Business Model Innovation and the Balanced Scorecard

Over the last decade, strategic management has emphasized the business model as a theoretical framework for formulating and implementing an innovation strategy that creates value for organizations. In the global economy, the competition to create value has taken on a new dimension, as business model innovation (BMI) has become a new frontier of strategy. Increasingly, multinational firms are focused on innovating their business models, rather than developing new products and technology, to create greater business value. If innovation is the essence of value creation, maximizing the efficacy of innovation should be a primary strategic focus of business leaders. The balanced scorecard has become a popular business analytic tool of academics and practitioners. Little has been done, however, to use the balanced scorecard as a business analytical framework to measure the effectiveness of BMI. Therefore, we propose a matrix that applies a set of metrics and key success factors for each of the four categories of the balanced scorecard to the four basic components of the business model. This business analytic framework will provide a means for optimizing BMI. BACKGROUND