Business model innovation

Inspiration frombusiness model classics Kimmo Koivisto CEO, Tellyo

Who is this Kimmo Koivisto? Today • Tellyo Co-founder and CEO • Teho-Opisto Co-founder and board member Before • Vectia Management consultant • Nokia Research strategy • Helsinki university of Technology

Tellyo converts 2nd screen to a smart TV remote for spontaneous discovery, interaction and sharing@TellyoTV

Who is this Kimmo Koivisto? Today • Tellyo Co-founder and CEO • Teho-Opisto Co-founder and board member Before • Vectia Management consultant • Nokia Research strategy • Helsinki university of Technology

Agenda• What is business model• Why business model matters• Classic cases for inspiration

”A business model describesthe rationale of how an organizationcreates, delivers, and captures value”

Business model innovatorsoutperform traditional innovators

Startups are about inventing radical business modelsIncumbents fail because of:1) CEOs dont really want a new business model2) Product is king. Nothing else matters3) Cannibalization is off the table4) ROI hurdles are too aggressive for fledgling models5) Rogues and renegades get no respect

Where to look for innovative business models? Earnings logic Business model innovation directions

Earnings logic: Case JC Decaux

Where to look for innovative business models? Earnings logic Low cost Business model innovation directions

Low cost: Case Ryanair

Where to look for innovative business models? Earnings logic Low cost As a service Business model innovation directions

As a service: Case Hilti Traditional Hilti Fleet Business Management High-quality tools Customer value Tools when needed and proposition with service guarantee Low margins, high Increased cost of capital inventory turnover Profit but higher margins, montly payments One-time investment + Predictable hard-to-predict service fees Procurement continuous cost Small batches of tools to Management-level sales of individual contractors Sales long-term service contracts Manufacturing & Inventory, replacement Distribution Processes and service process management R&D, low-cost manufacturing Resources Warehousing & IT Sources: Johnson et al. (2008) www.hilti.com

Where to look for innovative business models? Earnings logic Low cost As a service Standardization Business model innovation directions

Standardization: Case Minute Clinic

Where to look for innovative business models? Earnings logic Low cost As a service Co-creation Standardization Business model innovation directions

Co-creation: Case ThreadlessLeveraging the Love• All products are designed, rated and marketed by community members• Engages creators, critics, joiners and spectators• Valuable return on time spent• No advertising, no professional designers, no retail distribution, no salespeople – low overhead, high margins

Where to look for innovative business models? Earnings logic Low cost As a service Co-creation Standardization Business model innovation directions Long tail

Long tail: Case Amazon An example of a power law graph showing popularity ranking Head Hit items, the few that dominateSales Long tail Non-hit items, unique items in relatively low quantities Products Demand shifts towards niches with high availability of choice and when there is large population and negligible distribution and stocking costs Reference: Anderson, C. (2006). The Long Tail: Why the Future of Business is Selling Less of More

Where to look for innovative business models? Earnings logic Low cost As a service Co-creation Standardization Business model innovation directions Long tail Network effect

Network effect: Case Bell telephone Potential calls between phones1 10 n

Network effect: Case personalized publicationsReaders, who are the most price Content creation (# sharedsensitive, are subsidized to drive More readymade content articles) is stimulated to adddemand available for publications. platform value CONTENT READERS CREATORS Increased demand for the created contentThe integrator facilitates the Higher demand lowers prices andprocess and captures part of the allows variety on printed mediacreated value INTEGRATOR PRINT SHOPS Wider reach and Higher subsidizing more granular targeting increases demand Advertisers are charged as their demand grows more strongly in response to growth in the user side Established practices increase ADVERTISERS ad sales

Where to look for innovative business models? Earnings logic Low cost As a service Co-creation Standardization Business model innovation directions Long tail Network effect

Key take awaysStartups are about innovating radical business models Take lessons from other industries All elements of the model must fit together

Thank you Lets get in touchkimmo@tellyo.com

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Business model innovation

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