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Reinventing Your Business Model
Reinventing Your Business Model
Reinventing Your Business Model
Reinventing Your Business Model
Reinventing Your Business Model
Reinventing Your Business Model
Reinventing Your Business Model
Reinventing Your Business Model
Reinventing Your Business Model
Reinventing Your Business Model
Reinventing Your Business Model
Reinventing Your Business Model
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Reinventing Your Business Model

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  • The article mis-quoted the iPod launch-> It’s actually 2001 not 2003The iPod is a portable media player designed and marketed by Apple and launched on October 23, 2001->http://en->wikipedia->org/wiki/IpodThe iTunes Store, formerly iTunes Music Store is a software-based online digital media store operated by Apple Inc-> Opening as the iTunes Music Store on April 28, 2003, with over 200,000 items to purchase
  • Gillette offers the razors fairly cheaply then charges a lot for the replacement blades, locking consumers into a cycle of continuous purchases on high-margin products->
  • Apple did the Gilette razor-and-blades model in reverse:Apple essentially gave away the “blades” (low-margin iTunes music) to lock in purchase of the “razor” (the high-margin iPod)-> “Stories of business model innovation from well-established companies like Apple, however, are rare” –article quote, pg 52->The Rio MP3 player, introduced by Diamond in 1998, was the real new market disruptive innovation compared to Apple's iPod-> But what Apple did differently is that they serviced nonconsumers of digital downloads-> The real disruptive innovation was iTunes - creating an easy, relatively cheap way to consume music-> Users did not even have to purchase an entire CD; songs were available as true singles for the first time-> The consumption of digital music downloading created a need for MP3 players - and the iPod took off->
  • CVP: A description of the value that a product, service or process will provide a customer-> Should be defined abstractly to assure one understands who all the competitors are-> Thus, rather than saying one provides customers with books, one should consider saying that one provides education or entertainment->A clear statement of who the target market for a particular product is, of what key benefits the product will deliver, and of the price that will be charged-> A value proposition is a clear, concise series of factual statements on tangible results from your products or services->The unique added value an organization offers customers through their operations-> 
The logical link between action and payoff that knowledge management must create to be effective; e->g->, customer intimacy, product-to-market excellence, and operational excellence [Carla O'Dell & C->Jackson Grayson]->The primary and essential benefit of a product or service-> For a company, it is the reason for being-> 

All of the definitions reiterate the importance of the customer/client-> Take away all the individualization and personal interpretation and the value proposition is a clearly defined statement that identifies value: value that your client wants, value that you can deliver->
The client is key to the entire process – the client drives the ‘value proposition’
There are as many ‘value propositions’ as there are clients-> Each client is unique and has different needs-> There is no one blanket value proposition-> In order for a value proposition to be effective it has to be customized to each client’s specific needs->
  • Business Model – comprised of 4 main elements – the other 3 elements necessary of course, but we’re focusing on CVP – 1-> CVP 2-> Profit Formula (made up of Revenue model; cost structure; margin model; resource velocity)3-> Key Resources (people, technologies, products, facilities, equipment, channels, and BRAND) – required to deliver the value proposition to the customer4-> Key Processes (training; development; manufacturing; budgeting; planning; sales; service; rules/metrics/norms)
  • The other remarkable example of leveraging nonconsumers to create an effective product offering (and business model) was that of Tata in Mumbai-> The people who could not afford cars were locked out of the marketplace due to wealth constraints-> They instead consumed scooters – sometimes an entire family atop a motor-scooter built for two max-> By creating a relatively affordable car (only ~$2500 USD), a new group of consumers were also created->
  • WalMart – Customers want LOW prices, we provide them with that->BMW – Customers want a car that provides with the ultimate driving experience – willing to pay top-dollar for it
  • Transcript

    • 1. <li>Reinventing Your Business ModelDec 2008, Harvard Business Review<br />authors:<br />Mark Johnson<br />Clayton Christensen<br />Henning Kagermann<br /></li><li>Why did the iPod succeed?<br />1998 – Diamond Rio Launch<br />2001 – Apple iPod Launch<br />Photo 2: www-&gt;flickr-&gt;com/photos/peemmfivekay/2285194342<br />PHOTO 1-&gt; http://www-&gt;flickr-&gt;com/photos/nrkbeta/2279686789/<br /></li><li>Not the product, but theBusiness Model<br />$$$<br />$<br />Photo 4:http://www-&gt;flickr-&gt;com/photos/shuttercat7/3116959633/<br />Photo 3: http://www-&gt;flickr-&gt;com/photos/kylemay/2078976171/<br /></li><li>Not the product, but theBusiness Model<br />$$$<br />$<br />http://www-&gt;apple-&gt;com/itunes/<br />http://store-&gt;apple-&gt;com/us/browse/home/shop_ipod/family/ipod_classic<br /></li><li>“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself-&gt;”-Peter Drucker<br /></li><li>Customer Value Proposition {CVP}<br />Business Model’s #1 element<br />Help consumers get a solution for their fundamental problem<br />Niche is key <br />Why do consumers need you?<br /></li><li>CVP can be created due to-Nonconsumers-<br />Scooters and Motorcycles<br />Traffic, small side streets<br />Can’t afford the premium cars<br />Video 1<br />Video 2<br />SOLUTION: create a small car that’s supremely affordable<br />Video 3<br /></li><li>CVP and Business Model Brainstorming<br />WalMart<br />BMW<br />Image: http://arkjournal-&gt;com/uploaded_images/Always-Low-Prices-799991-&gt;jpeg<br />http://www-&gt;cartype-&gt;com/pics/124/small/bmw_logo_1-&gt;jpg<br /></li><li>CVP Creation<br />What’s your favorite (successful) brand?<br />What do you think its CVP would be?<br /></li><li>New Business Model<br />Where’s an area of non-consumption in our society today?<br />or<br />What problem do you have as a consumer that a company (existing or not) could help you solve?<br /></li><li>Thank You!<br />By Melissa Bird-Vogel<br />Twitter: @missybirdbird<br />Email: mbbv@u-&gt;washington-&gt;edu<br />Credits Next Slide<br /></li><li>Sources<br />Creative Commons Attributions:<br />1-&gt; &amp;lt;div xmlns:cc=&amp;quot;http://creativecommons-&gt;org/ns#&amp;quot; about=&amp;quot;http://www-&gt;flickr-&gt;com/photos/nrkbeta/2279686789/&amp;quot;&amp;gt;&amp;lt;a rel=&amp;quot;cc:attributionURL&amp;quot; href=&amp;quot;http://www-&gt;flickr-&gt;com/photos/nrkbeta/&amp;quot;&amp;gt;http://www-&gt;flickr-&gt;com/photos/nrkbeta/&amp;lt;/a&amp;gt; / &amp;lt;a rel=&amp;quot;license&amp;quot; href=&amp;quot;http://creativecommons-&gt;org/licenses/by-sa/2-&gt;0/&amp;quot;&amp;gt;CC BY-SA 2-&gt;0&amp;lt;/a&amp;gt;&amp;lt;/div&amp;gt;<br />&amp;lt;div xmlns:cc=&amp;quot;http://creativecommons-&gt;org/ns#&amp;quot; about=&amp;quot;http://www-&gt;flickr-&gt;com/photos/peemmfivekay/2285194342/&amp;quot;&amp;gt;&amp;lt;a rel=&amp;quot;cc:attributionURL&amp;quot; href=&amp;quot;http://www-&gt;flickr-&gt;com/photos/peemmfivekay/&amp;quot;&amp;gt;http://www-&gt;flickr-&gt;com/photos/peemmfivekay/&amp;lt;/a&amp;gt; / &amp;lt;a rel=&amp;quot;license&amp;quot; href=&amp;quot;http://creativecommons-&gt;org/licenses/by-nc-nd/2-&gt;0/&amp;quot;&amp;gt;CC BY-NC-ND 2-&gt;0&amp;lt;/a&amp;gt;&amp;lt;/div&amp;gt;<br />&amp;lt;div xmlns:cc=&amp;quot;http://creativecommons-&gt;org/ns#&amp;quot; about=&amp;quot;http://www-&gt;flickr-&gt;com/photos/kylemay/2078976171/&amp;quot;&amp;gt;&amp;lt;a rel=&amp;quot;cc:attributionURL&amp;quot; href=&amp;quot;http://www-&gt;flickr-&gt;com/photos/kylemay/&amp;quot;&amp;gt;http://www-&gt;flickr-&gt;com/photos/kylemay/&amp;lt;/a&amp;gt; / &amp;lt;a rel=&amp;quot;license&amp;quot; href=&amp;quot;http://creativecommons-&gt;org/licenses/by/2-&gt;0/&amp;quot;&amp;gt;CC BY 2-&gt;0&amp;lt;/a&amp;gt;&amp;lt;/div&amp;gt;<br /> Other photos have URL source attribution, Apple Products from Apple website-&gt;<br />Article Reference:<br /> Johnson, M-&gt;, Christensen, C-&gt;, Kagermann, H-&gt; (December 2008)-&gt; Reinventing Your Business Model-&gt; Harvard Business Review-&gt;<br /></li>

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