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Even companies that have done well in creating new business models will find themselves suddenly running up against limitations in pursuing the success they would like to enjoy. As a result, company leaders need to have the next generation of business models in advanced development at all times. Sometimes, this lesson is best learned when business model innovation has been slow to develop in the company's beginning.Zebra Technologies is a leader and pioneer in providing portable bar coding printers for making labels. When you ask the butcher in your supermarket to cut something special for you, chances are that the price will be put on the package by a label produced on a Zebra Technologies printer.Ed Kaplan, CEO and co-founder, observes that the company was founded in 1969 with no business model. There were simply two engineers who performed custom electro-mechanical design work on a part-time basis. The operating concept was that if you built a better mouse trap, the world would find you. Most of the lessons the founders learned in business school did not apply to a start-up situation, so the company took awhile to find its foundation.The company's initial success was in providing machines for making and reading the paper tapes used to direct machine tools. After initial expansion, it became clear that the market potential was limited.Searching around for something new to do, the company spent two years to come up with its first bar code printing device. The timing was good because the Universal Product Code (the largest initial use for bar coding) was adopted in 1973, and went into wide-scale application in the late 1970s. The meat and produce counters in grocery stores were the company's initial application.From there, the company expanded its focus into industrial markets, prospering when an industry or a large company required its suppliers to use bar codes to ease supply chain management.In 1987, the company sold its paper tape business to its largest competitor to complete its first business model evolution.Gradually, competitors began to make inroads with bar code printers for specific end markets. In many cases, Zebra Technology found it easier to acquire than to develop a competitive offering. In the process, it expanded its views about what the printing technology could do.More recently, new forms of technology began to threaten bar code printing. These threats include other ways to identify a product like radio-frequency based devices. The company was quick to develop its own products employing these technologies, while the end markets have been slow to develop due to the initial costliness of the newer technologies.By 2001, the company saw its marketplace maturing. In response, the company's top management took on a business model redesign task. In essence, Zebra Technologies was being sure to focus on the rest of the orchard while continuing to pick the fruit available to it as efficiently as possible.The challenge was a particularly important one because the company has historically relied on value-added resellers to market and service its equipment. By being one step removed from the customers who use the products every day, the company lacks some of the perspective needed to add more value for its customers. Any move to circumvent customers, on the other hand, could have very severe negative sales consequences.Also, does Zebra Technology have or could it usefully add skills needed in order to innovate for customers in new ways? These are some of the major challenges facing the company as it looked for a better business model.The company used its experience with deciding to leave the paper tape business as a prototype for the process of choosing a new direction. Jack Kindsvater, senior vice president of business development, reports that the company's original impetus for business model change away from the paper tape business was based in Mr. Kaplan's involvement with the Young Presidents' Organization (YPO). In that setting, Mr. Kaplan benefited from getting objective reactions to the company's business model from peers in other companies and knowledgeable academics.As the business model creation process progressed, top management saw that many different focuses were needed for the new business model. What the business model foundation should be was open to question and discussion. Each person agreed, however, that the time to create and deploy an improved business model was before it was needed. The search for an improved business model was undertaken with a sense of urgency and importance.What are the lessons for you?Do you know what your next business model will be?Do you know what the business model after that will be?Are you ready to implement both of them on short notice?Copyright 2008 Donald W. Mitchell, All Rights Reserved Article Tags: Paper Tape Business, Next Generation, Business Models, Business Model, Paper Tape, Tape Business