Karan Girotra's business model innovation talk discusses how companies can use the concept to give themselves a competitive edge.
While innovation is all about finding a new market or designing a new product to fulfill consumer needs, business model innovation is about offering the same product and addressing the same needs with a new business model. By altering a cost, revenue or risk system, companies have the opportunity to revolutionize or disrupt an industry. In particular, risk is often perceived as a negative, but with proper management, it may actually lead to greater advantage. Girotra uses the example of Uber, a transportation network that allows you to hail a cab through an app. While a black car service provider has to take on the risk of investing in a heavy asset load before a demand is assessed, "A company like Uber [...] has a business model which has a lot lower risk, because the cost and revenue scale up together. If a lot of people want taxi rides, Uber ends up bringing in a lot of drivers on board. If nobody wants a taxi ride there are no drivers who are paid."
Ultimately, Uber's business model manages risk in a way that differentiates it from a traditional car service, and is able to offer superior service.