Review: The Risk-Driven Business Model

Four Questions That Define Your Company

By Karan Girotra and Serguei Netessine
Harvard Business Review Press, 222 pages, $30

Most companies focus their innovation on new products. But companies like Amazon and Netflix are disrupting industries with business model innovation—a different kind of innovation that is cheaper, easier and more powerful. At a time when business model innovation is flourishing as never before, The Risk-Driven Business Model by Karan Girotra and Serguei Netessine, both professors at Insead, reveals how companies can design and their business models to unlock value and game-changing competitive advantage. The authors point to Blockbuster's failure to adapt its business model in the Netflix age as a cautionary tale. At the other extreme, the success of Amazon is due to the mastery of regularly reinventing its business model. The key to creating an innovative business model is to ask four questions: What key decision get made in a business; when those decision are made; who is empowered to make decisions, and why those individuals make the decision they do. The answers go a long way to determining success or failure.