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This paper aims to address risks inherent in business model innovation. The authors make the case that entrepreneurs and managers, in relying on sources of innovation when designing business models, need to pay heed to these hidden risks – or tripwires – that can prevent the venture from efficiently, effectively and profitably scaling. The authors provide a guiding framework to help entrepreneurs and managers identify four distinct tripwires in their business model underlying the sources of innovation.

The authors build a systematic framework of the four tripwires – structure, scaling, systems and strategy – underlying offer-driven, customer-driven, finance-driven and resource-driven business model innovations. By relying on academic research, the authors’ scholarly work on organizational decline, innovation and corporate turnaround and the authors combined experiences and observations in industry, this study makes explicit and highlights problem areas in the business model, providing examples of representative companies to illustrate the challenges and consequences of failing to identify and manage its tripwires.

The authors demonstrate that awareness and attention to the tripwires underlying sources of innovation can mitigate a business model’s future challenges. Business model innovations can and often do conceal hazards that become apparent only as a venture begins to grow. As such, it is essential that entrepreneurs and managers attend to these potential problem areas in the early stages of designing their business models. In bringing awareness to innovation-related tripwires, the authors offer a risk-management “patch” for managers and entrepreneurs when developing their business models.

Business model innovation is a powerful tool to help in identifying growth opportunities. Yet in launching, scaling or transforming their business models, entrepreneurs and managers can encounter unforeseen challenges. While sources of innovation in the business model prioritize the discovery of growth opportunities, this has often come at the expense of the potential risks underlying them. The authors provide a means to identify four distinct tripwires that may be triggered when implementing business model innovations.

This paper aims to highlight the importance of addressing both competitive strategy and business model for the long-term success of a company. The paper builds a prescriptive framework to help managers assess their companies’ positions based on the extent to which they attend to their strategies and business models simultaneously. In doing so, the paper offers four possible outcomes – idling, faceoff, breakdown and traction – providing examples to capture each scenario and managerial prescription.

The framework of this study is based on academic research in strategy and business model design, the authors’ scholarly work on innovation and their combined experiences and observations in the industry. The framework uses examples of well-known companies to make the case for why managers need to pay heed to both business models and strategies simultaneously to achieve long-term competitive profitability.

This study’s framework suggests that the delicate balance between strategy and business model design determines the long-term competitive advantage and profitability of a company. Focusing on strategy without paying heed to the business model can cause companies to lose sight of changing customer behaviors. Alternatively, managerial attention to business models at the exclusion of its strategy leaves the company vulnerable to competition. The framework points at the delicate strategy–business model balance required to manage winning companies.

Business models and strategies represent two separate yet inextricably linked domains under the purview of management. However, companies can be weakened because of an overemphasis on one at the expense of the other. This paper’s framework offers a simple yet effective guide to assist managers in assessing their organizations’ current positions while also providing direction toward addressing any shortcomings.

This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies.

This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.

Organizations need to balance a good business model with a sound strategy, or else fall foul of the issues that faced some of the world’s largest organizations that eventually failed.

The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.