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Business Models do fail 10 examples - 5 reasons

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Business Models do fail 10 examples - 5 reasons …

Business Models do fail 10 examples - 5 reasons
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  • 1. Business Models Do Fail10 examples - 5 reasons www.elton-pickford.com
  • 2. IntroductionPart 110 Business Models that FailedPart 25 Reasons of FailureWhy do Business Models Fail ? Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 3. Business Models do Fail10 examples - 5 reasonsINTRODUCTION Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 4. Why this paper ?This document aims at identifying the root causes of Business Model failures. This analysis issupported by several real cases and constitutes a practical ground to explore the utilization of theBusiness Canvas (Alexander Osterwalder) and the Effervescence Framework (Yannick Mériguet -Elton-Pickford).Elton-Pickford is striving to provide organizations with efficient ways to explore new Business Modelsand publishes regularly case studies on Innovative Business Models. This document counter-balancesthe regular publications on successful Business Models by exposing failures as business reality too.We are proud to offer you this study which we invite you to share and comment with passion.Achievement: January 2013 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 5. PublicationThis document is provided under the terms of Creative Common License BY-NC-SA. Themodification and the distribution of this copyrighted work for noncommercial use only are authorizedunder the reference: BUSINESS MODELS DO FAIL - 10 EXAMPLES - 5 REASONS. Attribution - Licensees may copy, distribute, display and perform the work and make derivative works based on it only if they give the author (Antoine Dumont and Elton-Pickford) or licensor the credits in the manner specified by these . Noncommercial - Licensees may copy, distribute, display, and perform the work and make derivative works based on it only for noncommercial purposes. Share Alike - Licensees may distribute derivative works only under a license identical to the license that governs the original work. Achievement: January 2013 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 6. Understand the BUSINESS MODEL Elton-Pickford Framework What are the fundamental characteristics of Copyright Elton-Pickford the targeted Business Model? How well do Effervescence Framework they fit the context and scenario specificity Created by Yannick Meriguet, Associated at Elton-Pickford & uniqueness? How do they optimize the company strategy?SCENARIOWhat are the specificorganization objectives BUSINESS MODEL CONTEXT(Growth, Performance,Positioning, Differentiation, The context highlights theetc.). What is the internal critical elements to take intocontext of the company account in the external context(Specific competencies, of the company. What are the SCENARIOTension, M&A, Start Up)? OF THE ORGANIZATION CONTEXT key market characteristics,These elements define the socio-economic environment,foundation of the targeted consumer habits, etc. ? Andstrategy. how can it influence the Go To Market Strategy of the organization. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 7. KP KA VP CR CSUnderstand theBusiness Model Canvas KR CHCreated by Alexander Osterwalder, Business Model Generationwww.businessmodelgeneration.comCustomer Segments (CS)The Customer Segments building block defines the different C€ R€groups of people or organization an enterprise aims to www.businessmodelgeneration.comreach and serve. Different types of customer Segments Customer Relationships (CR)exist: mass market, niche market, segmented, etc. The Customer Relationships building block describes the type of relationships a companyValue Proposition (VP) establishes with specific customer segments.The Value Proposition building block describes the bundle Customer Relationships may be driven by differentof products and services that create value for a specific motivations: customer acquisition, customerCustomer Segment. It solves a customer problem or retention and boosting sales. We can distinguishsatisfies a customer need. The Value Proposition can be between several categories of Customercharacterized by its newness, performance, price, etc. Relationships: personnal assistance, self-service, co- creation, etc.Channels (CH)The Channels building block describes how a company Revenue Streams (R€)reaches its Customer Segments to deliver a Value The Revenue Streams building block represents theProposition. Channels can be direct or indirect: internet cash a company generates from each Customerplatform, sales forces, store, retailers, etc. Segment. There are several way to generate Revenue Streams: asset sale, subscription, usage fee, etc. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 8. KP KA VP CR CSUnderstand theBusiness Model Canvas KR CHCreated by Alexander Osterwalder, Business Model Generationwww.businessmodelgeneration.com C€ R€Key Ressources (KR)The Key Resources building block describes the most www.businessmodelgeneration.comimportant assets required to make a business model work.Key Resources can be characterized as physical, intellectual,financial, human, etc. Cost Structure (C€) The Cost Structure describes all costs incurred to Key Activities (KA) operate a business model. They can be cost or value The Key Activities building block describes the most driven and be classified as fixed or variable costs. important things a company must do to make its business model work (development, maintenance, production, etc.) Key Partners (KP) The Key Partners building block describes the network of suppliers and partners that make the business model work. Reasons behind partnering may be diverse: Optimization and economy of scale, acquisition of particular resources and activities, reduction of risk and uncertainty, etc. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 9. Part 110 Business Modelsthat Failed Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 10. IridiumCopainsdavant.com TelecomInternet 1998 Vogica Blockbuster Video2009 Spanair Movie rentals Household furnishing 2xmoinscher.com Airlines 2010 2010 Internet 2012 2012 Bic Encarta Kodak Moulinex Publishing Chemistry, digital Perfume Consumer Electronics 2009 2012 1991 2009 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 11. 1copainsdavant.com Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 12. copainsdavant.comIndustryInternet - Social web Scenario Highlights First mover advantageDate of creation Search of profitability2001Corporation Context HighlightsBenchmark Group Growing internet usageCountry of Origin Nationwide efficient broad band infrastructureFrance Social web growing interest New competitorsCase’s period Business Model Highlights2001 - 2012 Social networkMarket type Connect with past friends on internetMass market Freemium / premiumRevenues(2009) Group : 17 M€ / Website : 3,5 M€ Reasons of Failure Customer segment not buying a paid serviceNumber of Employees Likelihood of profitability(Group) 150 Emerging competition Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 13. copainsdavant.comInitial value proposition Deployed strategy New pivotCreated in 2001, "Copains davant" is the After 3 years of existence, with a full free access, In 2007, the company acknowledges the failureFacebook made in France, and enable to re- the company is searching a path to profitability. In of its business model, and re-open the fullconnect with past classmates, publish school 2004, the decision is made to monetize the site, service for free. Revenues will be nowpromotion pictures and communicate via and the internal mailing system along with generated by advertising. Additional servicesinternal mailing system. The company is quickly additional functionalities are now provided as a are created, and in 2010 the management ofbecoming the social web leader in France. paid service. Facing these new constraints, site the company is changed and re-think its entire frequentation is declining and the brand image of positioning and image. the company is hurt. If the value proposition is still attractive for users, they are not ready to pay for such services. The internal mailing system is the cornerstone of the interaction between schoolmates, and if too much constraints (price) exist, they stop to use it, loosing the benefits of the entire value proposition. Things get worst : the growing Facebook platform is penetrating the European market with a modern design, increased functionalities and at no cost for the user. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 14. copainsdavant.com BUSINESS MODEL SOCIAL NETWORK RE-CONNECT WITH PAST CLASSMATES ON INTERNET FREEMIUM / PREMIUM BROAD BAND CONNECTION INTERNET USAGE PENETRATION NATION WIDE EFFICIENT INTERNET FIRST MOVER ADVANTAGE INFRASTRUCTURE DEPLOYEDSCENARIO CONTEXT SEARCH FOR PROFITBILITY EMERGING SOCIAL WEB NEW ENTRANTS FACEBOOK Since 2004 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 15. copainsdavant.com KP KA VP CR CS EMAIL : MAINTENANCE 1 MILLION PER DAY MASS MARKET + PLATFORM PROMOTION MASS PERSONALIZATION SOCIAL NETWORK OLD USERS 30 - 40 YEARS KR RE-CONNECT WITH CH 13 MILLIONS OF UNIQUE FORMER CLASSMATES VISITORS / MONTH COPAINSDAVANT.COM EFFICIENT ADVERTISING SALES FORCES SPACE ADVERTISING ADVERTISING CAMPAIGN C€ PLATFORM INFRASTRUCTURE R€ ADVERTISING* HUMAN RESOURCES FREE SERVICE PAID SERVICEwww.businessmodelgeneration.com * Since 2007Source :La Tribune, Le Français CDA résiste toujours, october 2010Capital, Petits meurtres entre amis chez CDA, june 2010Studio Vitamine, CDA : Nouvelle version bêta, february 2012 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 16. 22xmoinscher.com Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 17. 2xmoinscher.comIndustryInternet - Marketplace Scenario Highlights Cost reduction strategy for margin recoveryDate of creation2001 Context HighlightsGroup3 Suisses Numerous emergent competitors Growing Internet UsageCountry of Origin Nationwide efficient broad band infrastructureFrance Business Model Highlights Market PlaceCase’s period Transaction Markup2001 - 2012 Buy/sell - Business to Consumers Secured TransactionsMarket typeMass Market Reasons of FailureRevenues Cost reduction program targeting a core activity of the business (Management)(2007) 3,3 M€ Decreasing traffic (Model viability)Number of Employees Emerging competition (Environment)(Website) 35 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 18. 2xmoinscher.comInitial value proposition Competition & investments Second chanceCreated in 2001, 2Xmoinscher is an internet While the company is communicated breaking The customer acquisition cost was becomingplatform that connect consumers (Buy/sell) event after 2 years, it’s facing important superior to the customer Lifetime value,along with professional (Sell). Users can buy or economic pressures between 2008 and 2012 making the business unprofitable.sell brand new or second-hand products. generating eventually important financial losses. In addition, Ebay, PrimeMinister, Amazon, In march 2012, the company communicates isDuring the transaction, 2Xmoinscher is LeBonCoin create a highly competitive market going bankrupt, few months later Uncle Henrypositioned as trusted partner by securing and which will knock about the sustainability of the buys it and plans to re-open the platform theholding the payment between parties. After the business itself. 15th of October 2012. Stay Tune...transaction is closed without litige the cashtransfer is proceed. At the same time, the company has embarked in a cost reduction program and curbed theirThe revenue model is based on a transaction marketing investments. It will have a hugefees after completion of the sales. impact on the site attractiveness, decreasing significantly the incoming traffic, and the generated revenues. Presence of large fixed costs (platform) will lead to a rapid margin erosion and eventually financial loss. 2Xmoinscher learned the hard way the specificity of a volume business. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 19. 2xmoinscher.com BUSINESS MODEL MARKET PLACE BUY / SELL NEW AND SECOND END PRODUCTS SECURED TRANSACTIONBusiness Model Sustainability isbased on sustaining traffic TRANSACTION FEESvouching generation of revenues. POSITIONNING AS A TRUSTED PARTNER REDUCED EMERGENCE OF SIZABLEINCOMING SITE TRAFFIC COMPETITION COST REDUCTION PROGRAM FOR MARGIN RECOVERY GROWING INTERNET USAGE NATIONWIDE EFFICIENT DECREASE BROAD BAND MARKETING BUDGET INFRASTRUCTURE SCENARIO CONTEXT Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 20. 2xmoinscher.com KP KA VP CR CS PLATFORM MAINTENANCE & DEVELOPMENT SELL / BUY & GENERATE TRUST PARTNERS WITH REVENUE SECURED MERCHANTS & CONSUMERS PLATFORM TRANSACTIONS MARKETING & PROMOTION BUY HALF THE PRICE (NEW & SECOND HAND PRODUCTS) BUYERS - MASS MARKET KR CH HUMAN PLATFORM RESOURCES 2XMOINSCHER C€ ADVERTISING R€ TRANSACTION FEES ON COMPLETED SALES HUMAN RESOURCESwww.businessmodelgeneration.comSource :Journal du Net, Fermeture 2xmoischer, march 2012 Journal du Net, Une page se tourne, 2xmoinscher ferme ses portesTomsguide, 2xmoinscher, Actualité n°2888 PC Impact, 2xfoismoinscher fait ses adieux, News n°69448 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 21. 3Encarta - Microsoft Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 22. EncartaIndustryPublishing / digital Encyclopedia Scenario Highlights Model viabilityDate of creation Differentiation through content quality1993 Multi platform products (CD, DVD, online)GroupMicrosoft Context HighlightsCountry of Origin Improvement of web content in general (site, blog, media etc.)USA New Competitor enters the market with free content and a collaborative platform Business Model HighlightsCase’s period Multimedia Encyclopaedia1993 - 2009 Rich content of high qualityMarket type Sales of CDs, DVDs etc. and online access subscriptionMass MarketRevenues Reasons of FailureNC Profitability of products (Model viability)Number of Employees Emerging competition (Environment)NC Business Model not developed further (Company culture) Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 23. EncartaInitial value proposition Change of habits Fierce competitionStarted in 1993, Encarta proposed a digital In 2001, Wikipedia enters the market. The These actions have no impact on theEncyclopedia available on multiple technology content is created and maintained by the users Customer’s behaviour. In 2009, Encarta has acarriers (CD, DVD, online) and in multiple themselves on a free basis, which continuously low market share of 1.27%, against 97% forlanguages. This product by Microsoft established improves the quality of the platform. Two years Wikipedia.itself very quickly as the Market leader, later, this platform overtakes Encarta by thecompeting with its 36500 articles (2007) number of articles. At this time, Wikipedia has more then threeagainst large multimedia corporations. millions articles in English. As a consequence, As a reaction, Encarta improves the content Microsoft decides not to continue its business actuality and proposes a free light access to a model and exits the Market end of 2009. limited amount of articles. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 24. Encarta BUSINESS MODEL UNIVERSAL MULTIMEDIA ENCYCLOPAEDIA 35 000 ARTICLES RICH AND HIGH QUALITY CONTENT 26 000 MEDIAS SALES OF DIGITAL PRODUCTS, SUBSCRIPTION FOR ONLINE ACCESS HIGH CAPABILITY TO MODEL VAIBILITY IMPROVEMENT OF WEB CONTENT CREATE CONTENT VERY REVENUE STREAMS / RAPIDLY IN GENERAL (SITE, BLOG, MEDIA, MANUFACTURING COSTS ETC.)SCENARIO DIFFERENTIATION THROUGH CONTEXT CONTENT QUALITY ENTRY OF A COMPETITOR WITH A FREE AND COLLABORATIVE MULTI-PLATFORM PRODUCTS BUSINESS MODEL (CD,DVD, Online) Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 25. Encarta KP KA VP CR CS CONTENT PUBLISHING MULTIMEDIA ENCYCLOPEDIA MASS MARKET PROMOTION OF THE ENCYPLOPAEDIA RICH AND HIGH QUALITY CONTENT KR CH WEB PLATFORM HUMAN RESOURCES CD / DVD C€ HUMAN RESOURCES R€ SALES OF DIGITAL PRODUCTS SALES OF SUBSCRIPTION FOR ONLINE ACCESSwww.businessmodelgeneration.comSource :Première, Encarta, coulé par Wikipédia, ferme définitivement ses pages, march 2009NouvelObs, L’encyclopédie en ligne Encarta va fermer, march 2009Clubic, Microsoft fermera Encarta cette année, march2009 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 26. 4Iridium - Motorola Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 27. IridiumIndustry Scenario HighlightsTelecom Services Take over Market leadershipDate of creation Deploy a large scale network1991 Manage the world wide phone network Win a major technological challengeGroupMotorola Context HighlightsCountry of Origin Development of competitionUSA Alternative emerging Technologies Cost reduction of Telecom infrastructure Rising customer demandCase’s period1991 - 1998 Business Model Highlights Call from anywhere in the worldMarket type Terminal salesMass Market Subscription salesRevenuesNC Reasons of FailureNumber of Employees Profitability of the value proposition (Model viability) Emerging competition (Environment)NC Technological development (Environment) Project management (Management) Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 28. IridiumInitial value proposition Evolution of the technological BankruptcyIn 1991, Iridium starts building a mobile environnement In 1998, Iridium starts and 9 months later, thephone system which allows communication company goes into bankruptcy. Customers facefrom anywhere. This system would cover any During the 8 years of project work, mobile technical failures, the product doesn’t work incities, any agglomerations and any square communication developed quickly. Telco operators cars or buildings, as the usage is only possiblemeter on earth, being at sea, in the jungle, in deployed terrestrial networks, thus covering the outside, requiring a open connection to thethe mountains. main access zones. In parallel, the costs of satellite array.The system, developed by Motorola, bases communication and of acquiring the cell phones Moreover, the value proposition is very costly:on an array of satellites displaced around the have dropped considerably. access costs 7 USD per minute against 50globe. cents for a traditional carrier. To this adds the acquisition of the phone for moreThis phenomenal project costs app. 6bn than 3’000 $.USD, and includes the launch of 15 rocketsand more than 75 satellites. It started itsoperation in 1998. iridium Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 29. Iridium BUSINESS MODEL CALL FROM ANYWHERE IN THE WORLD SALES OF PHONES Development of terrestrial networks SALES OF SUBSCRIPTIONS TO BECOME THE WORLD LEADER ON THE TELECOM MARKET RISE OF COMPETITION TO DEPLOY A LARGE SCALE NEW EMERGING TECHNOLOGIES NETWORKSCENARIO CONTEXT COSTS DECREASE OF THE TELECOM TO MANAGE THE WORLD PHONE INFRASTRUCTURE NETWORK INCREASE IN CUSTOMER DEMAND The initial customer TO WIN A MAJOR TECHNOLOGICAL segment is quite CHALLENGE restricted. A mass Market is developing shortly after the Launch Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 30. Iridium KP KA VP CR CS NETWORK DEVELOPMENT AND MASS MARKET MAINTENANCE KR CH FINANCIAL RESOURCES TELECOM NETWORKS 6bn USD PHONE FROM 75 SATELLITES ANYWHERE C€ NETWORKS & INFRASTRUCTURE 15 ROCKETS R€ COMMUNICATION: 7$ USD p. min. 75 SATELLITES SALES OF PHONES: 3’000$ USDwww.businessmodelgeneration.comSource :Libération, Iridium menace de sonner dans le vide, March 2000Steve Blank, No Business Plan Survives First Contact With A Customer, November 2011Stéphanie Legrand, Mémoire de recherche IAE de Lille, 2000 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 31. 5Spanair Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 32. SpanairIndustryAirline carrier – Transportation Scenario Highlights High variable costsDate of creation Financial tension (debts)1986 Cost reduction strategy based mainly on fixed costsGroup Airplane crash in 2008IEASA (80,1%) - SAS AB (19,9%)Country of Origin Context HighlightsSpain High competitive Market New entrants Cost of fuel Security norms & constraintsCase’s period High Customer’s sensitivity on security policies1986 - 2012Market type Business Model HighlightsMass Market General airplane transportation Main destinations: Spain, Europe, Latin AmericaRevenues(2009) 670 M€ Reasons of FailureNumber of Employees Massive increase in fuel costs (Environment)(2008) 4 000 High competitive forces (Environment) Costs reduction with major impact on the main value proposition (Management) Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 33. SpanairA new company A high tension Market The last flightSpanair starts in Spain in 1986. Its first flights After 2000, the air transportation Market becomes Meanwhile, new security rules have beenare conducted in 1988. Quickly, Spanair more competitive. Notably, new entrants introduced, requesting more stringent maintenancedevelops to a major player in air destabilize the market forces through new business procedures and quicker renewal of airplanes. Thistransportation in Spain and soon gains a models based on low price value propositions. impacts highly on the fix costs situation. On themarket share of 22%, directly behind the First financial losses appear here and there. The other hand, consumers are getting more critical,main player Iberia. Even though the main following years are marked by an important rise of after different air crashes that happened during thisflights are domestical flights, the company fuel cost, a sensitive key element of the business period. Many consumers start to look at security &proposes European flights with more than model, which impacts on the margin dramatically. maintenance ranking of the airlines.100 destinations. This second element adds to the already very tense financial situation of most companies. On August, 20th 2008, flight nbr. 5022 misses theAt the end, Spanair transported more than take-off and explodes on the ground. Most11 mio. passengers yearly, with more than During Summer 2008, the management starts a passengers die immediately. The following200 daily flights. During its whole history, the cost reduction program aiming at reducing head investigations reveal some neglected maintenancecarrier transported app. 104 mio. count by 25%, stopping app. 10 destinations and elements, showing weaknesses in the maintenancepassengers. grounding of 15 airplanes. programs, as well as consequential impacts of over aging airplanes. Following this, Spanair looses the main part of its Customer base. A destroyed image and growing debts end in the closure of all activities in Jan. 2012 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 34. Spanair BUSINESS MODEL MAJOR DESTINATION : SPAIN, EUROPE, LATIN AMERICA Many Spanish and Foreign Fuel MAJOR VARIABLE COSTS HIGHLY COMPETITIVE MARKET companies NEW ENTRANTS Major impact on FINANCIAL DIFFICULTIES, LOW-COST margin DEBTS FUEL PRICE FLUCTUATION CONSTRAINTS THROUGH NEW FIXES COSTS REDUCTION SECURITY NORMSSCENARIO CONTEXT AIRPLANE CRASH IN 2008 GROWING CUSTOMER AWARENESS OF SECURITY RULES Loss of trust from many customers Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 35. Spanair KP KA VP CR CS FLIGHT PROMOTION PASSENGER REASSURE CUSTOMERS AIRPORTS TRANSPORTATION ON FLIGHT SECURITY INDIVIDUALS TRAVEL AGENCIES AIRPLANE PROFESSIONALS MAINTENANCE KR QUICK TRIPS TO SPAIN OR ABROAD CH AIRPLANES (75) TRAVEL AGENCY AIR ALLIANCE PILOTS ** INTERNET SITE OF SPANAIR C€ FUEL AIRPORTS TAXES AIRPLANE MAINTENANCE R€ SALES OF FLIGHT TICKETS AIRPLANE ACQUISITION HUMAN RESOURCESwww.businessmodelgeneration.comSource :Le Monde, La compagnie aérienne Spanair en faillite, tous ses vols annulés, January 2012,Air Journal, Spanair en faillite, January 2012,L’expansion, Spanair en faillite, January 2012. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 36. 6Eastman KodakCompany Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 37. Eastman Kodak CompanyIndustryChemicals – Manufacturing of photographic films Scenario Highlights Work against Market evolutionDate of creation Reinforce existing business model1881 Introduce as many patents as possible to block the emerging digital MarketFounderGeorge Eastman Context HighlightsCountry of Origin Technology developments strongly enabling digital photographyUSA Photography is getting a mass product for individuals Rising customer demand New competitors in phase with changing Customer requirementsCase’s period1930 - 2012 Business Model Highlights Manufacturing of photographic filmsMarket type High marginsSegmented Markets (Individuals + Professionals)Revenues(1995) 15 Mds $ - (2011) 6 Mds $ Reasons of Failure Change in behaviour: Camera as a consumer good for mass marketsNumber of Employees(1954) 73 000 - (2011) 7 600 (Environment) Technology development: digital revolution (Environment) Strong focus on Margin protection (Company culture) Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 38. Eastman Kodak CompanyTechnological Innovation Change in Customer CollapseIn 1880, Georges Eastman, founder of requirements At the end of the 80’s, first competitors enterKodak, invents a special coating machinery the market with digital cameras. Between 1990that enables the mass production of dry In the early 80’s, Kodak invents digital photography. and 1999, Kodak introduces about 1’000films for photography. For a hundred years, However, the company is not determined to patents in digital photography, but neverthe company will dominate the world of develop further this technological innovation. achieves its final goals, as digital photography iscinema and photography. Management estimates that the latter could be a closer to Electronics than traditional major threat to the actual activity, the sale of photography.Kodak bases the growth strategy on the film argentic-based films.production and generates record sales In less than 10 years, the company will reducegrowth and huge margins (app. 80%). In The organization got used to very high margin, this workforce by 63’000. Handicapped by its own1981, Turnover of Kodak achieves 10 bn for years and years. As a reaction, it tried to past, Kodak is not able to change direction, andUSD. protect the existing business instead of satisfying Sony, Canon or Fuji will cause the collapse of the changing market requirements, thus shifting Kodak in 2012. away from the real changing market. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 39. Eastman Kodak Company BUSINESS MODEL MANUFACTURING OF PHOTOGRAPHIC FILMS MANUFACTURING OF PHOTO CAMERA Rise and growth of digital photography app. 80 % VERY HIGH MARGINS TECHNOLOGY DEVELOPMENT COUNTERACT AGAINST MARKET PHOTO CAMERA AS EVOLUTION CONSUMER GOODS IN A MASS MARKETSCENARIO REINFORCE THE EXISTING BUSINESS CONTEXT MODEL CHANGE IN CUSTOMER REQUIREMENTS PATENT AS MUCH POSSIBLE IN ORDER TO BLOCK THE DIGITAL MARKET NEW COMPETITORS IN PHASE WITH CUSTOMER EXPECTATIONS
  • 40. Eastman Kodak Company KP KA VP CR CS MANUFACTURING OF ADDITIONAL PRODUCTS * PHOTOGRAPHIC FILMS Printers Ink cartridges INDIVIDUALS Photo papers One-time usage cameras PROFESSIONALS PHOTO CAMERAS KR PHOTOGRAPHIC FILMS CH WWW.KODAKEXPRESS.COM * R&D RESELLER PATENTS ** NETWORK C€ HUMAN RESOURCES RAW MATERIAL R€ HIGH MARGINS 80 % ** ROYALTIES 75% of GB in 2011www.businessmodelgeneration.com * From mid 90’sSource : ** Commercialization in 2003www.kodak.frLe Figaro, Kodak se déclare en faillite, January 2012Philippe Silberzahn, Fin de Kodak, victime dilemme de l’innovateur, January 2012Knowledge@Wharton, «What’s Wrong with This Picture : Kodak’s 30-year Slide into Bankruptcy», february 2012 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 41. 7Blockbuster Video Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 42. Blockbuster VideoIndustryMovies rentals Scenario Highlights Offer a wide selection of moviesDate of creation1985Group Context HighlightsEchostar Expansion of internet New comersCountry of OriginUSA Business Model Highlights Wide selection of movies for rent Exclusive offer of new movies for rentCase’s period Develop stores in residential areas and malls1985 - 2010Market typeMass market - Individuals Reasons of Failure New usage (environment): illegal downloading, streamingRevenues(2002) 5,5 bn USD New comers (environment): emerging competitors New technologies (environment): internet, downloading, VODNumber of Employees48 000 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 43. Blockbuster VideoInnovation in services A changing environnement An abrupt endIn 1985, Blockbuster opens its first movie In mid 2000, new signs of change are emerging in In 2009, Blockbuster creates an automatedrental store in Dallas. From VHS tape to the environment. Customers expectations are distribution network to rent movies. The goalDVD, the company will have an exponential changing and new comers are disturbing the of this mass deployment is to come back as agrowth. In early 90s, the demand is existing market. Competitors appear and offer key player. For economic reasons, some shopsbooming. mail-delivered movie rental with a wider catalog. will be replaced by machines. Technological improvements will also disturb Despite this, the company filed for bankruptcyMovie rental allows to compensate the Blockbuster business model. Concurrently to in 2010.limited TV channels at that time and offers a internet development, streaming websites will The company left behind more than 6000wide and attracting catalog of movies. 9 explode along with all illegal downloading franchised and proprietary shops spread overyears after its creation, Blockbuster will be possibilities. 18 countries representing about 48000valued at $ 7.6 billion. employees. In addition, more and more TV channels propose new offers such as video on demand. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 44. Blockbuster Video BUSINESS MODEL 87 million customers WIDE OFFER OF MOVIES + 6000 shops RENTALS Twenty countries NEW MOVIES PROXIMITY WITH RESIDENTIALS AREAS AND MALLS New usages Illegal downloading Streaming websites INTERNET EXPANSION OFFER A WIDE SELECTION OF CONTEXTSCENARIO MOVIES NEW COMERS (between 2002 and 2010) Mail-delivvred rental Video On Demand development Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 45. Blockbuster Video KP KA VP CR CS DEVELOPMENT OF THE CONTENT OF THE OFFER INFORMATION ON USER STUDIOS DEVELOPMENT OF BEHAVIOUR NETWORK INDIVIDUALS KR WIDE MOVIES RENTAL OFFER CH 87 MILLIONS OF CUSTOMERS 48 000 EMPLOYEES DEDICATED SHOP + FRANCHISES DEDICATED DISTRIBUTION PRIORITY ON NEW MOVIES 6 000 SHOPS NETWORK IN 18 COUNTRIES C€ 40 % OF TURNOVER INFRASTUCTURE R€ MOVIES RENTAL DISTRIBUTED TO EMPLOYEES EXCLUSIVITY ON MOVIES * STUDIOSwww.businessmodelgeneration.com * On a dedicated periodSource :Le figaro, 24 september 2010 ; L’expansion, 11 may 2007 ;Financial Times, 24 february2010 ; The Times, 28 february 2010.Le Monde, 17 february 2010 ; Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 46. 8Moulinex Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 47. MoulinexIndustryManufacturer of small appliances Scenario Highlights Financials difficulties in 90sDate of creation Success story and recognizedd brand1937 Worldwide presenceFounderJean Mantelet Context HighlightsCountry of Origin Bursting of the family unitFrance Development of womens employment Emergence of strong asian competitors Small appliances associated with feeling of pleasureCase’s period1937 - 2001 Business Model Highlights Manufacturing of small appliance for women marketMarket type Mass production and low marginMass Market Originally, strong innovation on productRevenues(1998) 1,21 Billion € Reasons of FailureNumber of Employees Decrease of product sales with low margin (Business model viability)(1998) 11 000 Emerging competitors (Environment) Financial management (Management) Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 48. MoulinexHistory of the group Pricing policy End of the story In 1950, Jean Mantelet developed a differentIn 1932, Jean Mantelet invents the vegetable This booming market quickly attractes pricing strategy from its competitors. Instead ofmill. Wishing to end by finding lumps in mash competitors, firstly european and then asian establishing a selling price based on cost pricepotatoes prepared by his wife, he decided to ones. The market was huge and attracting. The including depreciation of production equipment, hecreate the famous "Potato Masher" or "Presse- low complexity of products and the low level of focused on the consumer. His approach is basedPurée". Manufacturing and distribution of these maintenance for this type of goods reduced on the consumers ability to buy the product byproducts are a great success. seriously entry barriers. defining a "democratic" price.This new equipment allows solving a shared The entrepreneur looks for a mass production toproblem to all housewifes at that time. In 1957, In the 90s starts the decline of the group. A ensure low costs and a minimum profitability.it operates his business under the brand slowdown in gross markets can be explained byMoulinex. In 1962, appears a strong motto: the saturation of several customer segments."Moulinex free women" Worlwide exposure Sales suddenly collapsed. The emblematic founder died in 1991. It leaved room for internal a period of thirty and mores the beginning of dissension, mismanagement and a lack ofthe consumer society. It means liberation of The exponential market growth allows Moulinex innovation. In an effort of diversification of itshousehold chores and automation of dedicated to be located in several countries. At the end 80s, products, he company made a major acquisitiontasks. Moulinex will then have huge Moulinex products are distributed in more than (Krups) which increased its debts and reduced itsopportunities to address these new needs. 135 countries. However, the company activity is flexibility. Despite several massive restructuring largely based in France. Only 20% of the turnover and merger attempts or capital opening, theWithin only few years, the brand will invent no is generated abroad against 40% for SEB, its main French jewel is closed in 2001, September 7th.less than 70 products among which we find the competitor.coffee grinder, the multi-function robot, the iron The brand still exists today. It has been acquiredor the microwave. by SEB group together with some French production units. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 49. Moulinex BUSINESS MODEL IN 1931 BY THE SMALL APPLIANCES FOUNDER, THE PRODUCTS MANUFACTURING «POTATO MASHER» MASS PRODUCTION LOW MARGIN The increase of single- parent families promote STRONG INITIAL VALUE PROPOSITION the market growth INNOVATION IN PRODUCTS FINANCIAL ISSUES IN THE 90’S MARKET GROWTH DEPENDS ON HOUSEHOLDS NUMBER OLD SUCCESS STORY Looking for time savings in houshold STRONG BRAND INCREASE OF WOMEN chores EMPLOYMENT SCENARIO CONTEXT WORLWIDE PRESENCE DECLINE OF AVERAGE 135 COUNTRIES HOUSING SIZERepresents only 20% EMERGENCE OF STRONG of Moulinex ASIAN COMPETITORS Decline of storage turnover areas: search for multi- functions products Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 50. Moulinex KP KA VP CR CS BRAND PROMOTION ADVERTISING RESELLERS NETWORK LOGISTICS DISTRIBUTION SMALL APPLIANCES ADVERTISING AGENCIES MASS PRODUCTION WOMEN EQUIPMENTS 180 000 UNIT / DAY* 135 COUNTRIES KR CH STRONG BRAND SMALL APPLIANCES IMPORTANT REAL ESTATE STORES RESOURCES HUMAN RESOURCES MASS-MARKET RETAILING Unskilled labor Mainly women C€ R€ SELL EQUIPMENTS WITH IMPORTANT REAL ESTATE ADVERTISING REASONNABLE PRICE RESOURCES BUDGET PRESSURE ON PRICE 20% OF TURNOVER HUMANS RESOURCES LOW MARGIN DONE ABROADwww.businessmodelgeneration.com * Production for 16 plants in 1980Source :Marketing Magazine N°144, Saga Française à succès, 2010 ; OuestFrance, La bataille des millions, 2009Ministère de l’industrie, Approche sectorielle - électroménager, 1999 Stratégies, Moulinex se robot que je ne saurais voir, 1998.Mémoires d’entreprises, Moulinex,1993 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 51. 9Cuisines Vogica Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 52. VGC DistributionIndustryFurniture fabrication Scenario Highlights Financial difficultiesDate of creation Strong decline of customer satisfaction1976LeadershipWilliam Ego Context HighlightsCountry of Origin Economic CrisisFrance Highly competitive environment Business Model Highlights Activities unbundlingCase’s period Failure of key partners2000 - 2010 Customer segmentation (professional / individuals)Market type Important logistics activitiesMass MarketRevenues Reasons of Failure(2008) 107 Million € Financial Management (Management)Number of Employees Failure of key partners (Business model execution)(Groupe) 1 000 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 53. VGC DistributionValue proposition Final closure Business model executionLocated in "Les Vosges", VGC Distribution group Delivery delays and lower product quality causedcombines manufacturing and distribution In the early 2000s, the company faced severalactivities of kitchens and bathrooms. After a growing customer frustration. In addition, VGC financial difficulties mainly related to inadequate Distribution is facing chronic financial difficultiesvarious takeovers and restructuring, the group management choices. and a major economic crisis. As a result manywants to be one of the key players in this orders will be canceled. Unable to pay Nevelt, itsbusiness. The company is forced to leave construction supplier, the group go into receivership for activities. From then relying on Nevelt, a sub-With 45 stores located in France, VGC several months before its liquidation. contractor that will ensure the production. VGCDistribution addresses two different customer Distribution will then focus on sales andsegments. On one hand, it offers individuals the distribution.construction and installation of customkitchens. It can also include appliances. VGC sales exceeds forecasts. but having NeveltOn the other hand, it addresses major retailers not being able to honor all orders, increasingsuch as Castorama, But or Brico-Dépôt by immediately delivery times for end customers.providing kitchens in kits. Delivery time initially negotiated to 8 weeks will become several months. In addition, some sets are coming with missing parts which forces VGC to perform installation in several steps. This will increase significantly logistic costs of the company. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 54. VGC Distribution BUSINESS MODEL CONSTRUCTION & ASSEMBLY KITCHEN AND BATHROOM FURNITURE CUSTOMIZED RELATION OWN DISTRIBUTION NETWORKS FINANCIAL DIFFICULTIES DECLINE OF HOUSEHOLD CONSUMPTION FAILED PARTNERSCENARIO CONTEXT STRONG NEGATIVE CUSTOMER COMPETITION REPUTATION Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 55. Vogica - VGC Distribution KP KA VP CR CS PERSONNAL KITCHEN & BATHROOM LOGISTIC INDIVIDUALS Routing orders CUSTOM ASSEMBY NEVELT Furniture production AGRESSIVE BUSINESS KITCHEN & BATHROOM PRACTICES FURNITURE KIT PROFESSIONALS KR CH Appliances Supplier Castorama APPLIANCES Brico dépôt under its brand 1982 But MANUEST VOGICA 45 stores Delivery within 8 weeks C€ R€ SALES OF FURNITURES NEVELT Slow margin Furniture production SALES OF FURNITURE Strong marginwww.businessmodelgeneration.comSource :Le figaro, 8 november 2010 ; Usine nouvelle, 28 september 2010 ;Huffington Post, 27 september 2010 ; Le Point, 9 november 2010. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 56. 10Group BIC Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 57. BIC - PerfumesIndustryConsumer products Scenario Highlights Several success stories in marketing of disposable productsDate of creation Financial results of the group1945 Capitalization on distribution networkLeadershipBruno Bitch Context HighlightsCountry of Origin Product praised by the publicFrance Increase of perfume price Growing competitor products Business Model HighlightsCase’s period Perfume manufacturing and sales1988 - 1991 Low priceMarket type Distribution through tobacco shops and bars channelMass Market Focus on simple and practical usageRevenues(2010) 1.830 Billion€ Reasons of FailureNumber of Employees Mistake in distribution channel selection(Group) 9 200 Inappropriate value proposition with customer expectations (VP/CS) Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 58. BIC - PerfumesDiversity of products Innovation in products Wrong distribution channelFounded in 1945 by Edouard Buffard and In 1988, BIC launched its own range of flagrances. Three years after the launch, sales didnt take offMarcel Bitch, Bic group launches in its first This perfume is accessible for everyone, used by and BIC ceases its perfumer activity. It appearsyears the Bic Crysta ball-point pen. Today everyone at any time. Marketing teams rely on the that the distribution channel was not the rightthe group operates worldwide and in more practical side by offering small bottles shaped like one. Many tests have been carried out on thethan 160 countries. For almost 60 years, BIC lighters that are easily transportable. It also product and on customer ability to buy. But,has shown a real ability to diversify its perfectly fits in a pocket or a handbag. Sold for 25 conditions and retail environment were notactivities and products. To date, the French francs (3.5 €) for about 300 sprays, the product considered.group produces lighters, razors, and various comes in 4 colors (red and blue for women, black Flagrances are often associated to luxury, goodwater sport articles (windsurfing, kayak...) in and green for men). time or even enjoyable olfactoric moments.addition to pens. Each perfume targets a specific customer segment Tobacconists do not match with this universe. or a specific context depending of its flavoring Odors, atmosphere, as well as sellersSince 2008, BIC also sells a mobile phone composition. competences are in total opposition with themanufactured and distributed in partnership selling experience expected by the customer.with Alcatel and Orange. After many marketing studies, it was decided to Actually this is not reflecting the real customer distribute the perfume on a large scale in Europe, perception. USA and several countries in Africa. Leveraging on its large ligther distribution In view of the customer, a good fragrance is network, the bottles are proposed to the mass strongly paired with emotions, and disposable market through existing retail shops. In apparence, goods (as the other products from BIC are) do it seems convenient for the customer to combine not match with this image. the purchase of a lighter with a perfume. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 59. BIC - Perfumes BUSINESS MODEL FRAGRANCE SMALL AND PRACTICAL FORMAT EASY TO USE Perfume for LOW PRICE 20 Francs DISTRIBUTION THROUGH TOBACCONISTS CAPITALIZATION ON THE DISTRIBUTION NETWORK COMPETITIVE PRODUCTS «EAU DE TOILETTE» SCENARIO SUCCESS STORY ON LOW PRICE CONTEXT AND PRACTICAL PRODUCTS GROWING PRICE INCREASED 66%STAGNANT TURNOVER FINANCIAL RESULTS INCREASE OF PERFUME2,2% DECREASE IN 1987 BETWEEN 1981 AND 1988 OF THE GROUP PRICE NEED TO RENEW Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 60. BIC - Perfumes KP KA VP CR CS ASSISTANCE IN SALES IN MANUFACTURING TOBACCO BARS AREAS PERFUMER EXPERT PROMOTION PRODUCT EXPERIENCE «DREAMS» PARTNERS MASS MARKET DISTRIBUTORS Male / Female TOBACCONISTS KR PERFUME: HIGH END CH WORLWIDE MANUFACTURING PRODUCT ADVERTISING DISTRIBUTION NETWORK SMALL AND PRACTICAL FORMAT BASED ON ITS DISTRIBUTORS STRONG BRAND FUNCTIONALITY TOBACCO BARS C€ MANUFACTURING ADVERTISING R€ LOW PRICEwww.businessmodelgeneration.comSource :Bicworld.com, 6 décembre 2012 ;L’Obs économie, Le bide de bic, 17 novembre 1988. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 61. Part 25 reasons of failureWhy doBusiness Models Fail ? Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 62. 1 Alignment between Value Proposition and Customer Segment Missmatch between the Value Proposition and the Customer Segments. The value proposition doesn’t answer a real need or doesn’t address a real problem of the customer. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 63. 1 Alignment between Value Proposition and Customer Segment Conflict within the Business Model:Value  proposition Inadequate fit between Value Proposition and BUSINESS MODEL Customer Segment The Business Model is disconnected from the Context SCENARIO CONTEXT OF THE ORGANIZATION Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 64. 1 Alignment between Value Proposition and Customer Segment Fight ! PC AC PV RC SC Value   Customer   RC proposition CX segment C€ R€www.businessmodelgeneration.com Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 65. 2 Business Model financial viability The costs exceed the revenues generated making the business non- profitable. Don’t confuse «impossible profitability» with slow return. Example : customer acquisition cost or production cost too high etc. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 66. 2 Business Model financial viability Conflict within theValue  proposition   Business Model : No profitabilityCosts  >  revenues BUSINESS MODEL SCENARIO CONTEXT OF THE ORGANIZATION Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 67. 2 Business Model financial viability KP KA VP CR CS Costs s R evenue KR Los sesCH !!!!! Revenues C€ R€ Costswww.businessmodelgeneration.com Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 68. 3 Environmental constraints are not fully integrated with the design of the Business Model Poor analysis of the environment : competition, technological trends, regulation and economics forces are poorly evaluated. Main environmental changes must be challenged prior to developping new business models. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 69. 3 Environmental constraints are not fully integrated with the design of the Business ModelValue  proposition   NOTCosts  >  revenues BUSINESS MODEL integratedEnvironment SCENARIO CONTEXT Key elements OF THE ORGANIZATION Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 70. 3 Environmental constraints are not fully integrated with the design of the Business Model ets Financial  mark New  Entrants ndsTechnology  tre PC AC PV RC SC Competition RC CX   New  customer behaviors C€ R€ Globalization www.businessmodelgeneration.com ...* Regulation *  Non  exhaustive  list Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 71. 4 Business Model Execution Management team did not focus enough on execution by lack of competencies, poor governance, or low transformation support. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 72. 4 Business Model Execution Conflict & absence of keyValue  proposition competencies within theCosts  >  revenues management team BUSINESS MODELEnvironmentManagement SCENARIO CONTEXT OF THE ORGANIZATION Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 73. 4 Business Model ExecutionAnalysis  of  the   Identification  of   Business  Model   Execution Environment opportunities Generation KP KA VP CR CS KR CH Management Failure C€ R€ www.businessmodelgeneration.com Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 74. 5 The goose that lays the golden egg It is difficult for companies to break old patterns that made them successful in the past. And the temptation is strong to pursue what has worked before. The risk is to look at new opportunities thru the lens of current profits and performance yields. The management does not take into account the necessity to adapt its business model. It stays unbalanced between a radical shift and incremental improvements. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 75. 5 The goose that lays the golden egg Organizational culture and past successes doesn’t encourage theValue  proposition management to questionCosts  >  revenues BUSINESS MODEL the real foundation of its current Business ModelEnvironment and new opprtunities forManagement growth.Organizational   SCENARIOculture CONTEXT OF THE ORGANIZATION Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 76. 5 The goose that lays the golden egg Actual profits Potential profits KP KA VP CR CS KP KA VP CR CS KR CH KR CH C€ R€ C€ R€www.businessmodelgeneration.com www.businessmodelgeneration.com Actual model Future model Very  profitable Less  profitable Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 77. MissionElton-Pickford is a leading consulting firm specialized in Business Model Innovation. Our customers arelarge corporations recognizing the necessary investment in Business Model Innovation.We provide premium consulting services and unique experience workshops with a sole objective ofimproving client’s condition.Today, reinventing its business models is not an option anymore. It is a path for a sustainable growth andnew performance. "Elton-Pickford is a facilitator and helps industry leaders to reinvent their business and explore opportunities for growth and new performance". Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 78. Corporate Business IndustryEducation Experiment watchBuilding leadership in Business Model Engaging in Business Model Innovation We provide organizations with critical insightsinnovation starts with Education. So, initiative can be challenging for any on innovative business models used in keychange the rules of the game: organization. We believe that the best industries (Industry cases, Industry trends,Experience a full immersion in design way to achieve rapid results is to Spot news)thinking & corporate entrepreneurship design practical experiences aroundand start looking at your business company strategic concerns. We calldifferently. them Business Experiments. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 79. Customer voiceYou have questions, remarks or suggestions ?Your feedback is important to us, contact us !You wish to have a live presentation of this document ?Let’s meet and discuss !You wish to access others studies ?Please visit our websiteand register to our newsletterYou wish to know more on how Elton-Pickford can assist you ?Contact us and plan a meeting Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 80. Paris Office Zurich OfficeElton-Pickford Elton-Pickford DACH Markets3 rue Chauveau-Lagarde Wolleraustrasse 41b75008 Paris 8807 FreienbachFRANCE SUISSE+33(0)9 50 699 646 +41 55 410 14 14www.elton-pickford.com www.elton-pickford.deElton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 81. About the authorAntoine Dumont is associate at Elton-Pickford. He actively participates in the elaborationof the global strategy and development of the business activities.He is an expert in economic intelligence and conducts regulary missions on this subjects Crédit photo (c) 2012 Karine Paolifor french Ministries of the Interior and the Defense.Antoine started his career as M&A consultant. He moved as Sales Director in the ITindustry where he worked for large industrial and financial clients (BNP Paribas, Oseo,Saint Gobain, Rieter Automotive).He conducts, on a regular basis, speaking engagements on Business Model Innovation. Hecontributed to the Blackbook - 10 Innovative Business Models, and wrote several case Contact :studies on disruptive Business Models. antoine.dumont@elton-pickford.com +33 (0)6 25 55 09 88He followed the Executive Program in Management and Strategy to the ESCP Europe. @AntoineDmtAcknowledgementsPeter Keates, Yannick Meriguet, Olivier Gemoets, Franck Louesdon. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
  • 82. www.elton-pickford.com