Written by Brad Cho, The Innovation Lab
Why Business Model Innovation Deserves Attention
Companies today face a difficult challenge, like students asked to solve an exam question drawn from material not covered in the textbook. This is because the boundaries between things that were once clearly distinct are disappearing and driving social change. This phenomenon is called boundary convergence, or the Big Blur.
A boundary is a perceptual dividing line between things we considered clearly separate. Yet focusing only on how IT convergence is breaking down industry boundaries reveals nothing beyond the changes caused by technological innovation. We need to examine comprehensively the many other boundaries that are also being dismantled.
1) The boundary between consumers and producers
a. Conventional view: The boundary between the roles of consumers and producers is clear.
b. Recent change: The boundary between the roles of consumers and producers is no longer as clear as it once was. Consumers participate deeply in company processes, and
companies engage in dialogue to build “relationships,” not merely conduct “transactions.”
2) The boundary between large and small companies
a. Conventional view: The market boundary between large and small companies is clear.
b. Recent change: The market boundary between large and small companies is no longer as clear as it once was. Through the production revolution created by the open-source economy and the platform economy’s use of network effects, small companies are accomplishing things in specific fields that even large companies find difficult to achieve.
3) The boundary between tangible and intangible things
a. Conventional view: The boundary between tangible and intangible things is clear.
b. Recent change: The boundary between tangible and intangible things is no longer as clear as it once was. As convergence occurs simultaneously across products and services, online and offline channels, and other areas, the relationship between core products and complementary offerings is becoming more complex.
This means that boundaries are disappearing simultaneously in who participates in market transactions, the scale of those transactions, and how offerings are delivered. These changes require companies to set aside traditional frameworks, focus on the broader trend, and pursue new forms of innovation.