I’ve just finished Seizing the White Space: Business Model Innovation for Growth and Renewal by Mark W. Johnson (Harvard Business Press).  Johnson is chairman of Innosight, a consulting and investment company he co-founded with Clayton Christensen, Harvard Business School professor and author of The Innovator’s Dilemma.

Johnson aims to present a systematic approach to business model innovation that has grown out of the original research and analysis that fueled The Innovator’s Dilemma. For me, the most important contribution of that earlier work was the way that Christensen revealed an underlying pattern that explained the successes and failures of different innovations.  Since that book was published, Christensen and Johnson (and other collaborators) have refined those ideas, and this book is a neat and concise summary of their current thinking and practice.  In a nutshell, successful innovation requires a solid customer value proposition, a profit formula that will deliver value to the firm, and the right resources and processes.

Johnson makes these ideas accessible without watering them down too much.  When he talks about the role of resource velocity, for example, even readers without an MBA or experience in finance or accounting will get the relationship between resource turnover and profitability.

While Johnson is targeting the challenges of innovating from inside an incumbent business, any one who is developing a business will benefit from his business model innovation framework.

The white space that Johnson wants readers to seize is an area that does not fit well with the current organization (or industry) and consists of either new customers or existing customers served in new ways.  The customers comprising the white space are often nonconsumers who lack access due to affordability or skill.  Many of the case studies Johnson uses to support his argument, such as the $2,200 Tata Nano, the world’s cheapest new car, include new business models that address this lack of access.

This book reinforces one of the themes you’ll find in my previous posts.  Successful innovation starts with finding one or more unmet or poorly met “jobs” that a customer needs to get done.  This outside-in approach to innovation often runs counter to the way most companies innovate, but Johnson will convince you that business model innovation has the potential to create far more value than does product innovation.

Copyright 2010 by David G. Bakken.  All rights reserved.