Unleash More Profits With Business Model Innovation

Unleash More Profits With Business Model Innovation

Many of the most attractive business model innovations will allow only one company to prosper by following that particular path. Even better is the circumstance where once that path is taken by anyone, many other potentially attractive paths are made smaller or are permanently closed off for others.

In an industry in which little business model innovation has occurred, a disproportionate potential for success can be grasped by the first company to take such a dominating track. If you are looking for business model framework you can browse https://innovation360.com/services/innovation-analytics/.

Having started down that path usually then provides new advantages and opportunities to make even more innovations. Each implemented innovation that builds on a previous, unduplicated one then becomes another brick helping to wall off competitive vulnerability.

In a for-profit organization you will naturally start by attracting the most profitable potential customers. If current customers buy a very small percentage (say 1 to 2 percent) of their needs from you, such a profitable expansion may simply be possible by selling 40 to 50 times more to selected current customers.

You are already spending time and money to gather a small part of these customers' total requirements. In many cases your overhead costs to provide more products and services would not increase.

Let's start by assuming that your current pretax profits are 10 percent of sales and your contribution to profits before overhead costs is 30 percent of sales.

This circumstance means that selling more of the same mix of offerings at the same price to an existing customer would almost triple the profit contribution margin on the increased sales. Were that to occur, 20 times volume growth would lead to a 60 times increase in profits!

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