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Marc Sniukas - Doujak Corporate Development
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How to develop and design new Business Models? How to evaluate Business Models?
Case Study What are characteristics of Business Model Innovators?
TEACHING
We dont teachwe create opportunities to learn!
LEARNING
Who are you? What is your work (company, position, ) Why are you here? What do you know about business model innovation?
About Marc
www.sniukas.com Consultant
Author
Researcher
Context Conditions Surrounding Business Model Innovation Activities Purpose Input to Business Model Innovation Activities
Apdated from De Wit and Meyer Strategy: Process, Content, Context 3rd edition 2004 Thompson Learning
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Context Conditions Surrounding Business Model Innovation Activities Purpose Input to Business Model Innovation Activities
Get the business model wrong, and there is almost no chance of success...
Prof. David Teece University of California, Berkley.
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
Managers
Growth
Public Officers
Enhanced Value for Citizens Innovative New Approaches needed New Public Management
Source: Moore, GA 2004, Darwin and the Demon: Innovating Within Established Enterprises. Harvard Business Review, 82
Source: Moore, GA 2004, Darwin and the Demon: Innovating Within Established Enterprises. Harvard Business Review, 82
Any Questions?
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Context Conditions Surrounding Business Model Innovation Activities Purpose Input to Business Model Innovation Activities
The business model is a companys 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.)
WHO
is your customer?
Markets
Customer Segments
WHAT
do you offer your customers?
Products & Services
HOW
do you do this?
Create Value Deliver Value Capture Value
Solutions
Experiences
Individual Customers
Value Proposition
Value Proposition
Value
Organization
Relationships
Financials
Source: Accenture
Source: Linder, J. C. and S. Cantrell (2000). "Changing Business Models: Surveying the Landscape." A Working Paper from the Accenture Institute for Strategic Change.
Source: Johnson, M, Christensen, C, & Kagermann, H 2008, Reinventing Your Business Model. Harvard Business Review, 86
Be able to communicate it Speak a common language See the big picture Have a basis for innovation
KEY RESOURCES
CHANNELS
COST CENTRES
REVENUE STREAMS
KEY RESOURCES
CHANNELS
COST CENTRES
REVENUE STREAMS
KEY RESOURCES
CHANNELS
COST CENTRES
REVENUE STREAMS
KEY RESOURCES
CHANNELS
COST CENTRES
REVENUE STREAMS
KEY RESOURCES
COST CENTRES
REVENUE STREAMS
COST CENTRES
REVENUE STREAMS
REVENUE STREAMS
COST CENTRES
REVENUE STREAMS
COST CENTRES
REVENUE STREAMS
COST CENTRES
REVENUE STREAMS
Any Questions?
KEY RESOURCES
CHANNELS
COST CENTRES
REVENUE STREAMS
COST CENTRES
REVENUE STREAMS
Sales Offer 1 You are your main suppliers, partners and alliances? Offer 2
KEY RESOURCES
R1 Customer 1 Customer 2
CHANNELS
Direct Sales
COST CENTRES
REVENUE STREAMS
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WHO
is your customer? New Markets
WHAT
do you offer your customers?
HOW
do you do this? New Ways of Doing Business
New Offers
Operational Innovation
Management Innovation
Continuous
Discontinuous
External
Source: Marc Sniukas
KEY RESOURCES
CHANNELS
COST CENTRES
REVENUE STREAMS
MinuteClinic
Traditional Approach Who Everybody Business Model Innovation Everybody
What Usually full treatment Services covered by health insurance Special treatment for additional cost How A range of specialist Special facilities One central location Solution shops
Generalists Located in shopping malls / inside CVS pharmacies Multiple locations Retail model
Grameen Bank
KEY PARTNERS KEY ACTIVITIES VALUE PROPOSITION RELATIONSHIPS CUSTOMERS
KEY RESOURCES
CHANNELS
COST CENTRES
REVENUE STREAMS
Grameen Bank
Traditional Approach Who Business Model Innovation (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) Small loans to unbanked people
What Classic loans, usually for larger sums 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
McCaf
KEY PARTNERS KEY ACTIVITIES VALUE PROPOSITION RELATIONSHIPS CUSTOMERS
KEY RESOURCES
CHANNELS
COST CENTRES
REVENUE STREAMS
McCaf
Traditional Approach Who People who want a quick bite to eat Get in, order, get served quickly, get out quickly again Business Model Innovation People who want to sit down and remain seated for a while Create a 3rd place la Starbucks Coffee and cake Made to order (coffee) Pre-produced (cakes) 2 counters Separate seating area for McCaf Key is to increase share of wallet of the customer and keep him for a longer period of time in the restaurant Innovative use of existing assets.
What Pre-made food prepared constantly according to demand Standard menus Some variations allowed How 1 counter Standardized processes Central locations with high frequencies The key is to serve a maximum number of people during a given time
Nintendo Wii
Traditional Approach Who Kids Hard Core Gamers Business Model Innovation Everybody from 4-99 The whole family Casual Gamers Family 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.- )
Dimension
Scale
1 5
3rd innovative tier noncustomers least profitable least satisfied commonalities chain of buyers circumstances traditional existing customers most profitable most satisfied differences single buyer attributes single product according to industry (either functional or emotional) product improve and raise
Who
What
approach Customers Profitability Satisfaction Segmentation Buyer Attributes vs Circumstances Total Solution Appeal Product vs Function Features
total solution; experiences against conventional logic function selectively raise, reduce, create, and eliminate experiences; every element of buying cycle addressed new streams strategic pricing aligned with strategic price of the masses high fit, creative rearrangement of activities new assets
How
Customer interface conventional logic Revenue streams and pricing Cost Activity system Assets conventional logic not aligned with strategic price of the masses low fit, me too logic existing assets
Activity System
Assets 5
Customers
Cost
Profitability
Features
Buyer
Function 1 = conventional me too 2 = imitative innovation 3 = slightly innovative; some new ideas; not too risky Appeal 4 = innovative; risky new ideas 5 = radically different
Source: Marc Sniukas
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Context Conditions Surrounding Business Model Innovation Activities Purpose Input to Business Model Innovation Activities
A Discovery-Driven Approach
A Discovery-Driven Approach
Turn ideas into market ready concepts Road-test the idea portfolio with key stakeholders, consumers, internal and external Prototyping, Technical feasibility Experimentation & learning Customer & stakeholder feedback Business planning, venturing, secure founding Decide of organizational and governance structures Evolution & optimization
Design new business models Develop and select ideas Develop an idea portfolio Idea Generation (In-house, cross-units, external) Idea Evaluation Idea Selection Strategic decision making
Output
Gate Tools
Any Questions?
Discovery
Gaining insights
Description Input Tasks
Identify internal and external opportunities Project Brief 1. 2. 3. 4. Company Assessment Market Assessment Industry Assessment Future Trends Assessments 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 Stop/Go Decision Is the idea still interesting? Is it worth spending the resources for the next phase? Desk and real life research Who/What/How, Canvas, SWOT Customer Profile, Value Curve, Buyer Experience Cycle 5 Forces
Output
Gate
Tools
Discovery
Gaining insights
Source: Xplane
Pre-Purchase Steps
Awareness Evaluation Purchase
Customer Productivity: In which stage are the biggest blocks to customer productivity?
In which stage are the biggest blocks to simplicity? In which stage are the biggest blocks to convenience? In which stage are the biggest blocks reducing risk? In which stage are the biggest blocks fun and image? In which stage are the biggest blocks to environmental friendliness?
Environmental friendliness:
Source: Marc Sniukas. Adapted from Kim and Mauborgne Blue Ocean Strategy Harvard Business School Press, 2005
Pre-Purchase Steps
Awareness Evaluation Purchase
Channels
low
Price Meals Lounges Seating Class Choice Hub Connectivity Friendly Service Frequent Point to Point Departures
Following Kim and Mauborgne Blue Ocean Strategy Harvard Business School Press, 2005
high
low
Any Questions?
1. 2.
3. 4.
How to develop and design new Business Models? How to evaluate Business Models?
Case Study What are characteristics of Business Model Innovators?
1. 2.
3.
Context Conditions Surrounding Business Model Innovation Activities Purpose Input to Business Model Innovation Activities
Apdated from De Wit and Meyer Strategy: Process, Content, Context 3rd edition 2004 Thompson Learning
1. 2.
3.
Context Conditions Surrounding Business Model Innovation Activities Purpose Input to Business Model Innovation Activities
1. 2.
3.
Context Conditions Surrounding Business Model Innovation Activities Purpose Input to Business Model Innovation Activities
Source: Accenture
1. 2.
3.
Context Conditions Surrounding Business Model Innovation Activities Purpose Input to Business Model Innovation Activities
1. 2.
3. 4.
How to develop and design new Business Models? How to evaluate Business Models?
Case Study What are characteristics of Business Model Innovators?
1. 2.
3. 4.
How to develop and design new Business Models? How to evaluate Business Models?
Case Study What are characteristics of Business Model Innovators?
Source: businessmodelgeneration.com
Source: businessmodelgeneration.com
Source: businessmodelgeneration.com
Source: businessmodelgeneration.com
Source: businessmodelgeneration.com
Source: businessmodelgeneration.com
Source: businessmodelgeneration.com
Source: businessmodelgeneration.com
WHO
is your customer? New Markets
WHAT
do you offer your customers?
HOW
do you do this? New Ways of Doing Business
New Offers
New Markets
New Offers
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III.
1.
III.
existing
most profitable most satisfied specific buyer
focus on differences
focus on finer segmentation focus on attributes (of customers and products)
focus on commonalities
focus on de-segmentation focus on circumstances (needs and the job done)
B2B
B2C
Satisfaction
Profitability
Non-Customers
Characteristics
Demographics
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III.
1.
What problem is the customer trying to solve? *Customer] wants to [solve problem] in [this context+. Which features are important to the customer? What does he want and value? 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?
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3.
Pre-Purchase Steps
Awareness Evaluation Purchase
Customer Productivity: In which stage are the biggest blocks to customer productivity?
In which stage are the biggest blocks to simplicity? In which stage are the biggest blocks to convenience? In which stage are the biggest blocks reducing risk? In which stage are the biggest blocks fun and image? In which stage are the biggest blocks to environmental friendliness?
Environmental friendliness:
Source: Marc Sniukas. Adapted from Kim and Mauborgne Blue Ocean Strategy Harvard Business School Press, 2005
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III.
start anew, or use existing assets in a new way total solution, bundling
functional appeal
emotional appeal and experiences focus on function fulfilled and the job-to-be-done raise, reduced, create, eliminate selectively
focus on product
cost-plus thinking
price-minus thinking; target costs network (with customers, suppliers, partners, alliances)
integrate activities
Type
Product Service Solution Experience
Features
Focused Extensive
Form
Tangible Intangible
Custom
Generic Tailored
Breadth
Single Bundled
Lifetime
Consumable Durable
Supplier
Direct Indirect
Support
Light Heavy
Frequency
Often Rarely
Availability
On-Demand Limited
Timing
Immediate Delayed
Autonomy
Assisted Independent
Strategy
Planned Unplanned
Location
Traditional New
Form
Cash Financed
Price
Fixed Variable
Frequency
Pay per item Flat fee
Frequency
Once Installment
Timing
Up-front Afterwards
Payer
Single Multiple
low
Price Meals Lounges Seating Class Choice Hub Connectivity Friendly Service Frequent Point to Point Departures
Following Kim and Mauborgne Blue Ocean Strategy Harvard Business School Press, 2005
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How to develop and design new Business Models? How to evaluate Business Models?
Case Study What are characteristics of Business Model Innovators?
What we assume...
expanding or defending a current business 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
Revenue potential (Qty x Price) Cost (fix + variable) Unit Margin Target
How innovative is the model? Does it have the potential for competitive advantage through differentiation?
Does fit our organization? Can we implement it? Do we have the capabilities and resources?
Organization
Resources & Competencies Which do we need? Which do exist already? Which need to be build? Change need Change readiness
Financials
Revenue potential Cost Unit Margin Target Cash Flow Payback Net Present Value
Innovation
How innovative is the new model? Known to company and industry Known to industry, new to company New for company and industry
Risks
Competition Weaknesses Threats Expected barriers
Success Factors
Strengths Opportunities
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3. 4.
How to develop and design new Business Models? How to evaluate Business Models?
Case Study What are characteristics of Business Model Innovators?
Context Conditions Surrounding Business Model Innovation Activities Purpose Input to Business Model Innovation Activities
A Discovery-Driven Approach
A Discovery-Driven Approach
Turn ideas into market ready concepts Road-test the idea portfolio with key stakeholders, consumers, internal and external Prototyping, Technical feasibility Experimentation & learning Customer & stakeholder feedback Business planning, venturing, secure founding Decide of organizational and governance structures Evolution & optimization
Design new business models Develop and select ideas Develop an idea portfolio Idea Generation (In-house, cross-units, external) Idea Evaluation Idea Selection Strategic decision making
Output
Gate Tools
Discovery
Gaining insights
Description Input Tasks
Identify internal and external opportunities Project Brief 1. 2. 3. 4. Company Assessment Market Assessment Industry Assessment Future Trends Assessments 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 Stop/Go Decision Is the idea still interesting? Is it worth spending the resources for the next phase? Desk and real life research Who/What/How, Canvas, SWOT Customer Profile, Value Curve, Buyer Experience Cycle 5 Forces
Output
Gate
Tools
Discovery
Gaining insights
Development
Designing options
Description Input Tasks
1. 2. 3. Development of business model concepts Develop business model idea portfolio and evaluate ideas Insights from discovery phase First ideas Develop Business model innovation idea portfolio Evaluate BM portfolio 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
Go to testing: Stop/Go Decision Justified to start conversion/testing/experimentation phase? Budget decision 25 ways Who-What-How, Canvas Value Curve Spider, Scorecard, Hypotheses List, Business Case
Gate Tools
Conversion
Experimenting in practice
Description Input Tasks
1. 2. 3. 4. Conversion of concepts into real-life Testing concepts and receiving market feedback Business concepts approved for test Customer tests Technical feasibility Organizational gap analysis Implementation and change roadmap Final Business Model Evaluation Strategy is developed Organizational structure is defined Partners/Network are defined Tested Business Model is profitable Launch decision Budget approval Business model is profitable
Output
Gate
Tools
Commercialization
Launch, incubation and transition
Description Input Tasks
1. 2. 3. 4. Implementation and launch Launch new business model Successfully tested Business Model Innovations Implementation Start-Up / Incubation Acceleration Transition New Market New Value Proposition Growth Competitive Advantage Launch review (12 months) Business model review Business model optimization Integration into holding
Output
Gate
Tools
BU
Mgmt
Workshop
Presentation of Business Models Preparation of GMM
Research on innovative Business Models and Trends. Final version until April 29 to SIO
Division
Mgmt
Group 2010
Group 2011 +
Draft until March 29 to SIO Coaching Sessions with SIO Final Version until April 7 to SIO
Division
Mgmt
Group 2010
Group 2011 +
Division
Mgmt
Group 2010
Group 2011 +
Draft until March 29 to SIO Coaching Sessions with SIO Final Version until April 7 to SIO
Workshop
Presentation of Business Models Preparation of GMM
Mgmt
Division
Mgmt
Group 2010
Group 2011 +
Draft until March 29 to SIO Coaching Sessions with SIO Final Version until April 7 to SIO
Workshop
Presentation of Business Models Preparation of GMM
Research on innovative Business Models and Trends. Final version until April 29 to SIO
Mgmt
Division
Mgmt
Group 2010
Group 2011 +
Draft until March 29 to SIO Coaching Sessions with SIO Final Version until April 7 to SIO
BU
Mgmt
Workshop
Presentation of Business Models Preparation of GMM
Research on innovative Business Models and Trends. Final version until April 29 to SIO
Division
Mgmt
Group 2010
Group 2011 +
Draft until March 29 to SIO Coaching Sessions with SIO Final Version until April 7 to SIO
BU
Mgmt
Workshop
Presentation of Business Models Preparation of GMM
Research on innovative Business Models and Trends. Final version until April 29 to SIO
Division
Mgmt
Group 2010
Group 2011 +
Draft until March 29 to SIO Coaching Sessions with SIO Final Version until April 7 to SIO
1. Description
2. Inspiration 3. Creation
Step 1 Description
1. Description
Our past. Our present.
Path of life
How your organization became what it is today
What was the original idea of the founders? What where the main life changing events in your companys history? (e.g. internationalization, crisis,) What was the focus of the phases between? (e.g. growth, innovation, integration,) What where the main challenges in the respective phases and how did your organization master them? What are the main strengths and mastered challenges you can build your future on? What are 2-3 milestones for the future?
Path of life
The Process
Please form mixed groups of 3 people and discuss the path of life of your Business Unit. A-B-C Interviews A interviews B; C observes & gives feedback B interviews C; A observes & gives feedback C interviews A; B observes & gives feedback Please summarize the main points of your discussion.
A B C
2
2. Current business model Discussion of the main key success factors of the model including the Economic Engine.
Market place
Business model exhibition Please choose a business model that you are interested to find out more about After 15 minutes when you hear the signal, please change to the next business model booth. In total there will be 3 rounds of Business Model presentations & discussions.
Step 2 Inspiration
2. Inspiration
Perspective 2020 How will our environment develop? What are relevant trends for us? What will be coming up in the future and what will be the implications?
2
Discussion of innovative business model examples
2. Inspiration
Looking outside
1. Please take your scenario card from your booklet and study it for a couple of minutes. 2. Find a partner 3. Discuss with your partner: - What could it mean for our - Future if my, your or both trends come true? 4. Please change partner and discuss the two trends again.
Step 3 Creation
3. Creation
Developing ideas
Creation of ideas
Group work in the Business Units Based on the insights you gained, please develop ideas for new business models The ideas can be - Cross functional ideas - Ideas for new business models - Social business ideas - Ideas for your own business unit Please note them on post its Please choose ONE most promising idea Please write them on post its and stick them on the canvas Chose the Most Promising Idea
Time: 60
Market place
Business model exhibition
Free floating and discussing of the ideas developed by the business units.
Time: 60
BU
Mgmt
Workshop
Presentation of Business Models Preparation of GMM
Research on innovative Business Models and Trends. Final version until April 29 to SIO
Division
Mgmt
Group 2010
Group 2011 +
Draft until March 29 to SIO Coaching Sessions with SIO Final Version until April 7 to SIO
1. Ideas were clustered and further described. 2. Holding Board took decision on which ideas to drive on a group level. 3. Project Teams were set up to evaluate the details of group wide ideas. 4. Division and Business Unit ideas went straight into the strategy & budgeting process for the following year.
Architecture 2011
The sequence of activities
Nov
2010 Core Team Meeting Kick Off
Dez
Core Team Meeting
Q1
2011 Core Team Meeting Division 1 Division 2
Q2
Core Team Meeting Division 3 Division 4
Q3
Core Team Meeting Division 1 Division 2
Q4
Core Team Meeting Division 3 Division 4
2012
Setting the stage Team Kick Off Hire Project Manager Hire Project Manager Hire Project Manager
Development
Development Setting the stage Setting the stage Setting the stage
Conversion
Discovery
Development
Discovery
Development
Conversion
Discovery
Development
Conversion
Organizational Set Up
Driving Strategic Innovation
Steering Committee
Cross Division Cross Teams Division Project Cross Division Project Teams Cross Division Project Teams Cross Division Project Teams Project Teams
Within Division WithinTeams Division Project Within Division Project Teams Within Division Project Teams Within Division Project Teams Project Teams
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How to develop and design new Business Models? How to evaluate Business Models?
Case Study What are characteristics of Business Model Innovators?
Apdated from De Wit and Meyer Strategy: Process, Content, Context 3rd edition 2004 Thompson Learning
NewCo Evolutionary
Innovation tensions
Inside Revolutionary
Outside
CoreCo
Closed
Informal
Source: Marc Sniukas
Holistic
Questioning attitude Rewards success and failure, punishes inaction Tolerates mistakes Slack is welcomed Supports risk taking and change Supports teamwork and collaboration
Variety (internal and external) Collaboration Educated in regard to the strategy and skills needed
Set the context Guide the process in a participative and fair way Clearly communicate reasons, and expectations Educate employees Shield creative teams from distractions and pressure Appreciate distinctiveness in people and their thinking Welcome change Ask itself what it does to promote or inhibit innovation and how to get rid of these obstacles.
Structure Processes
Fast and unbureaucratic Decentralized decision making Support idea generation, experimentation and execution Fast and flat Small units Encourages collaboration Autonomous teams at the front line