Innovative Business Models and Crisis Management

Abstract Nowadays the worldwide and regional increasing competition, increasing demands from customers asking for more sophisticated products and the rapid changing of the environment where the businesses operate, has created the need for innovative business models. From a survey run by IBM in 2008 it was concluded that Chief Executive Officers from many corporations feel the need to adopt their business models and even to undertake larger changes as a result. Most financial analysts or academics take the music industry as a prime example of failure to innovate its core business model, especially in this troubled crisis period. There are many other industries where failure to innovate its core business lead to their decline. One of the biggest calamities of the current recession is the fall of the once highly regarded (and onetime fourth-largest) Wall Street investment firm – Lehman Brothers Holdings, which was forced to file for bankruptcy protection few years ago. Not many years ago another giant WorldCom second biggest long distance phone company in the US filed for bankruptcy burning 107 billion USD of assets. It is claimed that the financial crisis is the reason. But, is the financial crisis the only reason for failure? The reality shows that the business models and crisis management provisions have lost their role. The aim of this article is to present the rationale on the need of investing in innovative business models as the literature tells and run a comparative study using data from two or three big corporations in order to show how innovative business models can help the management to take the right decisions when dealing with crisis situations. The main result and conclusion of this article is to show that the failure of many corporations is not created by the crisis alone, but because the management did not innovate its business model.