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Entrepreneurs Organizing New Enterprises Need to Focus First on Business-Model Innovation

Entrepreneurs Organizing New Enterprises Need to Focus First on Business-Model Innovation

If you are an individual or a small team not yet operating as a business, starting first on business model innovation sounds impossible. The world is full of long-standing companies that seem to be serving virtually every conceivable need.

However, can you serve those needs with new business models in a better way? Probably you can. And if you can, then you can be the first to compete based on business model innovation.

Notice that business model innovation usually requires more mental agility than resources, so the playing field is either level or may be slightly tilted in your direction. As you work on business model innovation, pay attention to closing the door behind you with impossible-to-duplicate advantages, though, so that others cannot leapfrog past you if you want to enjoy the ultimate competitive advantage from business model innovation.

Let’s consider an example. Commercial art schools had been around for decades when Education Management started out in 1969 by purchasing the Art Institute of Pittsburgh.

How could the company be first with an improved business model in the other geographic markets where commercial art was already being taught by for-profit schools and by tax exempt public or private colleges and universities?

What Education Management did was to focus the commercial art learning process on the needs of employers. In doing so, the company knew that it would also better serve the needs of students by making it easier for them to get, hold, and make career progress in commercial art jobs. To make this adjustment, Education Management made seven changes in the commercial art school business model:

(1) continually define, update and add to the curriculum around employers’ current and future needs, and actively involve employers in the curricula development process through participation in local curricula advisory committees and in special subject panels

(2) employ faculty who are working professionals for career specific subjects

(3) build the curriculum to concentrate on what students need to learn

(4) create facilities and technology specialized to facilitating learning about the professional career environment

(5) help graduates get jobs

(6) reach out extensively to potential students become aware of these educational and career choices.

(7) acquire and rapidly convert small local art and culinary schools into the Education Management business model though substantial investments, and installing detailed planning and information systems to manage those operations according to the Education Management business model.

With this new business model, Education Management had the opportunity to become the first commercial art school in a geographic area to offer greater diversity of education programs in the art, design, and culinary fields, with a superior faculty, facilities, technology, and job market outreach. Note that the business model could either be used to shift the direction an existing school that was acquired (like the Art Institute of Pittsburgh had been) or to start a new school from the ground up.

Copyright 2008 Donald W. Mitchell, All Rights Reserved

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