In 2001, the music industry was hemorrhaging money. Napster had trained an entire generation to expect music for free, CD sales were plummeting 20% and record labels were desperately suing their own customers. The industry seemed doomed.
Then Apple did something counterintuitive: they made it easier to buy music than steal and introduced the iPod with the iTunes Store. This wasn’t just another product launch; it reignited the music industry. At a time when digital piracy was pervasive and CDs were dying out, Apple created a new way to experience and purchase music.
By 2006, iPod and iTunes had grown into a $10 billion business, representing nearly half of Apple’s revenue. Johnson, Christensen, and Kagermann highlighted this in an excellent HBR article, “Reinventing Your Business Model,” noting that Apple wrapped good technology in a great business model by combining hardware, software, and services.
The same principle has happened in other industries facing disruption. Netflix moved from DVD shipping to streaming to creating its own content. Amazon expanded from books to an “everything store” to cloud services. In each case, technology was the spark, but reinvention of the business model drove sustainable growth.
Today, AI is creating an even sharper inflexion point as knowledge and creative work are no longer scarce; they’re instantly available and increasingly commoditised. So, the question is: how do you reinvent?
Christensen’s Johnson and Kagermann business model framework gives us four levers.
1. Customer Value Proposition (CVP)
As Jeff Bezos said, ‘Start with the customer and work backwards.” He’s right.
So, the critical question is: What “job” does your customer truly need done? Because AI is resetting expectations. Speed, personalisation, and intelligent responses are now the baseline. If your value doesn’t connect to what customers truly care about, you risk losing them.
For example, consulting firms that once competed on research alone now face AI tools that generate reports in seconds. The firms that win will shift their CVP to “we help you interpret your analysis and communicate with confidence.”
2. Profit Formula
How a company makes money while delivering value to customers. Apple didn’t just sell iPods; it made money every time someone downloaded a song through iTunes, paving the way for Spotify, Apple Music, and other subscription models.
AI reshapes economics in similar ways. A coaching business, for example, might move from charging hourly rates to offering packages, or AI-assisted programmes that deliver value at scale.
3. Key Resources
What assets and capabilities make your model work? For Apple, it was the integration of hardware, software, and licensing. For you, it could be proprietary data, unique methodologies, or the trust you’ve built with clients over decades.
Your advantage often lies less in what you own and how you apply and combine it. That could be:
- Data and insights built over years of client work.
- Partnerships and networks that competitors can’t easily replicate.
- Human judgment, experience, and relationships that remain irreplaceable
4. Key Processes
How will you deliver consistently and at scale? Apple built processes that tightly integrated iTunes, the iPod, and later, the iPhone into one smooth experience. For your business, how you deliver consistent client experiences, manage partnerships, or maintain quality at scale.
Changing your model often means rethinking and refining the processes that enable you to remain consistent, scalable, and adaptable as customer expectations and market conditions evolve.
New tools don’t guarantee survival because you can have the best tech, the most brilliant plan, and even the most straightforward strategy. But if your people don’t believe in it, nothing changes.
Real change happens when leaders and teams buy into a shared vision, feel the urgency, and commit to working differently. You don’t reinvent a business model — your people do.
If you’re a business owner or consultant, look at these starting points:
- What customer problem can we solve through the business model change
- How will it change what customers value and what they’ll pay for?
- What unique advantages do we have that cannot be replicated?
- What needs to happen to get our team or stakeholders on board?
I work with consultants, founders and their teams to rethink their business models so they can turn disruption into growth. If you’re ready to explore what reinvention could look like for your business, let’s connect.
