Business Model Innovation Matrix

The Business Model Innovation Matrix is a strategic tool used to explore and categorize different types of business model innovations. It helps businesses identify opportunities for growth and differentiation by analyzing existing and potential business models across two dimensions: novelty and efficiency.

At a very high level, the Business Model Innovation Matrix is used in the context of business, strategy, innovation.

Business Model Innovation Matrix quadrant descriptions, including examples
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What is the Business Model Innovation Matrix?

A visual explanation is shown in the image above. The Business Model Innovation Matrix can be described as a matrix with the following quadrants:

  1. Efficiency Innovation: Focuses on optimizing existing processes and resources to improve efficiency. Example: Streamlining supply chain operations.
  2. Breakthrough Innovation: Introduces entirely new business models that are both novel and efficient. Example: Launching a subscription-based service in a traditional retail market.
  3. Incremental Innovation: Involves making small, incremental changes to existing business models. Example: Adding new features to an existing product line.
  4. Disruptive Innovation: Creates new markets or disrupts existing ones with novel but initially less efficient models. Example: Introducing a low-cost airline service.

What is the purpose of the Business Model Innovation Matrix?

The Business Model Innovation Matrix is a powerful framework designed to help organizations identify and explore various types of business model innovations. This matrix is divided into four quadrants, each representing a different approach to innovation based on two key dimensions: novelty and efficiency.

Novelty refers to how new or unique the business model is compared to existing models in the market. High novelty indicates a completely new approach, while low novelty suggests incremental changes to existing models.

Efficiency measures how well the business model optimizes resources and processes to deliver value. High efficiency means the model is highly optimized, while low efficiency indicates room for improvement.

By plotting business models on this matrix, organizations can identify where they currently stand and explore opportunities for innovation. For example, a company might find that its current model is highly efficient but not very novel, suggesting a need for more creative approaches to stand out in the market.

Use cases for the Business Model Innovation Matrix include strategic planning, competitive analysis, and identifying areas for improvement. Companies can use this matrix to brainstorm new business models, assess the potential impact of innovations, and prioritize initiatives based on their strategic goals.

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What templates are related to Business Model Innovation Matrix?

The following templates can also be categorized as business, strategy, innovation and are therefore related to Business Model Innovation Matrix: Product-Market Matrix, 4 Ps Marketing Mix Matrix, AI Capability-Value Proposition Alignment Matrix, AI Innovation-Value Alignment Matrix, AI Maturity Matrix, AI-Value Proposition Alignment Matrix, AI-Value Proposition Matrix, AIDA Marketing Matrix. You can browse them using the menu above.

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