Innovate Your Business Model with a ‘Zero-Legacy’ Mindset

I recently sat down with BIF Research Advisor Jean-Pierre Jeannet who shared his observations about the inherent difficulties of business model innovation. Jeannet has spent years analyzing emerging companies and has developed a spot on recommendation for established companies—if you want to innovate on your business model, begin with a ‘zero-legacy’ mindset.

The playbook for emerging companies is simple. Young start-ups spend considerable time nurturing a new idea or innovation while they build their business model from the ground up. With the right product or service, their competitive advantage over an established company can be huge. Why? They’re beginning in what Jeannet calls the ‘zero-legacy zone’.

It's a nice place to be if you’re a start-up. Established companies however have innumerable hurdles to jump in order to change a business model--legacy systems, managerial mindsets, employee inertia all play into it. But, they also simply can’t embrace new ideas or innovations without innovating on their business model. And unfortunately, all too often, companies won’t move unless there is substantial imperative to do so. [And then it’s usually too late.] But according to Jeannet, this is an avoidable trap.

Jeannet is convinced that companies should change their business models on a regular basis. Which means, first and foremost, business model innovation is as much a mindset as it is a process onto itself. [If you've read Gary Hamel, you know he's nodding in agreement.]

“It is hard to achieve business model innovation on a regular basis,” he says. “People get stuck and can’t get off of a tried and true process. But you can’t counter business model innovation with new technology. Companies must be skilled at including the business model conversation as part of the overall strategic conversation on a regular basis.”

So what do you do if you have the 'zero-legacy' mindset but are trapped in a quagmire of legacy systems? Jeannet sees advantage in organizations like the Business Innovation Factory.

“For some, business model innovation includes several technical or delivery or logistical components that can be hard to see, and even harder to experiment on. Having access to a real world laboratory is not only a good idea, but in the long run could be critical to a company's sustainability.”

There’s a great quote by Vijay Govindarajan who says “every strategy starts to decay the day it is created.” By maintaining a zero-legacy mindset, companies can manage the present and create their future all at the same time.