Class 2 of CDL (Strategy) at Rotman

1. Types of Business Models/Strategies
Joshua Gans
Creative Destruction Lab (Strategy), 2014

2. Idea
Business
Model
Business
Model
Business
Model
Business
Model
?

3. ?

4. relentless.com
Coherence

5. Focus
Core idea: selling books online
• Books
• Online Search
• Bricks & Mortar
• Low prices
• Books
• Online Ordering
• Agent
• Premium
?

6. How do you identify different business models?
Answer: start with broad focus
Do this or that, not both

7. When do you compete?
Who do you compete with?

8. When do you compete?
Today …
for the market
Tomorrow …
in the market
• Patents
• Proprietary networks
• Own key resources
• No IP
• Open platforms
• Develop capabilities
Control Execution

9. Who do you compete with?
Current incumbents Other entrants
• Product market entry
• Stealth/niche tactics
• Develop assets
• Licensing/acquisition
• Quick to scale
• Partnerships
Compete Cooperate

10. Control
Execution
Compete Cooperate

11. Control
Execution
Description
Patent, 1st mover
Superior product
Lower costs
Capabilities
Time-to-
Market
Slow
Fast
Future
Returns
Unique
assets
Unique
capabilities

12. “...you charge a small amount of money ... and
that's it, you're done. You don't need to go seek
venture capital money, you don't need to sell out
your users' privacy. They're not even your users,
they're your customers — for the first time in a
decade. It's great.”
"My goal has never been to dominate the market,"
he says. "My goal has always just been to just
make a living."

13. Mobile
Taxi/Limo
Services

14. Mobile
Taxi/Limo
Services
Compete Cooperate
Control
Execution

15. Mobile
Taxi/Limo
Services
Compete Cooperate
Control
Execution
$332m
$0.05m
$1.5b $77m

16. Explain focus
UberX?

17. Control
Execution
Compete Cooperate

18. Control
Execution
Compete Cooperate
DISRUPTION

19. Orientation towards
competition &
investment in
execution
DISRUPTION
Innovate along a new technology
trajectory
Novel value creation for unserved
customer combinations
Leverage local talent & local users
Disruption
Strategy
"Creative Destruction"
Lean experimentation & hustle
Rapid product development &
time to market

20. Coherence
DISRUPTION

21. Control
Execution
Compete Cooperate
DISRUPTION

22. Control
Execution
Compete Cooperate
DISRUPTION VALUE CHAIN

23. Orientation towards
collaboration,
investment in
execution
VALUE CHAIN
Integrate new and old technologies
Novel value for existing end
customers
Value
Chain
Strategy
“Synergy”
Scarce talent & capabilities
Unique core competency
Leverage access to value chain
players

24. Coherence
VALUE CHAIN

25. Control
Execution
Compete Cooperate
DISRUPTION VALUE CHAIN

26. Control
Execution
Compete Cooperate
INTELLECTUAL
PROPERTY
DISRUPTION VALUE CHAIN

27. Intellectual
Property
Strategy
Orientation towards
collaboration,
investment in
control
INTELLECTUAL
PROPERTY
Innovate generalizable,
transferable technology
Defined value creation for existing
end customers
“The Ideas Factory”
An integrated team of IP managers
& inventors
A source of new complementary
innovations
Find a supply of high human capital

28. Coherence
INTELLECTUAL
PROPERTY

29. INTELLECTUAL
PROPERTY
DISRUPTION VALUE CHAIN
Control
Execution
Compete Cooperate

30. Control
Execution
Compete Cooperate
INTELLECTUAL
PROPERTY
ARCHITECTURE
DISRUPTION VALUE CHAIN

31. Architecture
Strategy
Orientation towards
competition,
investment in
control
ARCHITECTURE
Build an ecosystem around a new
technology
Defined value creation for
unserved customers
“Zero to One”
Insight into different stakeholders
A “hub” in the market
Leading & shaping the ecosystem

32. Coherence
ARCHITECTURE

33. Control
Execution
Compete Cooperate
INTELLECTUAL
PROPERTY
ARCHITECTURE
DISRUPTION VALUE CHAIN

35. Disruption Strategy
Invest in execution, avoid
competitive detection:
Fast speed to market,
imperfect product is tolerated
by customer
Choose new tech S-curve:
Nascent technology that needs customer
input and iterative improvement
Choose tails of market curve:
Customer segments that are currently
underserved due to size or niche demands
Build capacity for rapid
experimentation:
Team needs sufficient talent to
rapidly iterate product based on
customer feedback
Target an unoccupied position:
An isolated position on the technology frontier
distinct from existing customer needs increases
lead time on incumbents
Leverage ecosystem to exploit market inertia:
Choose an ecosystem where there is easy access
to underserved customers; build relationships with
influencers in these niche customer segments

36. Value Chain Strategy
Invest in execution, orient
to collaboration:
Bring to market the best
solution for a link in an
existing value chain
Bridge new and old S-curves:
Help the existing market leverage opportunities
from the new technology S-curve
Help customers serve theirs:
Enhance your customer’s value propositions and
market power
Occupy a unique position:
Choose a link in the value
chain served by outdated
technology and human capital,
with no innovative competitors.
Build a team of scarce talents:
Team needs talent in innovation and business
development. To avoid vertical integration or
imitation from customers, the team needs to
possess unique capabilities.
Find and follow your customers:
Choose to an ecosystem where there is access
to all stakeholders in value chain necessary for
deployment and support of product.

37. Intellectual Property Strategy
Invest in control, orient to
collaboration:
Gain control through patents,
trademarks, copyright or trade
secrets of a novel invention.
Invent generalizable technology:
Modular components that can be easily transferred
and integrated into existing value chains
Focus on existing customers:
Enhance value in a known way for existing
customers and their end users
Build an ideas factory:
Be he source of new inventions
by building a team with talent in
innovation, commercialization
and IP management
Seek sources of smart, affordable talent:
Choose an ecosystem where there is a supply
of highly-skilled talent and an environment that
can retain them
Be the source of new innovations:
Occupy a position on the technology frontier with
opportunity for standard-setting; continual
generation of inventions

38. Architectural Strategy
Invest in control, compete
for the market:
Control the linchpin that
enables the market to work
effectively
Build a foundational technology:
Develop either a platform upon which others can
build products and services or a market
intermediary
Connect stakeholders together:
Understand how to match select stakeholders
together to create and deliver value for all sides
Build a dual-focus team:
Team needs the capabilities
to both grow the ecosystem
and monetize the platform/
product
Position as a hub in the market:
Rather than competing directly in the market,
it is a competition to secure the ecosystem,
as the de facto hub of the market.
Seek out the influencers:
Choose an ecosystem where there are key
influencers to build relationships with, and
thought leadership that generates imitation

39. Bionym
CEO: Karl Martin

40. Your venture is an experiment.
You need to figure out which one to run first.