Introduction

According to Michal Porter, strategy is about being different. Over the long run only companies that succeed in building a sustained competitive advantage will be successful (Porter, 1996). Therefore, a company’s value creation process needs to be distinct from its competitors. It needs to be both more effective and more efficient. Product innovation no longer offers sufficient competitive advantage in differentiating successful companies (McGrath, 2011). Competitors are quickly able to copy innovations, product life cycles are becoming shorter and competitors from low wage countries have considerable cost and price advantages. At the same time, Information and Communication Technologies (ICTs), offer unprecedented opportunities to rearrange value creation activities in new and different ways. Hence, companies consider business model innovation as an opportunity to build sustainable competitive advantage (Teece, 2010). The IBM CEO study from 2009 highlighted that 70 percent of CEOs regard business model innovation as a strategic priority and 98 percent are working on changing their existing business models. A joint study by Business Week and the Boston Consulting Group concludes that business model innovators have higher and more sustained returns than product or process innovators (Lindgardt et al., 2009). Amazon, Southwest Airlines, Apple, Nespresso and ING-DiBa are companies that redefined customer value, found new ways to structure their value creation processes and captured that value with great returns. This paper examines the concept of business model innovation and discusses the design of the key elements. Using the Nespresso case as an example, we demonstrate how business model innovation can be implemented successfully. Based on a unique positioning strategy, successful business model innovators align their product and services logic, added value logic, sales and marketing logic and revenue logic to create a system that delivers great returns. The secret of a successful business model lies in its coherence, its uniqueness and the fact that it is difficult to imitate.