This document discusses business model innovation. It begins with an agenda that includes defining business model innovation and outlining the process of business model innovation. The document then discusses why business model innovation is important for benefits like profit and growth. It also provides tools for describing one's current business model, including the business model canvas. The canvas is used to visualize the key components of a business model in a simple format. Finally, the document engages participants in describing their own business models using the canvas as a guide.
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Business model innovation 2 day workshop facilitation slides
10. What will we do today?
Agenda
1. Why is Business Model Innovation important?
2. What is a Business Model?
3. What is Business Model Innovation?
4. What is the Process of Business Model Innovation?
11. What will we do tomorrow?
Agenda
1. How to develop and design new Business Models?
2. How to evaluate Business Models?
3. Case Study
4. What are characteristics of Business Model Innovators?
13. Getting to know each other
“ Who are you?
“ What is your work (company, position, …)
“ Why are you here?
“ What do you know about business model
innovation?
15. How to (re)invent your Business Model?
The Framework: Dimensions to consider
Context
Conditions Surrounding Business Model Innovation Activities
Purpose Content
Input to Result of
Business Model Process Business Model
Innovation Flow of Business Model Innovation Innovation
Activities Activities Activities
Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning
16. What are we going to do today?
Agenda
1. Why is Business Model Innovation important?
2. What is a Business Model?
3. What is Business Model Innovation?
4. What is the Process of Business Model Innovation?
17. How to (re)invent your Business Model?
The Framework: Dimensions to consider
Context
Conditions Surrounding Business Model Innovation Activities
Purpose Content
Input to Result of
Business Model Process Business Model
Innovation Flow of Business Model Innovation Innovation
Activities Activities Activities
Why to engage in
business model
innovation?
Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning
18. “Get the business model wrong, and
there is almost no chance of success...”
Prof. David Teece
University of California, Berkley.
20. „Innovation is front and center on the
corporate agenda, according to a
global survey. Executives are adding
more breakthrough innovations and
business model changes to their
portfolio to fuel the growth engine.“
Business Week, November 16, 2009
21. Why do Business Model Innovation?
Benefits cited by business model innovators
Source: IBM Global CEO Study 2006
22. Why do Business Model Innovation?
Profit outperformers focus on business model innovation
Source: IBM Global CEO Study 2006
23. Why do Business Model Innovation?
Operating margin growth in excess of competitive peers
Source: IBM Global CEO Study 2006
24. Why do Business Model Innovation?
Business model innovators outperform traditional
innovators
Source: Businessweek / BCG Innovation Survey 2008
25. Why is it important to you?
How Business Model Innovation can help you.
Entrepreneurs Managers Public Officers
Market Entry Growth Enhanced Value for
Citizens
Commercializing a Competitive Innovative New
New Technology Advantage Approaches needed
Create New Markets Fend of new New Public
entrants Management
26. Is it time to renew your business model?
How to tell: Environmental Forces
27. Is it time to renew your business model?
How to tell: Product/Technology Life Cycle
Stagnating or
declining revenues
Source: Moore, GA 2004, Darwin and the Demon: Innovating Within Established Enterprises. Harvard Business Review, 82
28. Is it time to renew your business model?
How to tell: Product/Technology Life Cycle
Source: Moore, GA 2004, Darwin and the Demon: Innovating Within Established Enterprises. Harvard Business Review, 82
31. What will we do today?
Agenda
1. Why is Business Model Innovation important?
2. What is a Business Model?
3. What is Business Model Innovation?
4. What is the Process of Business Model Innovation?
32. How to (re)invent your Business Model?
The Framework and Dimensions to consider
Context
Conditions Surrounding Business Model Innovation Activities
Purpose Content
Input to Result of
Business Model Process Business Model
Innovation Flow of Business Model Innovation Innovation
Activities Activities Activities
Dimensions and
components of Business
Models and Business
Model Innovations.
Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning
33. What is a business model?
Some definitions
“ “A business model is simply the ‘way of doing business’ that a firm has chosen: its entire
system for creating and providing consistent value to customers and earning a profit from that
activity, as well as benefit for its broader stakeholders. It refers to the core architecture or
configuration of the firm, specifically how it deploys all relevant resources (not just those
within the company boundaries), to create differentiated value for customers at a profit…”
(Davenport, T. H., M. Leibold and S. Voelpel (2006). Strategic Management in the Innovation Economy. Publicis Wiley.)
“ The business model is a company’s answer to the question of how to make money in its
chosen business. It describes, “…as a system, how the pieces of a business fit together”
(Magretta, J. (2002). "Why Business Models Matter." Harvard Business Review 80(5) May: 86-92.)
34. What is a business model?
The essence and main components
WHO WHAT HOW
is your do you offer do you
customer? your customers? do this?
Markets Products & Services Create Value
Customer Segments Solutions Deliver Value
Individual Customers Experiences Capture Value
Value Proposition
35. Describing your business business model
Please describe your business by answering these 3
questions.
Who is your
customer?
What is your value
proposition?
How are you
creating and
delivering your
offer?
Source: Marc Sniukas
36. What is a business model?
The different layers / levels of detail of a business model
• Offering
Value
• Customer
Proposition
• Needs and job to be done
• Creation
Value • Delivery
• Capture
• Activities and processes
• Network and value chain partners
Organization
• Resources, assets and capabilities
• Governance structures and processes
Relationships • to all stakeholders
• Costs
Financials • Revenues
• Profit
Source: Marc Sniukas
37. What is a business model?
Tools for describing your business model
Source: Accenture
Source: The Boston Consulting Group
Source: Innosight
Source: businessmodelgeneration.com
38. Describing your business model
Source: Linder, J. C. and S. Cantrell (2000). "Changing Business Models: Surveying the Landscape." A Working Paper from the Accenture Institute for Strategic Change.
39. Describing your business model
Four components
Source: Johnson, M, Christensen, C, & Kagermann, H 2008, Reinventing Your Business Model. Harvard Business Review, 86
40. Describing and visualizing your business model
Why is it important?
Be able to communicate it
Speak a common language
See the big picture
Have a basis for innovation
41. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
KEY
RESOURCES CHANNELS
COST CENTRES REVENUE STREAMS
Source: Canvas by businessmodelgeneration.com
42. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
What‘s your
offer?
Which „jobs
KEY to be done‚
RESOURCES CHANNELS
do you
satisfy?
COST CENTRES REVENUE STREAMS
Source: Canvas by businessmodelgeneration.com
43. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
What‘s your
Who‘s your
offer?
customer?
Which „jobs
Which
KEY to be done‚
RESOURCES CHANNELS customer
do you
segments do
satisfy?
you serve?
COST CENTRES REVENUE STREAMS
Source: Canvas by businessmodelgeneration.com
44. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
What‘s your
Who‘s your
offer?
customer?
Which „jobs
Which
KEY to be done‚
RESOURCES CHANNELS customer
do you
segments do
satisfy?
you serve?
How do you
reach your
customers?
COST CENTRES REVENUE STREAMS
Source: Canvas by businessmodelgeneration.com
45. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
What‘s your
relationship
What‘s your to the
Who‘s your
offer? customer?
customer?
What‘s your
Which „jobs image?
Which
KEY to be done‚
RESOURCES CHANNELS customer
do you
segments do
satisfy?
you serve?
How do you
reach your
customers?
COST CENTRES REVENUE STREAMS
Source: Canvas by businessmodelgeneration.com
46. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
What‘s your
What are
relationship
your core What‘s your to the
activities and Who‘s your
offer? customer?
processes? customer?
What‘s your
Which „jobs image?
Which
KEY to be done‚
RESOURCES CHANNELS customer
do you
segments do
satisfy?
you serve?
How do you
reach your
customers?
COST CENTRES REVENUE STREAMS
Source: Canvas by businessmodelgeneration.com
47. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
What‘s your
What are
relationship
your core What‘s your to the
activities and Who‘s your
offer? customer?
processes? customer?
What‘s your
Which „jobs image?
Which
KEY to be done‚
RESOURCES CHANNELS customer
do you
segments do
satisfy?
you serve?
What are your How do you
main assets reach your
and customers?
competencies?
COST CENTRES REVENUE STREAMS
Source: Canvas by businessmodelgeneration.com
48. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
What‘s your
What are
relationship
your core What‘s your to the
activities and Who‘s your
offer? customer?
You are processes? customer?
What‘s your
your main Which „jobs image?
suppliers, Which
KEY to be done‚
partners RESOURCES CHANNELS customer
do you
and segments do
satisfy?
alliances? you serve?
What are your How do you
main assets reach your
and customers?
competencies?
COST CENTRES REVENUE STREAMS
Source: Canvas by businessmodelgeneration.com
49. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
What‘s your
What are
relationship
your core What‘s your to the
activities and Who‘s your
offer? customer?
You are processes? customer?
What‘s your
your main Which „jobs image?
suppliers, Which
KEY to be done‚
partners RESOURCES CHANNELS customer
do you
and segments do
satisfy?
alliances? you serve?
What are your How do you
main assets reach your
and customers?
competencies?
COST CENTRES REVENUE STREAMS
What is
driving cost?
Source: Canvas by businessmodelgeneration.com
50. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
What‘s your
What are
relationship
your core What‘s your to the
activities and Who‘s your
offer? customer?
You are processes? customer?
What‘s your
your main Which „jobs image?
suppliers, Which
KEY to be done‚
partners RESOURCES CHANNELS customer
do you
and segments do
satisfy?
alliances? you serve?
What are your How do you
main assets reach your
and customers?
competencies?
COST CENTRES REVENUE STREAMS
What is How do you
driving cost? make money?
Source: Canvas by businessmodelgeneration.com
53. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
KEY
RESOURCES CHANNELS
COST CENTRES REVENUE STREAMS
Source: Canvas by businessmodelgeneration.com
54. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
What‘s your
What are
relationship
your core What‘s your to the
activities and Who‘s your
offer? customer?
You are processes? customer?
What‘s your
your main Which „jobs image?
suppliers, Which
KEY to be done‚
partners RESOURCES CHANNELS customer
do you
and segments do
satisfy?
alliances? you serve?
What are your How do you
main assets reach your
and customers?
competencies?
COST CENTRES REVENUE STREAMS
What is How do you
driving cost? make money?
Source: Canvas by businessmodelgeneration.com
55. Describing your business model
The business model canvas
KEY KEY OFFER RELATIONSHIPS CLIENTS
PARTNER ACTIVITIES
R1
Sales
Offer 1
Customer 1
You are
Offer 2
your main Customer 2
suppliers, KEY
partners RESOURCES CHANNELS
and
alliances? What are your Direct Sales
main assets
and
competencies?
COST CENTRES REVENUE STREAMS
What is How do you
driving cost? make money?
Source: Canvas by businessmodelgeneration.com
56. What will we do today?
Agenda
1. Why is Business Model Innovation important?
2. What is a Business Model?
3. What is Business Model Innovation?
4. What is the Process of Business Model Innovation?
58. Business Model Innovation is about...
The essence
WHO WHAT HOW
is your do you offer do you
customer? your customers? do this?
New Ways of
New Markets New Offers
Doing Business
New Value Propositions
Source: Marc Sniukas
59. The Innovation Map
4 Types of Innovation
Internal
Operational Management
Innovation Innovation
Continuous Discontinuous
Product & Service Business Model
Innovation Innovation
External
Source: Marc Sniukas
61. Nine Inch Nails
KEY KEY VALUE RELATIONSHIPS CUSTOMERS
PARTNERS ACTIVITIES PROPOSITION
KEY
RESOURCES CHANNELS
COST CENTRES REVENUE STREAMS
Business Model Canvas teamplate by : businessmodelgeneration.com – Content by Marc Sniukas
66. MinuteClinic
Traditional Approach Business Model Innovation
Who “ Everybody “ Everybody
What “ Usually full treatment “ Focus on basic treatments
“ Services covered by health insurance “ Quick
“ Special treatment for additional cost “ Convenient
“ Affordable
How “ A range of specialist “ Generalists
“ Special facilities “ Located in shopping malls / inside
“ One central location CVS pharmacies
“ “Solution shops” “ Multiple locations
“ “Retail model”
Source: Marc Sniukas
68. Grameen Bank
KEY KEY VALUE RELATIONSHIPS CUSTOMERS
PARTNERS ACTIVITIES PROPOSITION
KEY
RESOURCES CHANNELS
COST CENTRES REVENUE STREAMS
Business Model Canvas template by : businessmodelgeneration.com – Content by Marc Sniukas
69. Grameen Bank
Traditional Approach Business Model Innovation
Who “ (Rich and middle class) people who “ “Low income clients”
are reliable to pay back the credits or “ Poor people who would not get
have enough assets as security. any loans from traditional banks
(especially women)
What “ Classic loans, usually for larger sums “ Small loans to “unbanked people”
to buy assets.
How “ Strong risk management “ About 97% make their payments.
“ The returns from the interests belong “ The borrowers are the owners of
to the bank/ shareholders the bank.
“ Profit focus “ The profit of the bank goes back to
the owners.
“ There is no collateral. No lawyers.
“ Social business focus
Source: Marc Sniukas
71. McCafé
KEY KEY VALUE RELATIONSHIPS CUSTOMERS
PARTNERS ACTIVITIES PROPOSITION
KEY
RESOURCES CHANNELS
COST CENTRES REVENUE STREAMS
Business Model Canvas template by : businessmodelgeneration.com
72. McCafé
Traditional Approach Business Model Innovation
Who “ People who want a quick bite to eat “ People who want to sit down and
“ Get in, order, get served quickly, get remain seated for a while
out quickly again “ Create a “3rd place” à la Starbucks
What “ Pre-made food prepared constantly “ Coffee and cake
according to demand “ Made to order (coffee)
“ Standard menus “ Pre-produced (cakes)
“ Some variations allowed
How “ 1 counter “ 2 counters
“ Standardized processes “ Separate seating area for McCafé
“ Central locations with high “ Key is to increase share of wallet
frequencies of the customer and keep him for
“ The key is to serve a maximum a longer period of time in the
number of people during a given restaurant
time “ Innovative use of existing assets.
Source: Marc Sniukas
74. Nintendo Wii
Traditional Approach Business Model Innovation
Who “ Kids “ Everybody from 4-99
“ Hard Core Gamers “ The whole family
“ Casual Gamers
What “ High Tech – High Performance “ Family Console
Console “ Low tech console
“ Focus on fun rather than technical
performance
How “ High tech, high end processors for “ Low tech, lower power processors,
speed and graphics, connect over the no additional features
internet, additional features (DVD, “ New movement technology
internet,...) lower cost
high cost lower sales price (190.- €)
high sales price (250-300.- €)
Source: Marc Sniukas
75. How innovative is your business model?
The Business Model Evaluation Spider
Dimension Scale
1 5
approach traditional innovative
Who Customers
Profitability
existing customers
most profitable
3rd tier noncustomers
least profitable
Satisfaction most satisfied least satisfied
Segmentation differences commonalities
Buyer single buyer chain of buyers
Attributes vs attributes circumstances
Circumstances
What Total Solution
Appeal
single product
according to industry (either functional or emotional)
total solution; experiences
against conventional logic
Product vs product function
Function
Features improve and raise selectively raise, reduce, create, and
eliminate
How Customer interface conventional logic experiences; every element of buying
cycle addressed
Revenue streams conventional logic new streams
and pricing strategic pricing
Cost not aligned with strategic price of the masses aligned with strategic price of the masses
Activity system low fit, me too logic high fit, creative rearrangement of
activities
Assets existing assets new assets
Source: Marc Sniukas
76. How innovative is your business model?
The Business Model Evaluation Spider
Assets
5
Activity System Customers
4
Cost Profitability
3
Revenue Streams Satisfaction
2
1
Customer Interface Segmentation
Features Buyer
1 = conventional me too Function Circumstances
2 = imitative innovation
Appeal Total Solution
3 = slightly innovative; some new ideas; not too risky
4 = innovative; risky new ideas
5 = radically different
Source: Marc Sniukas
77. What will we do today?
Agenda
1. Why is Business Model Innovation important?
2. What is a Business Model?
3. What is Business Model Innovation?
4. What is the Process of Business Model Innovation?
78. How to (re)invent your Business Model?
The Framework and Dimensions to consider
Context
Conditions Surrounding Business Model Innovation Activities
Purpose Content
Input to Result of
Business Model Process Business Model
Innovation Flow of Business Model Innovation Innovation
Activities Activities Activities
How to achieve business
model innovation within
your company?
Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning
79. The process of business model innovation
A discovery driven approach
Setting the Stage
A Discovery-Driven
Approach
Source: Marc Sniukas
80. Source: Marc Sniukas
How to (re)invent your Business Model?
The Process “
“
Define the purpose, scope and focus of innovation activities
Align business and innovation strategies
“ Build leadership alignment & commitment • Identifying
“ Build a common language and understanding internal and
“ Definition of governance structures and processes external
opportunities
• Sensing, seeking
Setting the Stage and shaping
opportunities
“ Bringing successful ideas to market
• Describe the
“ Financial impact current business
“ Incubation model
“ Acceleration • Explore and
“ Transition understand
A Discovery-Driven consumer and
customer needs,
Approach motivations,
behaviors
• Understand
emerging
“ Turn ideas into market
markets, industry
ready concepts
and socio-
“ Road-test the idea portfolio ecological trends
with key stakeholders,
consumers, internal and external “ Design new business models
“ Prototyping, Technical feasibility “ Develop and select ideas
“ Experimentation & learning “ Develop an idea portfolio
“ Customer & stakeholder feedback “ Idea Generation (In-house, cross-units, external)
“ Business planning, venturing, secure founding “ Idea Evaluation
“ Decide of organizational and governance structures “ Idea Selection
“ Evolution & optimization “ Strategic decision making
81. Setting the stage
Getting ready
Description Project Set Up
Input (Business Model Innovation idea)
Tasks 1. Define purpose, scope and focus (Why)
2. Define and build team (Who)
3. Define goals and metrics
4. Define governance structure, process and project plan (How)
5. Build leadership commitment
Output • Project Brief/Assignment
• Project plan incl. milestones, tasks, responsibilities, 1st resource planning per phase
• Team is established
• Common understanding about the project has been created
Gate • Stop/Go decision
• Team established and resources have been committed
Tools • Kick-off workshop
• Business Model Handbook
• Project Brief
• Project Planning
Source: Marc Sniukas
84. Discovery
Gaining insights
Description Identify internal and external opportunities
Input Project Brief
Tasks 1. Company Assessment
2. Market Assessment
3. Industry Assessment
4. Future Trends Assessments
Output • Description AS IS of current business model, market, competition, industry
• Description of opportunities
• Description of first ideas
• Update project planning incl. resources needed estimation for next phase
Gate • Stop/Go Decision
• Is the idea still interesting?
• Is it worth spending the resources for the next phase?
Tools • Desk and real life research
• Who/What/How, Canvas, SWOT
• Customer Profile, Value Curve, Buyer Experience Cycle
• 5 Forces
Source: Marc Sniukas
85. Discovery
Gaining insights
Source: Marc Sniukas
86. What does your customer want?
The Customer Profile
What does he
THINK and FEEL?
Fears, worries,
aspirations, wants,
needs, frustrations,....
What does he What does he
HEAR? SEE?
What others Environment
say Others
Influencers What does the
Companies market offer?
... ...
What does he
DO?
Behaviors
Attitudes
Appearance
...
87. What does your customer want?
The Customer Profile
What does he
THINK and FEEL?
Fears, worries,
aspirations, wants,
needs, frustrations,....
What does he What does he
HEAR? SEE?
What others Environment
say Others
Influencers What does the
Companies market offer?
... ...
What does he
DO?
Behaviors
Attitudes
Appearance
...
Source: Xplane
88. How do you reach your customers?
Buyer Experience and Channels
Pre-Purchase Steps The Six Stages of the Buyer Experience Cycle
Awareness Evaluation Purchase Delivery Use Supplements Maintenance Disposal
Customer Productivity: In which stage are the biggest blocks to customer productivity?
The Six Utility Levers
Simplicity: In which stage are the biggest blocks to simplicity?
Convenience: In which stage are the biggest blocks to convenience?
Risk: In which stage are the biggest blocks reducing risk?
Fun and image: In which stage are the biggest blocks fun and image?
Environmental
In which stage are the biggest blocks to environmental friendliness?
friendliness:
Source: Marc Sniukas. Adapted from Kim and Mauborgne “Blue Ocean Strategy” Harvard Business School Press, 2005
89. How do you reach your customers?
Buyer Experience and Channels
Pre-Purchase Steps The Six Stages of the Buyer Experience Cycle
Awareness Evaluation Purchase Delivery Use Supplements Maintenance Disposal
Channels
Source: Marc Sniukas
90. What is your value proposition?
Low Cost Airline Average Airline Car Transport
high
low
Price Meals Lounges Seating Class Hub Connectivity Friendly Service Frequent Point to
Choice Point Departures
Following Kim and Mauborgne “Blue Ocean Strategy” Harvard Business School Press, 2005
91. What is your value proposition?
The Value Curve
high
low
92. Who are your non-customers?
Why are they not buying?
“ 1st group: „soon-to-be“ non-customers: They minimally use the current offering, but are
constantly searching for something better or different and ready to switch easily. They are
closest to the existing customers.
“ 2nd group: „refusing“ non-customers: They either do not use or cannot afford to use the
current market offerings because they find the offerings unacceptable or beyond their means.
These customers are willing to buy, but not at the current terms.
“ 3rd group: „unexplored” non-customers: They are the farthest away from the existing market.
Typically they are being ignored completely as potential customers by the industry, either
because they have always been assumed to belong to another industry or are not being
considered worth the effort.
95. What will we do tomorrow?
Agenda
1. How to develop and design new Business Models?
2. How to evaluate Business Models?
3. Case Study
4. What are characteristics of Business Model Innovators?
98. What did we do yesterday?
Agenda
1. Why is Business Model Innovation important?
2. What is a Business Model?
3. What is Business Model Innovation?
99. How to (re)invent your Business Model?
The Framework: Dimensions to consider
Context
Conditions Surrounding Business Model Innovation Activities
Purpose Content
Input to Result of
Business Model Process Business Model
Innovation Flow of Business Model Innovation Innovation
Activities Activities Activities
Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning
100. What did we do yesterday?
Agenda
1. Why is Business Model Innovation important?
2. What is a Business Model?
3. What is Business Model Innovation?
101. How to (re)invent your Business Model?
The Framework: Dimensions to consider
Context
Conditions Surrounding Business Model Innovation Activities
Purpose Content
Input to Result of
Business Model Process Business Model
Innovation Flow of Business Model Innovation Innovation
Activities Activities Activities
Why to engage in
business model
innovation?
Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning
102. Why do Business Model Innovation?
Benefits cited by business model innovators
Source: IBM Global CEO Study 2006
103. Is it time to renew your business model?
How to tell
104. What did we do yesterday?
Agenda
1. Why is Business Model Innovation important?
2. What is a Business Model?
3. What is Business Model Innovation?
105. How to (re)invent your Business Model?
The Framework and Dimensions to consider
Context
Conditions Surrounding Business Model Innovation Activities
Purpose Content
Input to Result of
Business Model Process Business Model
Innovation Flow of Business Model Innovation Innovation
Activities Activities Activities
Dimensions and
components of Business
Models and Business
Model Innovations.
Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning
106. What is a business model?
The essence and main components
Source: Marc Sniukas
107. What is a business model?
Tools for describing your business model
Source: Accenture
Source: The Boston Consulting Group
Source: Innosight
Source: businessmodelgeneration.com
108. What did we do yesterday?
Agenda
1. Why is Business Model Innovation important?
2. What is a Business Model?
3. What is Business Model Innovation?
109. How to (re)invent your Business Model?
The Framework and Dimensions to consider
Context
Conditions Surrounding Business Model Innovation Activities
Purpose Content
Input to Result of
Business Model Process Business Model
Innovation Flow of Business Model Innovation Innovation
Activities Activities Activities
Dimensions and
components of Business
Models and Business
Model Innovations.
Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning
113. What will we do today?
Agenda
1. How to develop and design new Business Models?
2. How to evaluate Business Models?
3. Case Study
4. What are characteristics of Business Model Innovators?
114. What will we do today?
Agenda
1. How to develop and design new Business Models?
2. How to evaluate Business Models?
3. Case Study
4. What are characteristics of Business Model Innovators?
115. The Telco Business Model
3 models in one
Source: businessmodelgeneration.com
116. The Telco Business Model
3 models in one
Source: businessmodelgeneration.com
117. The Telco Business Model
3 models in one
Source: businessmodelgeneration.com
118. The Telco Business Model
3 models in one
Source: businessmodelgeneration.com
119. The Telco Business Model
3 models in one
Source: businessmodelgeneration.com
120. The Telco Business Model
3 models in one
Source: businessmodelgeneration.com
121. The Telco Business Model
3 models in one
Source: businessmodelgeneration.com
122. The Telco Business Model
3 models in one
Source: businessmodelgeneration.com
123. Bharti Airtel Limited
A new business model for the telco industry
“ Bharti Airtel Limited, the largest telecom service provider in India, chose to
strategically outsource its core functions.
“ For a typical telecom operator, the pain point during the growth phase is
planning for network requirements and preparing budgets for such a
capital expenditure.
“ Capacity has to be built ahead of demand, which usually means the
telecom operator has to absorb the cost of unused capacity.
“ Source:
http://blogs.hbr.org/cs/2010/05/reverse_innovation_success_in_the_tele.
html
124. Business Model Innovation is about…
The Essence
WHO WHAT HOW
is your do you offer do you
customer? your customers? do this?
New Ways of
New Markets New Offers
Doing Business
New Value Propositions
Source: Marc Sniukas
125. Business Model Innovation
Where to start?
New
Markets
New Value
Proposition
New Ways
New
of doing
Offers
business
Source: Marc Sniukas
126. What will we do today?
Agenda
1. How to develop and design new Business Models?
I. Who is the customer?
II. What is the need / job to be done?
III. How are you satisfying that need?
127. What will we do today?
Agenda
1. How to develop and design new Business Models?
I. Who is the customer?
II. What is the need / job to be done?
III. How are you satisfying that need?
128. Which customers do you target?
Creating new markets
existing ↔ noncustomers (2nd and 3rd tier)
most profitable ↔ less profitable
most satisfied ↔ less satisfied (1st tier)
specific buyer ↔ chain of buyers
focus on differences ↔ focus on commonalities
focus on finer segmentation ↔ focus on de-segmentation
focus on attributes focus on circumstances
(of customers and products) ↔ (needs and the job done)
Source: Marc Sniukas
129. Who is the customer?
Satisfaction
B2B
B2C
Profitability
Non-Customers
Characteristics Demographics
Source: Marc Sniukas
130. What will we do today?
Agenda
1. How to develop and design new Business Models?
I. Who is the customer?
II. What is the job to be done?
III. How are you satisfying that need?
131. What is the job to be done?
1. What problem is the customer trying to solve? “*Customer] wants to
[solve problem] in [this context+.”
2. Which features are important to the customer? What does he want and
value?
3. What are barriers for the customer?
- Price: How cheap / expensive are existing solutions?
- Access: How easy / complicated is it to get / install existing solutions?
- Usage: How easy / complicated is it for the customer to use existing solutions?
- Experience: What are barriers to a good experience?
132. How do you reach your customers?
Buyer Experience and Channels
Pre-Purchase Steps The Six Stages of the Buyer Experience Cycle
Awareness Evaluation Purchase Delivery Use Supplements Maintenance Disposal
Customer Productivity: In which stage are the biggest blocks to customer productivity?
The Six Utility Levers
Simplicity: In which stage are the biggest blocks to simplicity?
Convenience: In which stage are the biggest blocks to convenience?
Risk: In which stage are the biggest blocks reducing risk?
Fun and image: In which stage are the biggest blocks fun and image?
Environmental
In which stage are the biggest blocks to environmental friendliness?
friendliness:
Source: Marc Sniukas. Adapted from Kim and Mauborgne “Blue Ocean Strategy” Harvard Business School Press, 2005
133. What will we do today?
Agenda
1. How to develop and design new Business Models?
I. Who is the customer?
II. What is the need / job to be done?
III. How are you satisfying that need?
134. How to you define your product?
Creating new offerings
start anew, or use existing assets in a
focus on existing assets ↔ new way
single product or service ↔ total solution, bundling
functional appeal ↔ emotional appeal and experiences
focus on function fulfilled and the
focus on product ↔ job-to-be-done
raise, reduced, create, eliminate
build new features ↔ selectively
Source: Marc Sniukas
135. How do you do business?
Creating new ways for creating, delivering and caputring value
(co-creating) experiences
conventional customer interface ↔ easy to do business with
conventional pricing strategic pricing of the masses
(either to cover cost or benchmarked against ↔ (benchmarked against substitutes and alternative
competitors) industries)
cost-plus thinking ↔ price-minus thinking; target costs
network (with customers, suppliers,
integrate activities ↔ partners, alliances)
low fit of activities high fit of activities
(internally and externally)
↔ (internally and externally)
Source: Marc Sniukas
136. How to (re)invent your Business Model?
25 Strategies
WHO
#11 Target non-customers
#1 Challenge industry assumptions #12 Target less profitable customers
WHAT #13 Target the least satisfied customers
#2 Offer complementary products and services #14 Target the chain of buyers
#3 Offer solutions and experiences #15 Segment according to commonalities
#4 Offer bundles #16 Segment according to circumstances
#5 Switch your appeal: functional versus emotional #17 Desegment the customer based
#6 Focus on the job to be done HOW
#7 Selectively eliminate, reduce, raise and create #18 Reinvent the customer interface (channels)
#8 Look at subsitutes #19 Reinvent your customer relationships
#9 Expand the use of your assets and capabilities #20 Invent new revenue streams
#10 Look at the customer experience #21 Price differently
#22 Reinvent you cost base
#23 Re-assess your key activities
#24 Collaborate with suppliers, partners, the
network and ecosystem
#25 Look at completely different industries
Source: Marc Sniukas
137. What is your value proposition?
Type Features
Product – Service – Solution – Experience Focused – Extensive
Form Custom
Tangible – Intangible Generic – Tailored
Breadth Lifetime
Single – Bundled Consumable – Durable
138. How is the value proposition purchased?
Supplier Support
Direct – Indirect Light – Heavy
Frequency Availability
Often – Rarely On-Demand – Limited
Timing Autonomy
Immediate – Delayed Assisted – Independent
Strategy Location
Planned – Unplanned Traditional – New
139. How is payment done?
Form Price
Cash – Financed Fixed – Variable
Frequency Frequency
Pay per item – Flat fee Once – Installment
Timing Payer
Up-front – Afterwards Single – Multiple
140. What is your value proposition?
Low Cost Airline Average Airline Car Transport
high
low
Price Meals Lounges Seating Class Hub Connectivity Friendly Service Frequent Point to
Choice Point Departures
Following Kim and Mauborgne “Blue Ocean Strategy” Harvard Business School Press, 2005
141. What will we do today?
Agenda
1. How to develop and design new Business Models?
2. How to evaluate Business Models?
3. Case Study
4. What are characteristics of Business Model Innovators?
142. How to evaluate business models?
3 different types of experimentation
143. How to evaluate business models?
‚Paper‛ based approach
Area Rating Description What we What we
assume...
know...
Strategy How well does the idea
fit with our current 0 5 10
strategy?
expanding or defending a
What is the strategic current business
purpose of the idea? building a new one that has
already been identified
laying the foundations for
potential new businesses
Organization Resources &
Competencies
Which do we need?
Which do exist
already?
Which need to be
build?
Change need
Change readiness
Finance Revenue potential
Financial (Qty x Price)
Implications
Cost (fix + variable)
Unit Margin Target
How innovative is the model? Does fit our organization? Can
Does it have the potential for we implement it? Do we have
competitive advantage the capabilities and
through differentiation? resources?
144. How to evaluate business models?
‚Paper‛ based approach
Strategy Organization Financials
• How well does the idea fit with • Resources & Competencies Revenue potential
our current strategy? • Which do we need? Cost
• What is the strategic purpose of • Which do exist already? Unit Margin Target
the idea? • Which need to be build? Cash Flow Payback
expanding or defending a • Change need Net Present Value
current business • Change readiness
building a new one that has
already been identified
laying the foundations for
potential new businesses
Innovation Risks Success Factors
• How innovative is the new • Competition • Strengths
model? • Weaknesses • Opportunities
Known to company and • Threats
industry • Expected barriers
Known to industry, new to
company
New for company and industry
145. What will we do today?
Agenda
1. How to develop and design new Business Models?
2. How to evaluate Business Models?
3. Case Study
4. What are characteristics of Business Model Innovators?
146. How to (re)invent your Business Model?
The Framework and Dimensions to consider
Context
Conditions Surrounding Business Model Innovation Activities
Purpose Content
Input to Result of
Business Model Process Business Model
Innovation Flow of Business Model Innovation Innovation
Activities Activities Activities
How to achieve business
model innovation within
your company?
Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning
147. The process of business model innovation
A discovery driven approach
Setting the Stage
A Discovery-Driven
Approach
Source: Marc Sniukas
148. Source: Marc Sniukas
How to (re)invent your Business Model?
The Process “
“
Define the purpose, scope and focus of innovation activities
Align business and innovation strategies
“ Build leadership alignment & commitment • Identifying
“ Build a common language and understanding internal and
“ Definition of governance structures and processes external
opportunities
• Sensing, seeking
Setting the Stage and shaping
opportunities
“ Bringing successful ideas to market
• Describe the
“ Financial impact current business
“ Incubation model
“ Acceleration • Explore and
“ Transition understand
A Discovery-Driven consumer and
customer needs,
Approach motivations,
behaviors
• Understand
emerging
“ Turn ideas into market
markets, industry
ready concepts
and socio-
“ Road-test the idea portfolio ecological trends
with key stakeholders,
consumers, internal and external “ Design new business models
“ Prototyping, Technical feasibility “ Develop and select ideas
“ Experimentation & learning “ Develop an idea portfolio
“ Customer & stakeholder feedback “ Idea Generation (In-house, cross-units, external)
“ Business planning, venturing, secure founding “ Idea Evaluation
“ Decide of organizational and governance structures “ Idea Selection
“ Evolution & optimization “ Strategic decision making
149. Setting the stage
Getting ready
Description Project Set Up
Input (Business Model Innovation idea)
Tasks 1. Define purpose, scope and focus (Why)
2. Define and build team (Who)
3. Define goals and metrics
4. Define governance structure, process and project plan (How)
5. Build leadership commitment
Output • Project Brief/Assignment
• Project plan incl. milestones, tasks, responsibilities, 1st resource planning per phase
• Team is established
• Common understanding about the project has been created
Gate • Stop/Go decision
• Team established and resources have been committed
Tools • Kick-off workshop
• Business Model Handbook
• Project Brief
• Project Planning
Source: Marc Sniukas
150. Discovery
Gaining insights
Description Identify internal and external opportunities
Input Project Brief
Tasks 1. Company Assessment
2. Market Assessment
3. Industry Assessment
4. Future Trends Assessments
Output • Description AS IS of current business model, market, competition, industry
• Description of opportunities
• Description of first ideas
• Update project planning incl. resources needed estimation for next phase
Gate • Stop/Go Decision
• Is the idea still interesting?
• Is it worth spending the resources for the next phase?
Tools • Desk and real life research
• Who/What/How, Canvas, SWOT
• Customer Profile, Value Curve, Buyer Experience Cycle
• 5 Forces
Source: Marc Sniukas
151. Discovery
Gaining insights
Source: Marc Sniukas
152. Who are your non-customers?
Why are they not buying?
“ 1st group: „soon-to-be“ non-customers: They minimally use the current offering, but are
constantly searching for something better or different and ready to switch easily. They are
closest to the existing customers.
“ 2nd group: „refusing“ non-customers: They either do not use or cannot afford to use the
current market offerings because they find the offerings unacceptable or beyond their means.
These customers are willing to buy, but not at the current terms.
“ 3rd group: „unexplored” non-customers: They are the farthest away from the existing market.
Typically they are being ignored completely as potential customers by the industry, either
because they have always been assumed to belong to another industry or are not being
considered worth the effort.
153. Development
Designing options
Description • Development of business model concepts
• Develop business model idea portfolio and evaluate ideas
Input • Insights from discovery phase
• First ideas
Tasks 1. Develop Business model innovation idea portfolio
2. Evaluate BM portfolio
3. Develop list of assumptions to be tested
Output • Idea / option portfolio
• Evaluation of ideas
• List of assumptions to be tested incl. resource requirements and how they will be
tested
• Business case for each business model
Gate • Go to testing: Stop/Go Decision
• Justified to start conversion/testing/experimentation phase?
• Budget decision
Tools • 25 ways
• Who-What-How, Canvas
• Value Curve
• Spider, Scorecard, Hypotheses List, Business Case
Source: Marc Sniukas