They are also touching on Irving Wladawasky-Berger and his thoughts on the necessity of near-death-experiences for real innovation (aka organizational brain cleansing),which I’ve mentioned here before (“Notes from the Business Innovation Factory (BIF) Summit“).

This is an interesting case of applied business model innovation (perfectly fitted for a coming consulting and coaching assignment I am currently preparing for), that shows many traits of disruptiveness (for the banking incumbents, that is):

Wal-Mart is pushing new banking offerings, starting with the under-served, offering basic services, etc. But you can bet that they won’t stop there, and why should they. Commodity banking is an industry ripe for disruption.

Wal-Mart’s announcement this week that it is forging ahead with banking services [...] The company’s move is firmly in line with how it approaches new markets, but the approach is quite distinct from how US financial services firms have traditionally functioned.

Wal-Mart is circumventing its recent lobbying defeat by partnering with an array of third party firms, such as GE, to provide a wide array of services such as debit cards, low-cost check cashing, and money transfers. It will use its brick-and-mortar infrastructure to great effect, but will also leverage the convenience of banking while you shop and its reputation for offering excellent value (in a market where pricing can be more than a little opaque). The focus of its effort — for now — will be on the unbanked, including immigrants.

The firm is laying the foundation of a highly disruptive business. It will offer simple banking services, without the frills of branches, nicely-dressed staff, and drive-through tellers. While consumers may give up these now-standard features of the banking experience, they will gain convenience, value, and access (including the ability to set up basic accounts without all the Know Your Customer paperwork that hinders many who are currently unbanked). Wal-Mart is attacking a market that most banks don’t value very highly, and on turf where the firm’s asset and brand advantages give it a clear Right to Win. These are all harbingers of success.

While I like this analysis very much I prefer to differ with Steves proposed approach to business model innovation. For me, business model innovation and design offers many more levers than merely “working backwards from the value proposition”:

Business model innovation has become a fashionable term of late, but it is harder to execute than many firms perceive. It must start with the customer value proposition, and then work its way through to the profit system and the firm’s resources and processes. Unfortunately, many firms get this backward, fixing the profit system, resources, and processes in place, and thereby severely constraining the type of business model innovation that can occur. They would be well-served to chart their current model in a disciplined fashion, recognizing the divergences that must happen for the company to thrive in the new competitive environment. Then, they can systematically liberate the constraints that remove degrees of freedom from their desired response. It is not easy, but if it were then it wouldn’t be so profitable.

But this is only a minor disagreement, as the other elements are right on (oh yes, “it is harder to execute than many firms perceive”). This calls for professional business model consulting help … doesn’t it?

Apple rates highly as an innovator in my view, but the company has been inconsistent in its long history.
Two disruptive innovations were big hits: the Mac and the iPod because
[...]
Many of Apple’s product flops seem to suffer from classic traps of would-be disruptors:
* Apple sometimes bet the farm on new technology and features ahead of clear market feedback from users (Newton)
* it tried to cram a new disruptive idea into a known business (Motorola ROKR phone, Eworld)
* it tried to create an incrementally better product in a crowded market (Cyberdog web browser, Pippin game console.

The point is that business is not a sporting event. Victory for one company doesn’t mean defeat for everyone else. Markets today are so big-the global video-game market is now close to thirty billion dollars-that companies can profit even when they’re not on top, as long as they aren’t desperately trying to get there. The key is to play to your strengths while recognizing your limitations. Nintendo knew that it could not compete with Microsoft and Sony in the quest to build the ultimate home-entertainment device. So it decided, with the Wii, to play a different game entirely. Some pundits are now speculating, ironically, that the simplicity of the Wii may make it a huge hit. [...]

well yes, this may turn out to be another very smart move of Google, optimizing the business model of PayPal being only the start, then pushing entirely new applications … weighing in its good standing in search (for goods, aka Froogle), micro-publishing (Blogger), AdSense stuff and more

Ultimately [Kazaa ...] are great things

and compares the problems faced by the new medium to similar issues of the past:

“When radio stations started playing music the record companies started suing radio stations. They thought now that people could listen to music for free, who would want to buy a record in a record shop? But I think we all agree that radio stations are good stuff.

“And the VCR did the same thing: the movie industry thought nobody would ever watch movies any more.

“But that technology enabled the movie industry to make much more revenue. The single largest revenue source for the movie industry is videos.”

More is found on Skype, that

undercuts a lot of revenues of the big phone companies, who have been using outdated technology.

and relies on an interesting pricing model:

Skype makes money because a small fraction of users is buying additional services, such as the capability to call from Skype to the telephone network or vice versa.

Not having to make money from every user is not a new idea, Zennström emphasises.

“It is very similar to companies like Google and other internet companies. When you go and search on Google you don’t pay for that. But sometimes you click on an advert and Google makes money on that.

“It’s the same thing with Skype. Some users are paying for services, but not everyone.”

Notice that

Zennström believes the losers out of this new structure will be the telcos who do not understand that there is a change going on.
“This is a disruptive technology that shifts the industry”, he says. [...] Skype, just like Kazaa and other software, are encouraging people to buy broadband connections.

read more at the BBC

Quite controversial, still many good thougths in there, note these gems:

Tech’s Idle Billions [...] The sector’s companies are minting money. Now they need to start spending some to create new technologies, products, and markets. [...] The trouble is, few tech companies are doing anything exciting with all that loot. Many chief executives are using their funds sparingly. Several years after the tech bust ended, they’re still unnerved by weak revenue growth and a stagnant stock market.

and

they’re playing it safe [...] With the tech downturn still fresh in their minds, relatively few business leaders have regained the sense of boldness that goes hand in hand with making advances in new technologies, products, and markets

and this last big one:

Wall Street in general simply won’t allow companies to take too many risks. It’s focused as never before on quarterly results. Investors were burned by Nasdaq’s crash of 2000, and a new generation of traders and hedge funds with the fleetest of investment horizons has come to the fore.

read more at BusinessWeek

Greasemonkey is a Firefox extension which lets users add “user scripts” (DHTML, technically) to any web page. These scripts can change any aspect of a web page’s behaviour, interaction, or design. This little baby is going to blow up business models. Let’s look at some examples.

An item in Techdirt that points to an Inquirer article …

Techdirt notes that …

… while most of the stories about businesses failing to adjust to a digital and computer age focus on things like the music or movie industry, there are some other, smaller, industries struggling against the tide as well.

and points to wedding photographers, where the old business model is like this:

[photographers] charge an hourly rate in the hundreds of dollars to take pictures during the wedding, and they retain copyright of the images. The photographer’s lucrative aftermarket consists of charging outlandish markups for additional prints.

This business model is being disrupted, as only the first half of the equation is a solid business; a good photographer who nails great images can lock in important memories that will last decades. That’s a service worth paying top dollar for. The second part of the equation—the copying part—is, of course, utterly out of date, as home scanning and printing have damaged that part of the custom photography business. So the copying business has become irrelevant, just like in the music industry, copyright business is still OK …

In music, the time has never been better to engage in the copyright business, because demand and musical awareness are extremely high. It’s just not a good time to be in the copy business.

and

The music industry is slowly finding new ways to leverage its valuable copyrights, adding value where no additional value was needed in the analog era.

Still the music industry hangs on to old modes of thinking …

The confusion between copyright business and copying business is the source of tremendous wasted energy as the music industry tries to change laws and destroy technology to enforce its right of control everybody’s personal copying. Home replication technology has changed everything, and it cannot be unchanged. Content industries of all sizes must concentrate on the core values of their copyrighted content, not the fringe industry of making copies, lucrative though that fringe once was.

… while neglecting opportunities that may be uncovered by ingenious business model innovation and design.

read on at The Digital Music Weblog

Digital audio formats, like satellite radio, online radio and podcasting — subscription-based programming that is pushed to MP3 players – are creating new business models and opportunities in radio and the music industry.

Keep this in mind:

20.1 million U.S. households will listen to satellite radio, 9.7 million will receive HD Radio and 12.3 million U.S. households will use their MP3 players to listen to audio podcasts by the end of the decade.

Seems to me those radio days of old are gone, and yes, just as Forrester Research Vice President Ted Schadler said, “If radio and music executives can successfully shift their thinking to embrace new audio delivery methods, both industries will benefit from new revenue streams and increased consumer loyalty over the next several years.”

read more at Yahoo