“Companies should devote R&D to new business models just as they do to new products. A new CEO today will need to preside over a changed business model three or four times in his career, but no one really knows how to do it. It’s not taught in business schools, and there is much to learn about how to manage a workforce that is no longer just within the four walls of an organization”.

AMEN!…and AMEN! This quote by Saul Kaplan, executive director of the Rhode Island Economic Development Corporation, from CFO magazine’s “Gaming the System” article, is fascinating because of the dearth of information in the media about innovation of business models. Almost always, innovation refers to products. My last post dealt with how TopCoder uses freelance competition to code software for it’s clients. Kaplan’s quote was raised in the context of applying the “competitive freelance” concept to other services- in this case freelance “C-level” types who have been through a few business cycles and business model changes.

I see it already in my own work. The idea of going from project to project for seasoned people is nothing new. But it is growing largely because more jobs are becoming information based because of technology that enables them. The question that the article raises is how other services, besides software development, can become competition-based, meaning you complete the assignment before knowing if you “win” the project.

I don’t think the kind of consulting provided by former C-level executives could fit the competitive model used by TopCoder. But I do think that business model innovation can be drastically increased by use of an outsourcing model- in fact, I think that the value of business model innovation is far higher than the value of product innovation. The key is unlocking the ability of the company to look outside of itself and it’s industry for the innovations. A PMO-like organization can facilitate this (refer to my “Choosing the Right PMO Vision Series“), and tapping into the multi-business cycle experience in the marketplace can further enhance it.

How do you manage business model innovation? Do you have a PMO and/or outsourced C-level expertise to assist? What is an example of where your company either increased it’s competitiveness through business model innovation or lost out to a competitor’s innovation?

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Post from: EveryJoe

Business Model Innovation is A Key to Surviving in Shaky Economic Climate

Think of a business model where a firm provides services with a global freelance resource base: is it writing? editing? software development? CFO magazine’s article on “Gaming the System” introduces TopCoder, not only as a global freelance software development operation, but one that has participants compete on providing the best code for it’s application work. This is business competition where you have to finish before knowing whether you will be paid or not, because you have to win.

It seems that TopCoder’s success and growth is based on the fact that they were more of a non-business community in the first place where attraction to their “model” was proven out- i.e., coders like to compete and would do it for free. The addition of a monetized-win competitive approach seemed a natural. Also, they actively flesh out their projects with previously built modules and specify “small enough” new modules that they say result in high quality code. They claim that their software development model results in more savings as applications get more complex- interestingly, I didn’t see any client statements to that effect.

CFO asks whether or not this model would work for other types of services that solve organizational problems as economic conditions tighten. More on that in my next post.

What do you think about the quality of work done in an outsourcing, competitive (finish work) environment? Have you seen this business model work in software development? What about other areas?

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Post from: EveryJoe

Innovating Through Competition as the Economy Tightens