A business model is a simplified representation of how the business makes money (innovation-management.org). Business model innovation involves creating entirely new approaches to doing business. Business model innovation is transformative; that is, it redefines the competitive playing field by introducing a unique value proposition to the consumer (Osterwalder, Pigneur, Clark, 2010). At its simplest, it demands neither new technologies nor the creation of brand-new markets: It’s about delivering existing products that are produced by existing technologies to existing markets. And because it often involves changes invisible to the outside world, it can bring advantages that are hard to copy (Girotra, Netessine, 2014). To be specific, business model are referring to the activities underlying value propositions, segments, value chain structures, and revenue models, it can be seen that all of these activities are linked in one architecture (Foss, Saebi, 2015).
Innovation in the business means implementing new ideas, creating dynamic products or improving your existing services. Business model innovation itself can be defined as “Changes in business logic that are new to the firm, yet not necessarily new to the world, and have to result in observable changes in the practices of a BM” (Bouwman et al., 2008).” Innovation is important on creating competitive advantages for a company or organization. Innovation also can be a benchmark for the growth and success of your business, and help you to adapt and grow in the marketplace. The innovation itself based on three things, first, the innovation is based on a novel principle that challenges management orthodoxy. Second, the innovation is systemic that is, it involves a range of processes and methods. Third, the innovation is part of an ongoing commitment to developing new and enhanced products and services. There is a natural progression in product design and development. Giesen et al. (2007) and Lingard et al. (2009) said that business model innovation are innovation in the three aspects, innovations in the value proposition, revenue model, and operating model.
Many business innovation models come up as a result of the advancement of the current technologies. Technologies are helping the businesses by making fundamental changes to one or more of the key strategic decisions under which company operates.