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Section D

Group - 8

Roll No. 2010195 to 2010199

Critique: Reinventing your Business Model Mark W Jhonson & others - HBR
The article titled Reinventing your Business Model by Mark W Jhonson, Clayton M Christensen and Henning Kagermann - Harvard Business Review, 2008 sees business model innovation as a more critical factor for value creation for an entity than technological innovations. The authors distinguish between ability of an entity to satisfy a real customer need (product) and how it actually satisfies it (delivery). The article right from the beginning tries to establish the reason as to why it is so difficult to pull of new growth that business innovation can bring. The importance of understanding the existing business model, its strengths and weaknesses, in order to re introduce it is wonderfully explained while high lightening Ipods success over its early competition. The analysis done on major innovations within existing corporations over the years and what top CEO feel about it is well supported with evidence from surveys done around the world. It goes on to accurately describe the need of a road map in a business model in order to see past its boundaries. The authors break down a business model into four interlocking elements 1. Customer Value Proposition (CVP), 2. Profit Formula, 3. Key Resources 4. Key Processes while accurately showing the significance of each element such the importance of developing a strong customer value proposition through relevant examples such as that of Ratan Tata of the Tata Group and how the company first came up with a product idea and a business model before finding a market for product. It goes on to describe how these four elements form the building blocks of any business. The customer value proposition and the profit formula define value for the customer and the company, respectively; key resources and key processes describe how that value will be delivered to both the customer and the company. The authors talk about the importance of precision in CVP and how more often than not companies trying to create something new, neglect the focus required on one job or by doing to many thing ends up doing nothing sound at all. The importance of sometimes shifting from the existing fundamentals of the profit formula is showcased beautifully incase of Halti moving to a contract management program. Towards the end the authors bring up the issue of how and when to realize the need for a new business model for an existing company and goes on to logically explain this necessity of changes in existing business models through the Dow Corning example. The authors have listed five reasons for need of new business models but they has ignored the needs arising out of social standing (amplified needs) or needs that are not existent but are made to be felt. The authors have not considered, while evaluating the parameters of success for a new business model, the effect it will have on the environment. Todays world is very concerned about the effects of a business on environment. The article does not give importance to the marketing aspect in developing a new business model. Unless advantage of new business model is clearly made understood to the executors of the plan, it will not be able to give results. The author does a fantastic job of convincing the reader with the central of the importance of business innovation. It logically explains its ideas and gives an in depth analysis of the elements of a business model. The arguments are well supported with statistics and surveys. Each idea is accompanied with examples from real life companies.