MGN815:

Business Models
Ajay Chandel
Lecture Outcome
Towards the end of this lecture, You shall be able to:
• Identity and evaluate various conditions necessary for Business Model
innovation
• Components of Business Model innovation
• Disrupt existing markets using Business Model Innovation
• Side effect of power tool commoditization: construction workers viewed these tools as virtually
disposable. (They often left them in the rain, maintained them poorly, or forgot them at the site.)
• Neglect decreased productivity and increased repair costs for companies already struggling with thinning
margins.
• Maintaining and transporting tools was burdensome to customers, and it was becoming a growing challenge
for construction sites to manage their “fleet” of tools over the course of a project.
• “A construction crew’s purpose is to build a house, not manage tools.”
• Hilti identified- New job-to-be-done of its customers
• Recognizing the way its customers were using (and abusing) its products, Hilti conceived of a leasing model for
fleets of tools.
• Instead of buying power tools individually and dealing with their upkeep and management on their own, customers could
pay a monthly fee to have a full complement of tools at their fingertips, kept well inventoried and in
full repair.
• The value proposition for the customer was basically, ‘We take care of everything, and You always have
the newest technology and the safest tools, well organized and readily available’.
'The World on Time’…..

A. UPS
B. FedEx
C. American Postal
D. Blue Dart
 Fulfilling Unserved Jobs-to-be-done in
existing markets

• FedEx creates value by offering “high-value

added” package delivery to over 220
countries.

• The business model can best be summed-up in the

company’s early slogan: When it absolutely,
positively has to be there overnight.

• With 652 aircraft (the world’s largest freight

airline) moving over 4 million packages per day,
FedEx guarantees speed with a reliability of
greater than 99%
Fulfilling Unserved Jobs-to-be-done in existing markets

• Fred Smith noticed that many of the corporate jets belonging to the rising powerhouses of the electronic age,
companies like IBM and Xerox, were being used to transport high-priced components to field service
engineers who were repairing computers.
• People needed these expensive parts, and they needed them right away; speed was clearly more important
than cost.
• One company—Emery Air Freight—was trying to address this job, but it had built its infrastructure around
passenger airlines serving large cities. (Reaching smaller cities was a challenge)
• Emery was “force-fitting the rapid movement of high-value-added and high-technology products into a
transportation system that wasn’t designed for it,” explains Smith.
• “Reliably move valuable packages from point A to point B overnight”- Smith envisioned.
• He bought a small aviation company and, to fulfill that job, created an integrated air and land system based
on a then-revolutionary hub-and-spoke approach.
• It blew Emery out of the market. Beginning in 1971 from a humble fleet of fourteen small aircraft serving
twenty-five U.S. cities, Federal Express became in 1983 the first U.S. company ever to book $1 billion in
revenue without a merger or an acquisition.
What “job-to-be-done” IKEA helps its
customers to achieve:
A. High end classic furniture
B. High cost durable furniture
C. Low cost fashion forward furniture
D. Low cost durable furniture