When we talk about innovation, technology is only one piece of the puzzle. Many times, it’s also necessary to innovate underlying business models to enable the technology to gain traction.
I learned this lesson in my “day job,” representing alternative energy developers. Back in 2005, wind power was all the rage. Meanwhile solar remained mired in a Catch-22 conundrum: because the technology required high-costs upfront, homeowners were reluctant to sign on, even with incentives. Yet without more widespread adoption, prices remained high without larger economies of scale.
What saved solar wasn’t cheaper technology, but instead an innovative business model credited to Jigar Shah and later copied by Elon Musk at Solar City. Shah’s company Sun Edison installed the solar panels at no cost, then recovered the costs through power purchase agreements with owners, who committed to pay for the solar-generated at a set rate for 15 or 20 years. (Disclosure – I worked on some of the regulatory issues related to this new structure to ensure that it wouldn’t subject the parties to regulation as a public utility). Once homeowners could install solar at no cost, the technology took off, prices came down and the rest is history.
In the legal profession today, there are lots of cool technology ideas – but it’s unclear to me how they can be deployed and actually turn a profit. For that reason, it makes more sense to identify new business models and adapt the technology to fit those new models. Click on the graphic to see some of my ideas for new business models – and feel free to chime in with your thoughts below.