Business Model Design and Innovation for Competitive Advantage

Slide 1: Management2.0: Competitive Advantage through Business Model Design & Innovation Guadalajara, June 2007 Alexander Osterwalder, PhD alex@arvetica.com

Slide 2: change is the process by which the future invades our lives -> Alvin Toffler

Slide 3: first of all: what are YOUR concerns? (buzz groups)

Slide 4: what are YOUR biggest issues and fears you face in strategic management today?

Slide 5: where do YOU see the largest opportunities to improve strategic management today?

Slide 6: your expectations for today?

Slide 7: what is innovation?

Slide 8: tell me about the most important innovations in your company

Slide 9: types of innovation?

Slide 10: technology innovation

Slide 11: process innovation

Slide 12: product & service innovation

Slide 13: business model innovation

Slide 14: four rings of innovation business model innovation product & service innovation process innovation technology innovation

Slide 15: which one of your examples qualify as business model innovation?

Slide 16: “Business model innovation matters” and it is a top priority of CEOs

Slide 17: Operating Margin Growth in Excess of Competitive Peers compound annual growth rate over five years [Source: IBM, CEOs are expanding the innovation horizon: important implications for CIOs]

Slide 18: Benefits Cited by Business Model Innovators percent of respondents [Source: IBM, Global CEO Study 2006]

Slide 19: some examples

Slide 20: NetJets: Fractional Ownership

Slide 21: Zopa.com: Peer-to-Peer lending

Slide 22: Bellum Concepts

Slide 23: why talk about business models?

Slide 24: how do you describe a business model?

Slide 25: without a common language

Slide 26: how do you communicate a business model?

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Slide 28: Ok Here Here CEOs 10° Managers 60° Staff 360°

Slide 29: how do you implement a business model?

Slide 30: with outdated methods

Slide 31: how do you measure the success of a business model?

Slide 32: we don’t

Slide 33: how do you change a business model and innovate?

Slide 34: we re-invent the wheel

Slide 35: what is a business model?

Slide 36: business model framework INFRASTRUCTURE OFFER CUSTOMER PARTNER CUSTOMER NETWORK RELATIONSHIPS CORE VALUE CUSTOMER CAPABILITIES PROPOSITION SEGMENTS ACTIVITY DISTRIBUTION CONFIGURATION CHANNELS COST REVENUE FINANCE STRUCTURE STREAMS a business model describes the value an organization offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and sustainable revenue streams [Osterwalder (2004) The Business Model Ontology]

Slide 37: case study

Slide 38: you become the new owner of a soccer club …

Slide 39: describe YOUR club’s business model

Slide 40: what value proposition do you offer, to which customer segments? describing how a wealth management bank acquires its clients

Slide 41: what value proposition do you offer, to which customer segments? (model) OFFER CUSTOMER VALUE CUSTOMER PROPOSITION SEGMENTS value proposition 1 target customer 1 value proposition 2 target customer 2 … …

Slide 42: what value proposition do you offer, to which customer segments? (example) OFFER CUSTOMER spectacular fans offensive football advertising space & advertisers high visibility … …

Slide 44: how do you reach your customers?

Slide 45: how do you reach your customers? (model) OFFER CUSTOMER COMMUNICATION VALUE CUSTOMER & DISTRIBUTION PROPOSITION SEGMENTS CHANNELS value proposition 1 channel 1 target customer 1 value proposition 2 channel 2 target customer 2 … … …

Slide 46: how do you reach your customers? (example) OFFER CUSTOMER stadium & box office spectacular club owned TV fans offensive football channel mobile phone TV advertising space & sales force advertisers high visibility

Slide 47: how do you build relationships?

Slide 48: how do you build relationships with your customers? (model) OFFER CUSTOMER VALUE CUSTOMER CUSTOMER PROPOSITION RELATIONSHIP SEGMENTS value proposition 1 mechanism 1 target customer 1 value proposition 2 mechanism 2 target customer 2 … … …

Slide 49: how do you build relationships with your customers? (example) OFFER CUSTOMER personalized website (ticketing) spectacular team blog (RSS) fans offensive football …

Slide 50: how do you earn your money with this business model?

Slide 51: how do you earn your money with this business model? (model) OFFER FINANCE VALUE REVENUE CUSTOMER PROPOSITION STREAMS SEGMENTS value proposition 1 revenue stream 1 target customer 1 value proposition 2 revenue stream 2 target customer 2 … … …

Slide 52: how do you earn your money with this business model? (example) OFFER FINANCE ticket sales spectacular TV channel fans offensive football subscriber fees mobile phone TV subscriber fees advertising space & advertising revenues advertisers high visibility

Slide 53: the business models place in a company

Slide 54: STRATEGY BUSINESS MODEL ORGANIZATION TECHNOLOGY the business model’s place in the company

Slide 55: external forces

Slide 56: 5 forces customer technological needs change BUSINESS MODEL legal social environment environment competition

Slide 57: the big picture (business model)

Slide 58: the big picture Partner Network Customer Relationship • • food & beverages personalized web profile • • ticketing services newsletter • • promoters team blog (RSS) • • ad placement VIP events with team • • telecom operator … • TV operator • … Core Capability Activity Configuration Value Proposition Distribution Channel Target Customer • play attractive & win • • attractive soccer • • team management stadium fans (families, etc.) • • 360º event (match, • • games event management POS networks fan groups • brand management • • • venue management dining, shopping) club website (+online TV) companies • video images • • exclusive VIP lounges • • ticketing club cable TV channel event/concert organizers • channel management • • merchandising • • VIP relationship mobile phone TV channel advertisers • renting out stadium • • management … … • video crew •… •… Cost Structure Revenue Model • • team & maintenance Ticket fees & season tickets • • infrastructure management online TV subscription revenues • • marketing revenue sharing cable & mobile phone TV • • video renting out stadium for events • advertising revenues • merchandising revenues

Slide 59: value creates revenues Partner Network Customer Relationship • • food & beverages personalized web profile • • ticketing services newsletter • • promoters team blog (RSS) • • ad placement VIP events with team • • telecom operator … • TV operator • … Core Capability Activity Configuration Value Proposition Distribution Channel Target Customer • play attractive & win • • attractive soccer • • team management stadium fans (families, etc.) • • 360º event (match, • • games event management POS networks fan groups • brand management • • • venue management dining, shopping) club website (+online TV) companies • video images • • exclusive VIP lounges • • ticketing club cable TV channel event/concert organizers • channel management • • merchandising • • VIP relationship mobile phone TV channel advertisers • renting out stadium • • management … … • video crew •… •… Cost Structure Revenue Model • • team & maintenance Ticket fees & season tickets • • infrastructure management online TV subscription revenues • • marketing revenue sharing cable & mobile phone TV • • video renting out stadium for events • advertising revenues • merchandising revenues

Slide 60: creating value requires infrastructure Partner Network Customer Relationship • • food & beverages personalized web profile • • ticketing services newsletter • • promoters team blog (RSS) • • ad placement VIP events with team • • telecom operator … • TV operator • … Core Capability Activity Configuration Value Proposition Distribution Channel Target Customer • play attractive & win • • attractive soccer • • team management stadium fans (families, etc.) • • 360º event (match, • • games event management POS networks fan groups • brand management • • • venue management dining, shopping) club website (+online TV) companies • video images • • exclusive VIP lounges • • ticketing club cable TV channel event/concert organizers • channel management • • merchandising • • VIP relationship mobile phone TV channel advertisers • renting out stadium • • management … … • video crew •… •… Cost Structure Revenue Model • • team & maintenance Ticket fees & season tickets • • infrastructure management online TV subscription revenues • • marketing revenue sharing cable & mobile phone TV • • video renting out stadium for events