands is punching below its weight. Research indicates that on average 7% of all UK businesses are experiencing High Growth and that this same 7% generate the majority of new jobs. The West Midlands challenge is that the starting line if further back than the rest of the UK, having a High Growth business density of only 5% (NESTA 2011).

The response demanded from the West Midlands is two fold:

1.     To create quick wins, build cash and generate sales quickly,

2.     Whilst at the same time, building long-term value in Businesses and the Economy.

Business Model Innovation (BMI) provides an opportunity to respond to both of these demands. It delivers a 4 times higher return than product or process focused innovation and continues to yield higher returns over the longer-term (Boston Consulting Group & Business Week 2009)

What is Business Model Innovation?

Business Model Innovation is concerned with the reinvention of a business, to deliver a superior value proposition through a business model that captures value at each stage of the customer journey. It focuses on capturing value in the short term and creating value over the long term.

Short Term = Value Capture

Short term value capture is realised through the reinvention of the business model to expand existing markets and penetrate new markets.  This allows the value proposition to be delivered in a different, and often disruptive, way. The ability to deliver a superior value proposition is based on a superior knowledge of customer trends, needs and behaviours.

Long Term = Value Creation

Customer knowledge is at the heart of Business Model Innovation and as such Value Creation is developed over time as knowledge of the customer grows. This results in a multilayered innovation effect that transcends each section of the customer journey. This multilayered and continuous approach to innovation means that the replication of the value proposition is incredibly hard to achieve.

Think about Apple - competitors can replicate the iPhone or iPad. It's much more difficult however to replicate how the iTunes platform integrates with these devices - this is multilayered business model innovation.

Businesses therefore must not take a narrow approach to innovation; rather they should focus on innovating at each stage of the customer journey, using technology to optimise all aspects of their business to deliver a superior value proposition.


To realise long-term value creation, businesses must develop an innovation culture that continuously anticipates, adapts and innovates - this cycle must be embedded in the organisation's psyche.

adaptation cycle

In summary BMI generates a higher return overtime as:

>      Multilayered innovation is more difficult to imitate;

>      The value proposition provides the context for innovation and the alignment of resources and effort;

>      Customer lock-in is engineered into the business model;

>      The Value Proposition is continuously adapted & reviewed;

>      A Value focus combined with strong leadership means everyone involved understand the part they play;

>      The optimisation of technology, resources and effort can result in a lower cost structure;

>      The business competes on their superior knowledge of the customer.

A call to action

Lets mobilise our collective skills, creativity resources and determination to recapture the top position.

Associated blogs:

I've previously blogged on Freemium, which is a great example of Business Model Innovation

Zoë's blog on Value Proposition will also help demystify the concept.