For the efficient conduct of business model innovation projects, it is essential that all participants should be on the same page. This includes having the same understanding of the core concepts and the constructs used in business model innovation. Here is a brief explanation of the most important terms, for your reference.

Analogical thinking  Analogical thinking involves using seemingly unrelated knowledge to solve a specific problem. Doing so often brings entirely new solutions to light.

Blue oceans  Uncontested market space that first needs to be accessed. While they do not yet exist, blue oceans are very appealing and have the potential to unlock new demand.

Brainwriting  A group creativity technique, similar to brainstorming, where in the first stage participants work individually, writing down their ideas.

Business ecosystem  All the relevant players in the value creation process (customers, partners, competitors), the relationships between them and influencing forces such as technologies, trends and regulatory changes. A company is both affected by its ecosystem and actively affects it.

Business model  A business model defines which customers are addressed, what is made available for purchase, how products and services are created and how profits are generated. These four dimensions – WHO-WHAT-HOW-VALUE – then define the business model.

Business model innovation  For a true business model innovation to be affected, at least two of the four business model dimensions (who-what-how-value) have to be reconfigured. Successful business model innovation ‘creates value and captures value’ for a company.

Business Model Navigator  The Business Model Navigator is a comprehensive business model innovation tool developed at the University of St Gallen. At the core of the Navigator methodology is creative imitation of existing business models in different industries. The Navigator has been developed on the basis of empirical studies of several hundred business models and practical applications in a large number of companies.

Confrontation principle  In line with the confrontation principle, new business models are examined by intentionally confronting extreme options. In this process, a company’s current business model is set against business model scenarios found in unrelated industries.

Convergent thinking  The reduction of a wide range of possible solutions down to a few promising options.

Design thinking  A method developed at Stanford University in the USA, design thinking refers to a series of processes for the development of highly creative products inspired by the phases of the design process: understand–create–deliver.

Disruptive innovation  A radical innovation that makes an existing technology, product or service obsolete.

Divergent thinking  Exploration of the widest possible variety of solutions.

Dominant industry logic  Each industry follows certain specific rules that are defined by the competitive environment and existing value chains.

Economy of Things  (EoT) The next evolutionary step of the Internet of Things, when connected products start to interact and conduct transactions. A core technology can be distributed ledger technologies, including Blockchain.

Go-to-market approach  Channels used to bring your products and services to your customers.

Hidden champion  A small company that is the global leader in its market niche, but is relatively unknown beyond its limited sphere.

Industry 4.0  Interconnected production and supply chain networks, also known as industrial IoT, smart factory or cyber-physical systems.

Internet of Things (IoT)  The interconnection of products embedded in everyday objects based on sensors, connectivity and data analytics.

Network effects  It has been established that the value of a network increases as the number of users within it increases. With this value it becomes more attractive and the number of users grows exponentially.

New economy  Those sectors of the economy that deal, in particular, in Web-based services. The value of goods here derives not from their scarcity, but from the potential inherent in their wide dissemination.

NIH syndrome  The ‘not invented here’ syndrome – a phenomenon whereby individuals or even whole companies refuse to accept knowledge generated outside their own group.

Old economy  The traditional sectors of the economy, where the price of goods is determined by scarcity.

Orthodoxy  A shared set of beliefs that influence the assumptions upon which we base our actions.

Pattern adaptation  The application of interesting business models to one’s own business model, such that entirely new ideas for it come to light.

Porter’s Five Forces  A tool for market analysis, the chief goal is to analyse one’s industry in great detail and use the findings to achieve a competitive advantage by improving one’s positioning. The criteria considered are competitors, customers, substitute products, suppliers and the intensity of competition within the industry.

Prosumer  A (private) producer who is in parallel a (part) consumer of the product or service produced.

Red oceans  Existing markets and industries that are relatively unattractive, highly competitive and offering small margins.

Revenue-generating mechanism  The rationale of what makes a business model financially sound. It includes delineations of the cost structure and sources of revenue. This dimension is designed to answer the most central question for every company: how do we generate a profit?

Similarity principle  An approach to business model pattern adaptation, going from the inside out. The adaptation process is begun by looking at the business models found in closely related industries and then considering an ever-wider range of industries. The patterns found are then adapted to one’s own business model.

Social media  Digital technologies through which users can exchange information via online platforms and cooperate on projects, for example.

Social network  The connection of a number of individuals by way of an online platform.

Switching costs  The costs that may be incurred when customers switch to a new provider or supplier.

TRIZ  The Russian acronym for the ‘theory of inventive problem solving’ (teoriya resheniya izobretatelskikh zadatch). An analysis of approximately 40,000 patents showed that technical contradictions as they occurred in various industries can be solved with the use of a limited number of elementary principles. This research resulted in the creation of one of the most well-known and intuitive TRIZ tools for technical problem solving: the 40 innovative principles.

Value chain  A description of all the processes and activities carried out by a business and the resources and capabilities involved.

Value proposition  Promise of value to be delivered, communicated and acknowledged to the customer; a company’s products and services should aim for creating that value.