Management2.0: Competitive Advantage through Business Model Design & Innovation

Slide 1: DRAFT VERSION 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 levels of innovation business model innovation product & service innovation process innovation technology innovation

Slide 15: “Business model innovation matters” and it is a top priority of CEOs

Slide 16: 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 17: Benefits Cited by Business Model Innovators percent of respondents [Source: IBM, Global CEO Study 2006]

Slide 18: why talk about business models?

Slide 19: how do you describe a business model?

Slide 20: without a common language

Slide 21: how do you communicate a business model?

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Slide 23: how do you implement a business model?

Slide 24: with outdated methods

Slide 25: how do you measure the success of a business model?

Slide 26: we don’t

Slide 27: how do you change a business model and innovate?

Slide 28: we re-invent the wheel

Slide 29: what is a business model?

Slide 30: 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 31: case study

Slide 32: you become the new owner of a soccer club …

Slide 33: describe YOUR club’s business model

Slide 34: what value proposition do you offer, to which customer segments? describing how a wealth management bank acquires its clients

Slide 35: 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 36: what value proposition do you offer, to which customer segments? (example) OFFER CUSTOMER spectacular fans offensive football advertising space & advertisers high visibility … …

Slide 37: how do you reach your customers?

Slide 38: 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 39: 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 40: how do you build relationships?

Slide 41: 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 42: how do you build relationships with your customers? (example) OFFER CUSTOMER personalized website (ticketing) spectacular team blog (RSS) fans offensive football …

Slide 43: how do you earn your money with this business model?

Slide 44: 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 45: 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 46: the big picture (business model)

Slide 47: 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 48: value creates revenues Partner Network Customer Relationship •