Understanding business models is important for innovation management for several reasons. The most important are:

• Innovation strategy - Designing your innovation strategy includes prioritizing focus areas for innovation. A solid business model analysis helps identify such improvement areas.
• Business model innovation - Larry Keeley of Doblin introduced 10 types of innovation in his study from 1999 (see side bar). Business model innovation shows the strongest return of investment. It outperforms technological innovation by a large margin. To design new, innovative business models you need to understand the nuts and bolts of existing business models in the same industry.
• Market introductions - A successful innovation is not just a technological break through, it is also a market success. By examining the business model for a new innovative idea at an early stage, the path to market success can be formed early in the innovation process. Identifying the potential customers can help in testing; mapping the necessary network can speed up the market introduction by getting the partners' buy in early; and understanding the true value of the idea can cut unnecessary development costs.