Just like the rivalry between the “Big Three” US automakers, there is an interesting competition unfolding amongst three multi-billionaires who are jockeying to commercialize travel outside the terrestrial Earth.
Jeff Bezos
Blue Origin is the company Bezos founded to develop his space travel initiative, through its New Shepard rocket with a luxury passenger capsule mounted on top. His primary goal is to cater to well-off tourists and Blue Origin has announced they plan to start selling tickets for suborbital space flights in 2019 at a cost of between $200,000 and $300,000 per seat.
His plans are then to start building the first moon base using Blue Origin’s upcoming New Glenn rocket system with the objective “to move all heavy industry off of Earth, and Earth will be zoned residential and light industry.”
Elon Musk
Elon Musk’s venture is called SpaceX and it has highlighted that one of their big advantages is the system’s easy landing capabilities – as was demonstrated in April 2018, when it was launched and touched back down safely in the west Texas desert minutes later.
SpaceX’s current rocket, the Falcon Heavy, is capable of launching a small “Crew Dragon” space capsule past the moon and back to Earth and according to Musk two private citizens have made large deposits to be able to go on a manned voyage.
Musk has also shared in detail the game plan for SpaceX’s next generation of space travel that involves the development of the “Big Falcon Rocket” that could provide for affordable, large scale, regular lunar visits.
Richard Branson
Richard Branson’s space travel company is named Virgin Galactic and it has sold about 700 seats at $250,000 per seat for its planned suborbital flights. This price range is right in line with his above listed two competitors, however Virgin Galactic has incurred various delays with the development of its program.
It will be interesting to see which of these three player’s company reaches the moon first.
Why Develop Space Travel?
The question is – why are these three people spending billions of dollars on trying to develop space travel? Is the competition ego driven? no doubt some is. Is it altruistic? Trying to prevent mankind from possible extinction? This may be part of it. But, the major reason is because they see enormous potential profits in commercializing space.
At this point in time the opportunities in space are like the potential profits railroads were presented with in the mid-1800’s in the Untied States. Not only could railroads make money by transporting people and products, but wherever they went they created opportunities for land speculation, developing new cities, generating profits from plentiful natural resources, establishing resorts, and creating vacation and adventure travel revenue.
But how does this relate to innovation – the focus of this article?
Business-model Innovation Generates Huge Revenue
As we discussed in the June 2018 newsletter, to be successful with innovation you need to develop an overall strategy of how to utilize innovation within your organization. With regards to June’s discussion on radical innovation, any conversation on innovation strategy needs to differentiate between product/service innovation and business-model innovation.
Business-model innovation involves the design or architecture of an entire system by which the enterprise provides value to customers, its actual delivery, and the related customer recruitment. This involves identifying how it plans to entice customers to pay for products/services and converting those payments to profit.
For example, the development of new shatterproof glass that could withstand tornado force winds would be a product innovation that could reap significant profits, but not one that would constitute an entirely new business-model innovation in the glass industry. Whereas, creating the ability to construct a building on-site by “pouring” it from a newly developed glass that would be strong and durable enough for building applications, would be a new business-model innovation.
Business-model Innovation Examples
Business-model innovation also describes the less glamorous processes of how an organization creates, delivers and captures value as opposed to only creating a new product or service. It requires management to do more up-front work to assess what customers want, how they wish to receive it, and how the enterprise can organize to best meet those needs.
For example, Google rose to power using business-model innovation. Google didn’t invent the Internet and computers; it simply used those tools to engineer new search engine business models, which created new value propositions for the public and as a result, Google became one of the most profitable companies in history.
In some cases, innovation that we might think of as product is business-model innovation. Henry Ford didn’t invent the automobile, but he did develop a mass production process that decreased the costs of producing cars. This enabled him to reduce the sales price so that the masses could afford to buy them. So, the business-model innovation of mass production served two purposes: cost reduction and tremendously increasing the car’s availability.
Space Travel Business-model Innovation Potential
Similar to what the above-mentioned railroads did, besides the adventure, novelty and the “early adopter” experience how could space travel generate additional business-model revenue? Opportunities could be:
- Family space vacations
- Manufacturing on other planets or in space
- Mining and availing ourselves of natural resources from other planets or moons
- Getting married in space
- Having children in space
- Partaking in certain activities that make membership in the “mile-high club” pale in comparison
- Performing surgery in zero or low gravity might have health benefits
- Perhaps treating certain chronic diseases in space may be beneficial
- Generating revenue from the colonization of other planets
How to Develop Business-model Innovation
With the above in mind, how does an organization develop business-model innovations? First, you need to assess your organization’s innovation skill-set, determine if you are capable of developing radical innovation, and establish an overall innovation strategy that focuses on areas that are most attractive and leverage your current know-how.
Second, you want to evaluate all your innovation ideas to determine whether they are a product/service innovation or business-model innovation. While the vast majority of innovations are product/service innovations, not business-model innovations, you want to do the following three things to develop business-model innovations:
- Communicate to your staff that you are looking for business-model innovations
- Train them on how to develop business-model innovations
- Educate them on how to take product/service innovations and try to convert them into business-model innovations
If you need assistance with how to develop business-model innovations effectively within your company, please contact us using the below information so we can be a resource to you in this critical area.
Fountainhead Consulting Group, Inc. is an Innovation and Business Planning firm. During the past 17 years, we have shown over 1,200 companies how to achieve their goals by using our unique, comprehensive, and systematic FastTrak Innovation Program™, Innovation Academy™, and Structure of Success™ methodologies. Using the components in these methodologies, each month we examine an aspect of how to transform your business or organization into a true 21st Century enterprise.
Office phone: (770) 642-4220
www.FountainheadConsultingGroup.com
George.Horrigan@FountainheadConsultingGroup.com
Tags: Business Planning, entrepreneur, front end of innovation, innovation, invention, small business consulting, small business planning, start a business
