Business Model Innovation & Blockchain: Strategic Thinking

Innovation is taking a step into the unknown. I have always looked at Innovation in this way. Many times, the mistake is made of approaching this concept by paraphrasing it as the sole introduction of new technologies. Therefore, to fully understand the scope of some technological revolutions, it is necessary to understand that managing Innovation is this but, above all, much more. Thinking about Innovation is the dictate of strategic thinking. Companies innovate driven by different needs:

• Increase profits
• Improve positioning
• Improve efficiency
• Improve customer satisfaction
• Increase market share and/or enter new markets.

Hence, the need to develop an adequate Innovation strategy integrated through all company functions.

After asking why one innovates, the next step is to see how to implement this challenging process.

We can look at how to innovate through 4 different lenses:

• Question deeply rooted beliefs and assumptions to explore new and highly unconventional answers.
• Recognize the future potential of emerging developments and ride these trends to explore new opportunities.
• Pay attention to problems that others have so far ignored, experimenting with new solutions to such problems.
• Understand your unlimited ability to recombine your resources in new ways, combinations, or contexts.

Having identified the 4 fundamental pillars on which to focus our strategy, we must reflect on the different forms of Innovation: is there only technological innovation?

Obviously, NO! The forms through which Innovation presents itself are multiple, and it is important to know them to separate the innovation=technology binomial.

Whether it is a new process, product, market, or organizational structure; innovating will deeply impact our Business Model.

How, therefore, do we implement our innovative strategy?

This process must be aimed at ensuring and optimizing results compared to the starting point. For this, if any company wants to achieve its objectives, it must add to its capabilities and priorities that of innovating before everyone else.

What is a Business Model?

The business model describes how the “pieces of the entire business” come together. It explains how a company creates, captures, and distributes value to its customer segments (Osterwalder, 2010).

Regardless of the tool used, the blocks answer four main questions:

• WHO is your customer?
• What is the VALUE PROPOSITION?
• How do you BUILD your value proposition?
• How do you MONETIZE? (Revenue Model)

Once the philosophy underlying Innovation is understood, one can become aware of the scope and value that blockchain can generate for our Business Model. In fact, this technology is as disruptive as the concept of Innovation itself.

But how does blockchain affect Business Model Innovation?

First of all, by authenticating traded goods. Traded goods can be interpreted in a broader sense, including any tangible or intangible goods or services that are the subject of a commercial transaction. If these goods are complex or their authenticity cannot be immediately validated, if consumption involves deep perceptual elements, or related brand values are high, the need for authentication is strong, so there is a business case for disruptive business models that use blockchain technology.

Blockchain technology influences business models by facilitating disintermediation. The presence of intermediaries introduces inefficiencies when industries are complex, customer needs are diverse, and suppliers are numerous. In these cases, especially when the transaction size is relatively small, blockchain technology can generate business that would not be feasible in the presence of intermediaries and the costs they generate. Through the democratic nature of the technology, which provides broad and direct access to service providers to a large number of potential users.

In conclusion, it is important to note that blockchain will not only affect the companies that implement this technology, but also those companies that need to restructure their business because blockchain undermines their offering by redefining the needs of end users.

Yuri Avantaggiato –