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Summary:
Many leaders believe that business model innovation success comes down to novelty. But research on 300 companies across two eras — the 1990s dot-com boom and the mature digital economy of the 2010s — reveals that this perception is wrong. Novel business models alone don’t guarantee high performance. Leaders must consider how novelty fits with other elements, such as efficiency, customer lock-in, and partnerships. Learn the essentials from businesses that stressed system design, not just sizzle.
In an age where innovation reigns supreme, it’s easy for leaders to believe that a novel business model equals a ticket to success. The logic is appealing: Be the first to offer something new, or something familiar in a new way, and the profits will follow.
This idea becomes even more compelling in times of technological upheaval. Technologies like artificial intelligence, blockchain, and renewable energy systems are not only tools for operational improvement but also foundational enablers of new ways to create and capture value. In this type of landscape, your organization’s business model becomes a strategic lever — not just for profit but for purpose. The rise of multisided platforms, subscription models, as-a-service models, and data monetization has shown that how you deliver value can be just as important as what you deliver. AI, in particular, is redefining how companies personalize experiences, optimize operations, and even cocreate value with users.
And yet, many organizations make missteps when engaging in business model innovation. After studying nearly 300 internet-enabled companies across two technological eras — the dot-com boom of the late 1990s and the mature digital economy of the 2010s — we discovered a more nuanced reality: A novel business model alone does not guarantee high performance, not even when the related technology is new and surrounded by hype. What really matters is how that business model novelty is configured — how it works in concert with other business model design elements, such as efficiency, lock-in, and complementary partnerships.
Our research shows that top-performing companies don’t just chase novelty for its own sake. Instead, they configure business models that strike a deliberate balance between value creation and value capture. They tailor those models to fit their strategy, size, industry dynamics, and the maturity of the technologies they use.
Business Model Innovation in the AI Age: Realities for Leaders
For leaders looking to build high-performing business models and avoid the common pitfalls of innovation theater, it’s important to examine lessons from companies that got it right and those that didn’t. Here’s what the research shows.
1. Novelty is powerful when paired with operational discipline. Spotify redefined the music industry with a novel business model: unlimited streaming via a freemium platform. But the company didn’t stop at novelty.
About the Authors
Petteri Leppänen is an assistant professor of strategy at IE University Business School. Gerard George is group managing director at International Medical University (Malaysia) and the Tamsen and Michael Brown Family Professor of Entrepreneurship and Innovation at Georgetown University’s McDonough School of Business. Oliver Alexy is a professor of innovation at Technical University of Munich.