Common Pitfalls In Business Model Innovation

“Organizations rarely fail to reinvent themselves because their leaders are naive about new technologies or emergent trends. Surprisingly, many of the companies. . . invented the technology that nearly killed them.” Reinvention is hard because it requires making tradeoffs between existing business and future innovation, and building the capabilities needed to nurture innovation through different phases. Harvard Business School professor Ryan Raffaelli shares the three traps he’s found get in the way of corporate reinvention: - The Identity Trap: Usually the first trap organizations encounter, this happens when companies narrowly define who they are by what they make or do now, limiting their opportunities for innovation; e.g., In the early 2000’s, Borders defined itself as a brick and mortar bookseller, even turning down an offer from Jeff Bezos to help it build an ecommerce platform. By the time the company realized it needed its own ecommerce capabilities, it was too late; Borders eventually filed for bankruptcy. On the other hand, many independent bookstores, facing the same threat from Amazon, broadened their identities to community gathering places and leaned into their “local” identities, offering author events and curated product selections. “As a result, the number of independent bookstore locations increased by 72% from 2009 to 2024.” - The Architecture Trap: Most companies know they need to support different kinds of innovation at different phases but don’t align the organization, ways of working, organization, or rewards to support what each needs. Companies need to provide autonomy, flexibility and time to iterate and incubate new products, and more structure and focus as they are ready to commercialize and go to market. - The Collaboration Trap: “If leaders fail to manage perceptions around different resources for different groups, or to communicate that all innovation efforts are valued and contribute to the company’s success,. . . individuals assigned to mature products or services may begin to resent colleagues with access to cutting-edge technologies or additional resources.” This can lead to turf wars, perceptions of favoritism, and a breakdown in collaboration and trust. When Swatch acquired the more traditional Blancpain, the CEO’s of the two companies worked together towards a shared vision that leveraged the former’s modern manufacturing processes, the latter’s marketing expertise and design aesthetics, and created space for joint projects. It has resulted in “the world’s largest watch company, as well as the largest supplier of components to the rest of the Swiss watchmaking industry.” #innovation #leadership #reinvention #identity #organization #collaboration #growth

Most businesses don’t crash overnight. They erode slowly, one bad decision at a time. By the time you see the cracks, the damage is already done. Here are 7 silent killers destroying your business model (and how to fix them): 1/ Ignoring Customer Needs ↳ Building on assumptions instead of real insights ↳ Fix: Talk to 10+ customers monthly and ask, “What made you look for a new solution?” 2/ Weak Value Proposition ↳ If customers don’t get why they need you, they won’t buy ↳ Fix: Write a one-sentence pitch answering: “Why switch to you today?” 3/ Overcomplicating Revenue Model ↳ A complex pricing creates friction. Friction kills sales ↳ Fix: Simplify pricing. Fewer choices = faster decisions 4/ Misunderstanding the Market ↳ A great product doesn’t create demand - demand creates a great product ↳ Fix: Find where people are already spending. Problems alone don’t mean paying customers 5/ Premature Scaling ↳ Growth should be driven by demand, not a race to impress investors ↳ Fix: Scale when revenue milestones prove demand, not when pressure dictates growth 6/ Ignoring Financial Health ↳ High revenue ≠ high profit ↳ Fix: Monitor cash flow weekly to catch issues early and avoid surprises 7/ Failing to Adapt Fast ↳ Moving too slow while competitors improve and execute ↳ Fix: Ship one core product improvement every 3-6 months Your business model isn’t a one-time decision. It’s a system that needs constant testing and validation. Which mistake resonates most with you? ♻ Share this to help other founders avoid these pitfalls And follow Mariya Valeva for more

A few months back one of my former companies closed its doors. They were a Series A company that received over $16M in funding. Customers loved them. Here’s 3 reasons they didn’t make it: First... 1. They didn't embrace their category This company had a clear category in which they were winning and had happy customers, but they were hell-bent on being in a different, sexier category. Their service business was a huge hit, but they really wanted to be known as a SaaS company. So rather than doubling down on where their happy customers were (on the service side), they spread their efforts thin trying to become something they were not. Then came... 2. Death by technical debt Because they didn’t embrace their category, they were constantly throwing features into the mix to juice up their product. And the debt really, really stacked up. So much so that it hit the point where a feature that should have taken 1 week to ship took 4 weeks – new features came out at a glacial pace. By the time they tried to re-platform it was too late. And finally, they were.... 3. Building stuff customers didn’t want No one wants to replatform, right? That’s not exciting to tell your customers about. In an effort to double-dip, they attemped to build a lighter weight version of their SaaS product first, thinking they could sell it down market, with plans to rebuilt the entire platform later. The problem? Nobody wanted the ligthweight version. The lightweight product was a great idea in the head of an executive… but that was all it was. 1. They didn't embrace their category 2. Death by technical debt 3. Building stuff customers didn’t want I waited a while to write this because nobody wants to dance on a grave, but I think it’s worth noting that these 3 pitfalls can be seen in smaller doses in a lot of companies. It’s too easy to try to expand categories too fast, or rack up technical debt, or start building for executives instead of your customers. Don't. 👉 Resist the need to unnecessarily break out of your category. 👉 Treat technical debt as a real threat.  👉 Keep a close ear to what customers want.