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Innovation, Business Models and Business Models Innovation

Innovation, Business Models and Business Models Innovation

This video was recorded at MIT World Series: Sloan Convocation 2005. When Morris Chang was launching his semiconductor company, he didn't rely on a business model -- because the concept had yet to be invented. "20 years ago," says Chang, "all we talked about in annual reports were products and services." Planning and managing relationships with customers and suppliers, central to contemporary business models, emerged organically for Chang's company, and proved critical to TSMC's success, he believes. Indeed, forging innovations in business models is often more difficult than making technological advances, which can be readily copied. "Who has made the most money?" asks Chang. In the computer industry, take Dell, which "didn't have real innovations in technology," but came up with a vastly improved way for customers to order. Or Starbucks, which has "made a $3 dollar cup of coffee out of a 50-cent cup of coffee." Chang's own TSMC, which began in 1987, scoped out the semiconductor industry, and arrived at a unique business model of manufacturing designs provided by customers who served the communications, computer and defense industries. But in this highly competitive industry, Chang has had to revise his business plan regularly, as well as stay ahead in the R&D game. "Innovations of all kinds were needed for us to survive, let alone prosper."

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