Executive Interviews: Interview with John C Camillus on Business Model Innovation
May 2009 - By Dr. Nagendra V Chowdary

John C Camillus
Donald R. Beall Professor of Strategic Management, Joseph M. Katz Graduate School of Business and College of Business Administration.

• Many new companies come with innovative business models. However, only a very few actually succeed in the marketplace. Why is it so difficult to carve a success out of a well-planned business model?
  Formulating a successful business model from scratch in a new company is a challenge that hasmany of the characteristics of a wicked problem. It is necessary to transform the initial model, in a manner analogous to rapid prototyping, in response to the unexpected problems and frustrating realities that will inevitably be encountered. Startups often do not have the deep pockets and the organizational slack to support the experimentation necessary to evolve from the initial configuration to a viable business model. Hence the frequent failures of new companies.

• Is there any difference between business model creation for a small company and a larger company? For instance, in the US, there are approximately 25 million small business owners, which create approximately 70% of all jobs in the US. Some of them go on to become listed companies and also increase their scale and scope of operations. Many others remain for years as they were. Is this difference anything to do with the business model creation and execution?
  A viable business model is of critical importance to both large and small companies. However, the role and implementation of business models can be quite different in different organizations. A business which is funded and operated by a small, closed, interactive group does not need to document and disseminate its business model. On the other hand, a small business that expects to go public or is seeking risky mezzanine funding has to develop and communicate its business model logically and convincingly. The internet companies that have been funded without any revenues to speak of and no near-termexpectation of profitability have obtained needed capital on the basis of the presumed power of their innovative business models.

  Success depends, of course, on having conceptualized a viable business model. It also depends on how well the business model is converted, executed as you phrased it, through strategic and action plans into operations. Companies that are successful over long periods of time also appear to have the capability and the will to revamp their business models before competition and external developments make them obsolete.

• What is the role of leadership and what should be the leadership initiative in creating/ innovating business models?
  Visionary, confident leadership is essential and invaluable. Many books have been written about the characteristics and the practice of visionary leadership, so I won’t attempt to describe it again in detail. However, there is one characteristic of such leaders that I would like to highlight. In the course of my consulting for over eighty large and small organizations and in the dozens of organizations where I have written case studies, I have observed that the most impressive and successful leaders do not build an inner circle in their own image. The notion of a “team of rivals” with differing perspectives and competencies, as described by Doris Kearns Goodwin in her book on Abraham Lincoln, is the hallmark of confident, visionary leadership. The ‘winners curse’ can effectively be lifted by such a leadership team.

• No business school in the world offers a course on business models. Do you think it’s time to articulate an exclusive course on business models? After all, a wholesome and holistic understanding of creating a business model might open a window to all the other courses?
  While it is possible that “no business school in the world offers a course on business models,” it would be difficult to teach a course on strategic management without talking about business models and related strategic innovation. And every accredited MBA program in the world offers a course on strategic management.

  There is no denying the significant role that business models can and should play in providing important perspectives on decision making in all the functional areas of business. Without an understanding of the organization’s business model and strategy, operating decisions in each and every area in a business would be at risk of being suboptimal. MBA programs have the responsibility to teach their graduates the need for and approaches to aligning decisions in functional areas such as marketing, operations, human resources, finance, MIS and R&D with the business model and competitive strategy.