A pugnacious CEO once told me that there are three ways to lose money: gambling, divorce, and innovation. With annual U.S. research and development spending amongst Booz & Company's Global Innovation 1000 at over $500 billion, companies are paying heavily for the ambition to create. But how do you plan for new growth and innovate in those markets where too many businesses are armed against commoditization with glib value propositions and over-reliance on cost containment, promotions, product extensions, and price competition?
According to a global study by IBM, today's CIO spends an average of 55% of his or her time on activities that spur innovation, and the key component underpinning all successful innovations is the business model. For a business model to be of value, it must have three core elements: a unique central idea that defines who you are, a grasp of future market trends, and profitability from either lower cost base or an offering that cannot be easily copied. An example is Gilt Groupe, whose business model covers all three, and has allowed them to continue to innovate across several categories. One of the hottest startups in New York, they expect to generate up to $500 million in revenue this year, up from $170 million in 2009.
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