Silicon Alley Insider has a nice post this morning called "The 7 Principles of Successful Entrepreneurship". What caught my attention was principle 5 "Remember that business model innovation is often as important as tech innovation". They explained this point as follows:
"We’ve never seen any statistics or studies in this regard, but it sure seems that the majority of shareholder value created over the last half century had a lot more to do with companies innovating around their business model than around technology. Think of eBay with online auctions. Store brands and generic drugs. Amazon cutting out the retail middleman. Manufacturers asking suppliers to co-locate. Dell building PCs to order. Social networking typified by sites such as MySpace and Facebook. The way HMOs and PPOs fused insurance and healthcare delivery. Sure, in many cases, technology was involved, but technology was not the strategic driver that created shareholder value. Instead, it was creativity applied to the business model (product/service mix, value proposition, channels, pricing) that made the difference. This kind of thinking needs to be applied not only by entrepreneurs but by corporate new-business professionals as well."
In my classes and workshops on business concept development one of the main themes is the opportunity to improve the value proposition through innovation in pricing, sales and distribution. I think too many entrepreneurs gloss over these decisions and miss the opportunity to build better customer relationships.