Business Models: Six recommendations to enable business model innovation in the Creative & Digital Industries.
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Business Models: Six recommendations to enable business model innovation in the Creative & Digital Industries.

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Advances in technology have disrupted the creative marketplace. What customers value and will pay for has changed and companies who don’t evaluate their existing business models risk losing their ...

Advances in technology have disrupted the creative marketplace. What customers value and will pay for has changed and companies who don’t evaluate their existing business models risk losing their relevance.

There is a lot of discussion around reinventing ‘business models’ and ‘strategy’ but there is a lack of clarity about what this means and even less about how to apply it.
So how does this impact the creative industries, which have undergone more change than most sectors over the last 10 years?

The part time Business Model Theme Champion role, funded by and on behalf of the Creative Industries KTN, focused on transferring current business model practice to the creative industries, using that to shape and inform business model innovation and examine how businesses can better articulate new and emergent business models.

This document is not meant as a scientific document or academic paper but a combination of a summary of my learnings from both my year’s tenure, as well as the thoughts and experiences from those who kindly attended workshops and roundtables or were consulted as experts or as leading companies in their field. My intention is to start a conversation around business model innovation in the creative and digital sectors and for the recommendations to be explored further.

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Business Models: Six recommendations to enable business model innovation in the Creative & Digital Industries. Business Models: Six recommendations to enable business model innovation in the Creative & Digital Industries. Document Transcript

  • Media–Sauce Theme Champion for Business Models & Growth Learnings 2012-13 #bizmodel Mellissa Norman Introduction Advances in technology have disrupted the creative marketplace. What customers value and will pay for has changed and companies who don’t evaluate their existing business models risk losing their relevance. There is a lot of discussion around reinventing ‘business models’ and ‘strategy’ but there is a lack of clarity about what this means and even less about how to apply it. So how does this impact the creative industries, which have undergone more change than most sectors over the last 10 years? The part time Business Model Theme Champion role, funded by and on behalf of the Creative Industries KTN, focused on transferring current business model practice to the creative industries, using that to shape and inform business model innovation and examine how businesses can better articulate new and emergent business models. The steps to reach this included firstly, understanding what a business model is, mapping the existing model, evaluating and modifying the current model and then being able to communicate the new business model. The activities I undertook are listed at the end of this document. They include events, roundtables, talks, research, interviews, content and blogs. This is not meant as a scientific document or academic paper but a combination of a summary of my learnings from both my year’s tenure and my wider business consulting work over the last seventeen years as well as the thoughts and experiences from those who kindly attended workshops and roundtables or were consulted as experts or as leading companies in their field. My intention is to start a conversation around business model innovation in the creative and digital sectors and for the recommendations to be explored further. Some experts consulted suggested that business innovation is happening already, by companies successfully trying new ideas, following instincts without using a particular 1
  • Media–Sauce process. The added benefits of using a framework to support change means that each step in the process becomes visible. It is easier then, to spot potential gaps and opportunities to build BM and strategy. This also will benefit companies who are still trying to understand business model innovation. This document also refers to a biannual global survey of CEOs commissioned by IBM, the most recent of which, was published in 2012 (the next is due later this year). Even though this survey is not exclusively for the creative and digital sectors, it can be an effective snap shot of current business trends, challenges and opportunities and an effective way to chart change of priorities. This document is aimed at both SMEs and organisations that work in the creative and digital sectors. Recommendations & Learnings “Understanding the customer value proposition and its relationship to how a new market is created is a critical element of implementing business model innovation. “ Dr. Chander Velu, Cambridge Judge Business School, University of Cambridge 1 - Lack of Understanding - Value Propositions & Customer Insight.  At the core of Business Model design is the value proposition- the value of your product/content/service and what is someone willing to pay for it. Yet many companies still struggle to articulate their value proposition. Understanding the value of what is on offer or in other words, ‘the job’ that a product/service/content does for the customer, is crucial to develop content, product and services that are relevant.  Understanding customers and their needs is an area that many companies recognise as a weakness. Some companies don’t use a CRM system, or collect data on their customers either due to a lack of skills or available time.  Businesses that are B2B have an extra challenge in that they serve two customers, their business client and the end user. Due to social media, we can now effectively collect data from our individual customers rather than refer to a customer segment group or an 2
  • Media–Sauce ‘average customer’. Some of the roundtable participants mentioned that capturing and processing this can be difficult. According to IBM’s Global survey in 2012, 75% of company CEO’s mentioned that increasing customer insight is a priority area for them. Recommendations  Companies need support in uncovering and redefining their value proposition. Having a VP (value proposition) can differentiate them from their competitors and demonstrate specific benefits. It also shows their customers why they should purchase from them, rather than anyone else. More importantly, it can keep them relevant by updating their business model, offer customers what they want, move away from outdated models and uncover new business models. A great tool to help a company with this is the value proposition canvas.  Companies need to be aware of what new tools and services are available to enable them to collect and analyse data to turn this into insight. 2 - Lack of Business Modelling & Strategy Skills.  Many SMEs CEOs do not come from a business background but have learnt it from their experience of running a company. Add to this, the challenge of managing the day to day duties and a lack of time, funds and resources can leave little time to strategize or redesign their business. A common problem is that entrepreneurs spend more time working in the business rather than on it.  This can leave a company vulnerable to threats and a lack of skills in this area can lead a CEO to look for a ‘silver bullet’ business model from elsewhere in the industry rather than to understand their own value proposition and tailor a model to fit their and their customer’s needs. • Product/service/content innovation tends to be the primary focus of companies with business innovation coming in second place. Interestingly, according to IBM’s survey, the companies who are outperforming their peers have similar product and service innovation but choose more disruptive, innovative forms of business model innovation and partner more extensively. • Business model innovation is an emerging field and its growth can be charted with the growth of the internet but training and workshops around this specialism, within the creative sector, are very limited. Many universities have research areas and experts investigating this field but the knowledge has not transferred to the creativity industries themselves. 3
  • Media–Sauce Recommendations • In order to maintain a creative/digital sector fit for purpose there needs to be access to training and workshops in this discipline. By supporting business model innovation and strategy, funding bodies and skills agencies could significantly increase the knowledge and skillset in this area which would positively impact revenue streams and company growth. • During one of our roundtables some suggestions included; establishing regular small groups offering peer to peer support for CEOs in a safe environment and bringing in experts from other industries to share their learning’s as this might help them create new solutions to current challenges. • To build knowledge transfer networks between the business schools/departments who are researching this area and companies who are at the coal face. This would bring added benefit to both. 3 - Change Coming From the Top.  The further away a CEO gets from the day to day running of the company the harder it is for them to hold all the knowledge of processes, successes and failures of that organization. We know that to successfully run a company control needs to be passed to other members of staff, which means pieces of knowledge are held by everyone.  Making changes in strategy and business modelling can have a huge impact on the company as a whole and affect moral. Each company has its own culture, particular habits and behaviour and when those are challenged it can cause fear and resentment. If the change is owned only by one person, it can be difficult to implement as they are fighting embedded habits and culture. Recommendations – • In order to affectively embed change within a company, the whole company needs to be involved. If that isn’t possible, a slice horizontally (same pay grade across different departments) and vertically (different pay grades in the same department) can be used instead. This will allow the change to be easily sustainable and will help recreate new habits and behaviour from the outset. • Every person employed by a company holds a piece of the company’s knowledge, about what works and doesn’t work. Tapping into this reduces risk, decreases costs and can create innovative solutions and increase sustainability of results. 4
  • Media–Sauce • There are very effective methods to do this including large participatory formats such as the world café method which BA, World Bank and many other organisations have utilized to create change by bringing the ‘whole system’ the processes and people into a room. For smaller SMEs, even a small group working together can be extremely beneficial. 4 - Lack of Collaboration/Partnerships. • Often when building new business, distribution or financial models, new skillsets can be required. To hire employees with these skills may be one costly solution. Another is to test the model by building collaborations with other partners who are experts in their field. • It can be difficult for a company to find a suitable partner and a framework to help support this relationship as there are many different kinds of partnerships (financial, supply chain, co-creative) and navigating which one to choose can be challenging. Recommendations • While not essential, it is certainly advantageous to build in partnerships and collaboration to support more innovative business models e. g. The Centre for Creative Collaboration is one organisation which is supporting SMEs through this process. IBM states that 75% of CEOs that were surveyed had formed partnerships and now have collaboration embedded into their business model. • Build partnerships across the chain to minimize the impact of the company's business model innovation on others in the value chain. • Get companies to work together is more effective than networking. Create environments and processes to allow companies to work together or to learn and trust at a deeper level which can increase the likely hood of collaborations. 5 - Lack of a Common Language. • Lack of a common language is a common problem in some companies. When you bring together experts in their own field from business, creative, and technology, each have their own jargon and language. This can increase the challenge of working together on overcoming business issues. It is easy to dismiss or disengage from an idea if you don’t understand it. 5
  • Media–Sauce Recommendations • The Business Model Innovation Canvas works well as a simple tool to describe, map and offer some evaluation of a business model as it is easy to use, and can be understood by most. Depending on the size of the company or the complicity of the change needed, other tools will be needed to future develop, evaluate and measure business model changes. The relevant tools will depend on the change needed. • Ensuring that there is a common language. This will help improve communication of a company’s values to their customers, to the rest of the company regardless of their specialism, to stakeholders and to potential investors. 6 - Lack of Agility in Organisational Structure/Processes. • Many companies working in the creative and digital spaces are dealing with disruptions caused by social media, digital and the current economic climate. • The complexity of company’s processes and structure has increased over the years, decreasing agility and creating an aversion to risk. As a company grows there is a tendency for layers of complexity to increase, making it harder to change, avoid pitfalls or embrace opportunities. • Challenging as they are, social and digital are only the current disruptors. Previously, many companies could live their lives successfully between major disruptions but now, as the rate of technology change increases, companies that are looking for the one business model solution and sticking to it, may find themselves in a similar position when other disruptions occur. Recommendations – • Building time to regularly review and evaluate the current model and strategy is important to insure a company grows. Over time, the product/service/content can be adapted according to the changing customer’s values or what they are willing to pay for. • Business iteration - there is no constant in business model design, it is an iterative process. Design thinking needs to be regularly applied to ensure a company maintains their relevance. A business model will continually evolve and grow; strategy will be tweaked to enable a company to be successful. In Conclusion The learnings from this year’s work represent a small part of a bigger conversation. In order for us to address shortcomings around strategy and business model innovation within the creative and digital sectors, we need to work together to share the knowledge we have rather than keep them in sector silos. 6
  • Media–Sauce Each sector has its individual strengths and expertise but sector knowledge around growth and business innovation can be translated in order to find new solutions in a different sector If you would like to participate in this discussion or would like to comment please contact Mellissa Norman mel@media-sauce.org. Mellissa Norman -Media-Sauce.org Media -Sauce is a digital business consultancy that enables companies to build innovative business models, strategies and processes. We have worked with BBC, Royal Shakespeare Company, Royal Commonwealth Society to develop business models, income streams and strategy. We also deliver innovative business workshops to enable companies to build new revenue streams and to design the right business model. We have created and delivered workshops for Skillset, the Technology Strategy Board, the BBC, Own-it, Pact, Interactive Scotland and Creative Clyde. Mel Norman has an interest in creativity, business and technology and how they work together and has 18 years experience across film, TV, digital, interactive and social. Mel has programme directed and produced a conference with Facebook and the collaborative Social Media Week London (Chinwag) with partners Nokia, Dell, C4 and BBC. Previously, to Media Sauce, Mel worked as a business consultant and set up a sales coaching programme for clients including Npower and Business in the Community. Mel started her career as an assistant to Bill Forsyth and Lynne Ramsay before producing one of the first digital feature films in Scotland. Mel has also worked with Endemol, BBC, Brighter Pictures and developed a slate of horror films working with Stuart Lee and other talented individuals. In 2007 Mel and Will Pearson won the ‘Socially responsive’ category at MIPTV’s 360 degree competition. In 2012 Mel was the Theme Champion for Business Models and Growth for the Creative Industries Knowledge Transfer Network. Currently Mel works as a digital business consultant and also as a Growth Coach for the Growth Accelerator programme. Summary of the year’s activity Business Model trends panel – IBM, IDEO, Social optic and MOO Business Model Workbook – created in collaboration with MOO 7
  • Media–Sauce ‘The Leap Day Challenge’- A campaign to help companies review their business models. Business model mapping and evaluation workshop – Creative Clyde, Interactive Scotland and held at STV. Workshop on sales and growth – Digital 2012 Talks on Business Models and Growth at the following events: London Book Fair-2012+2013, Digital Shoreditch, Social Media Week, Building Capacity for the Arts, Social Business Meet Up A wide range of companies, experts and stakeholders were consulted and participated in the year’s activities. Andy Bell Mint Digital Iain Bennett The Fifth Sector Mandy Berry Golant Media Ventures Wendy Boast 2change Frank Boyd CIKTN Charlie Cadbury Putitout Charles Catton Amber Books Brian Condon Centre for Creative Collaboration Kathryn Corrick Open Data Institute Tommy Doyle Reed Elseiver Niall Duffy Media Smiths Nick Farnhill Poke Matthew Hawn Consultant Paul Johnson Tuvalu Entertainment Jon Kingsbury Nesta Sandy Manuel Geoff McCormick The Alloy Will Micinnes Nixon Mcinnes Lisa Rodwell Moo Beatrice Rogers Business consultant Creative Industries KTN 8
  • Media–Sauce Will Rowe Protein Rubin Shah BBC Juliet Tzabar Plug in Media Nigel Walker Technology Strategy Board. *All participants are listed with the companies they were in at the time of their participation Meetings- Thank you to all of you who participated via individual meetings. Special thanks to: • Chandler Velu- Judge Business School, Cambridge University • Allison Coward- Bracket • Graham Hitchen: Consultant 9