Virtuous cycle

Bartlomiej Owczarek weblog

Return to 'Virtuous cycle' home page

Innovate products and not business models?

Umair Haque:

Business model innovation is often self-defeating and self-destructive. The real problem with business model innovation is that it dilutes the incentives to make good stuff in the first place. It lets boardrooms hide from the profound challenge of making insanely great stuff in the first place.


Business model innovation creates a kind of adverse selection. It offers a kind of insurance: if we can find more efficient ways to sell stuff, we don’t have to make better stuff. When we invest in selling stuff better – instead of making better stuff – unsurprisingly, the stuff we make often turns into lemons.

Another hint to focus on building great products instead of relying on business-side trickery.

(and yes Ogito, being a great product or at least a future great product, will charge for usage… maybe just after getting it to work under IE6 which, even though is a piece of junk, also seems to be favored by all my corporate, i.e. deep pocketed, friends)

Commenters note that there are cases where business model innovation also leads to virtuous loop that enables great products. I think Google and search ads business model could be one such example (although Google not exactly invented this business model).

On a side note, I’m amazed that this sort of writing came from Umair; I used to read his Bubblegeneration blog, where his articles seemed to consist in a large part of words he created himself. Must be “innovate ideas and not vocabulary” principle at work.