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When does your business model expire?

Wichtigkeit des Innovationsmanagement

To focus on the core business again means passively watching the expiration date of the current business model

In many large companies, a trend can currently be observed: they are increasingly focusing on their core business and either bringing innovation activities back into the main organization or stopping them altogether. However, innovation is not an option or a passing fad; it is a compelling necessity for any company aiming for long-term success. Stagnation means regression, and ignoring innovation potential can be fatal. This article describes the challenges and opportunities of continuous innovation and emphasizes the importance of recognizing value in change and actively responding to it.

The timelessness of change

Every existing value proposition and business model has an expiration date. While customer needs may persist, solutions and products are becoming more rapidly replicable or replaceable. The reality of the market and customer demands is constantly evolving, and companies must be willing to adapt. Where one company is dominant today, another may take its place in a few years, possibly even a company from a different industry that views customer needs from a different perspective and delivers more valued solutions. Clinging to outdated approaches can lead to gradual decline, while establishing an innovation culture and capability for continuous adaptation makes the difference between success and failure.

The unpredictability of innovation

Unfortunately, innovation is not a linear process. It is unpredictable, chaotic at the outset, and requires smart approaches to avoid operating in chaos and instead operate at most in the complex mode. The search for new business models and value propositions involves controlled experimentation and rapid learning cycles—from problem space to solution space. It also means creating evidence quickly and resource-efficiently, pivoting, or abandoning ideas without progress. Companies must be willing to learn from their mistakes and continuously evolve to remain relevant. Such an environment is rarely, if ever, present in core organizations optimized for operational excellence.

The right approach: Stepping back from innovation theater

Despite the importance of innovation, we see a concerning trend in many large companies: a withdrawal of investments in innovation in favor of focusing on the core business. While this withdrawal may be correct for purely “innovation theater” activities and may appear cost-effective in the short term, it carries the long-term risk of stagnation and the decline of genuine innovation. The ability to maintain exploratory capabilities and culture during times of change is a critical competitive advantage.

The Danger of Stagnation Reviving a culture of pure exploitation and operational excellence risks stifling the ability to explore and innovate. Companies that rely exclusively on what has worked before risk losing relevance and diminishing the value of their offerings. Finding the right balance between efficiency and innovation is crucial for long-term success.

The art of innovation

The art of innovation lies in recognizing value in change and actively responding to it. Companies must confront the unpredictability of innovation, have the courage to question traditional exploitation mindsets, and build an innovation culture and organization that truly deserves the name. After all, fancy innovation theater with well-designed labs but no impact can be replicated by others—it’s merely corporate PR. Only through continuous exploration of new opportunities and business models can companies secure long-term success and competitive advantages. This requires demonstrating an ambidextrous strategy in corporate leadership, fostering both the continuous optimization of existing processes for efficiency and the exploration of new possibilities. In addition to executive commitment, a balanced innovation portfolio encompassing short-, medium-, and long-term projects is crucial for sustainable development and competitiveness. The importance and priority of innovation are evident from the time that executive members themselves invest in innovation topics.

Conclusion: The significance of continuous innovation for your business model

In a world characterized by unpredictable changes, continuous innovation is the key to long-term success for companies. Those who actively embrace change will be able to seize new opportunities and adapt to evolving market conditions. The art lies in recognizing value amid change and viewing the unpredictability of innovation as an opportunity for growth and further development.

Yetvart Artinyan

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