Business with a purpose: Building sustainable business models

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What is the purpose of a business? If you think it is earning money, think again. Where is the money coming from? The money comes from paying customers and therefore the main task of a company is to …

What is the purpose of a business? If you think it is earning money, think again. Where is the money coming from? The money comes from paying customers and therefore the main task of a company is to create customers as Peter Drucker once said.

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  • 1. What is the purpose of a business?Dr. Patrick Stähler | 1
  • 2. Businesses with a purposeBuilding sustainable business modelsOIKOS Conference, St. GallenDecember 2nd, 2010Dr. oec. Patrick StählerPartner fluidminds GmbH
  • 3. Business is seen as theopposite of not-for-profit non-profit for profit Source: Inspired by Alexander Osterwalder’s presentation: BusinessDr. Patrick Stähler | 3 models beyond profits
  • 4. Let’s look at the impact Sustainability& sustainability: & ImpactThe traditional view + old school non-profit do-gooders non-profit for profit old school companies Source: Inspired by Alexander Osterwalder’s presentation: BusinessDr. Patrick Stähler | 4 models beyond profits
  • 5. How Can you call aidto Africa aid if after50 years of “aid”, Africais still dependenton aid? Mathematician, Ph.D. from CameroonDr. Patrick Stähler | 5
  • 6. Business Models with a Sustainabilitypurpose: Profit & & ImpactImpact & Sustainability + old school Business Models non-profit with a purpose do-gooders non-profit for profit old school companies Source: Inspired by Alexander Osterwalder’s presentation: BusinessDr. Patrick Stähler | 6 models beyond profits
  • 7. Self-help, self-responsibility and self-administration the basic idea of Friedrich Wilhelm Raiffeisen & Hermann Schulze-Delitzsch: Founder of the cooperative movement in Germany in the mid 1850s Cooperative banks for low-priced loans and advantageous investment opportunities for farmers to enable farmers to purchase agricultural equipment, fertilizers and livestock. The members then provided each other with mutual assistance.Dr. Patrick Stähler | 7
  • 8. Micro creditsHelp for Self-help:the basic idea of Muhammad Yunus Yunus set up the Grameen Bank in 1976 to give credit to the very poorest in his country, particularly women, in order to let them set up tiny businesses without collateral. The members then provided each other with mutual assistance.Dr. Patrick Stähler | 8
  • 9. «What types ofinnovation are there?»
  • 10. Technological Innovation
  • 11. Process Innovation
  • 12. Process Innovation
  • 13. Product Innovation
  • 14. Business ModelInnovation
  • 15. Customer utility customer + value price company + profit costsDr. Patrick Stähler | 16
  • 16. “Well, I know we are in a commodity market where the price is key, but I believe we can sell the good for 10x as much as before.”Dr. Patrick Stähler | 17
  • 17. Dr. Patrick Stähler | 18
  • 18. The importance Transistor was invented at of business the end of the 1940s model thinkingDr. Patrick Stähler | 19
  • 19. But SONY made in 1955 a successful product out of the transistor and developed a successful business model out of it for the next 50 years.Dr. Patrick Stähler | 20
  • 20. Do you know this man?Hans Rausing = Inventor ofthe Tetra Pack SystemsDr. Patrick Stähler | 21
  • 21. He could have sold his packaging machines, but…Dr. Patrick Stähler | 22
  • 22. But he sold packagedservicesDr. Patrick Stähler | 23
  • 23. „Which innovation expanded the global addressable market for mobile communication the most?*“ *After the invention of mobile telefony itselfDr. Patrick Stähler | 24
  • 24. Which innovation made this possible?Dr. Patrick Stähler | 25
  • 25. PrepaidDr. Patrick Stähler | 26
  • 26. Business Modelinnovation» Beats Technology» Beats Product» Beats Process
  • 27. Dr. Patrick Stähler | 28
  • 28. The business model creates value not technology or a product itself technology X value / utility creates enables business model defines business strategy
  • 29. To develop a business model with apurpose, isTo Do the rightthings And not todo things right
  • 30. „What is a business model?“Dr. Patrick Stähler | 31
  • 31. The business model is theDNA of your businessDr. Patrick Stähler | 32
  • 32. The business model givesmeaning to youremployees and customersDr. Patrick Stähler | 33
  • 33. Mountain Rescue in the Swiss Alps by volunteers the basic idea behind alpinerettung Schweiz Volunteers from the Swiss Alpine Club and the REGA (Swiss Air Rescue) are responsible for rescue in the Swiss alps. The operation are financed by patrons or members of the clubs in exchange of free services Highly professional non-profit organization also on the revenue sideDr. Patrick Stähler | 34
  • 34. The purpose of a business is to create customers. Peter DruckerDr. Patrick Stähler | 35
  • 35. “To refresh the world”Dr. Patrick Stähler | 36
  • 36. “To put a computer on every desk and in every home”Dr. Patrick Stähler | 37
  • 37. “To organize the world’s information and make it universally accessible”Dr. Patrick Stähler | 38
  • 38. Contribution based on sales support cultural & social purposes the idea behind Migros Culture Percentage Migros, the largest Swiss retailer, is organized as a cooperative that bans alcohol and tobacco from its product range A share of its revenues are devoted to social or cultural projects Migros runs Migros Klubschule (Migros Club School) with 500.000 people attending trainings every year Migros is runs the language school Eurocentres with 13.000 students a year in 8 languages and 30 locationsDr. Patrick Stähler | 39
  • 39. 1. What value/ benefit do we create for whom? 2. How do we do it? 3. How do we earn money?Dr. Patrick Stähler | 40
  • 40. Now, we need a common language for describing a business modelDr. Patrick Stähler | 41
  • 41. Components of abusiness model Value Proposition What value or benfit do we create for our customers and partners? Value Architecture How do we create the value? Revenue Model How and with what do we earn money? Dr. Patrick Stähler | 42
  • 42. „ What industry are we in? Who are our competitors? “Dr. Patrick Stähler | 43
  • 43. „ In which industry are we in? “Dr. Patrick Stähler | 44
  • 44. „That was the job the customer wanted to do.“Dr. Patrick Stähler | 45
  • 45. Value Proposition/ customerWertschöpfungsarchitektur customers Value Proposition/ Kunden Angebot Distributionskanäle Kunden Wie sieht mein WhoWie erreicht das are our Wer ist mein Angebot aus? Angebot meine Kunde? customers? Kunden? Welchen „Job“ What job do we solve übernehme ich für meinen Kunden? Wertschöpfungskette for our customers? Was sind die Kunden wichtigsten Schritte Aktivität 1 Aktivität 2 Aktivität 3 Aktivität 4 Aktivität 1 Nutzen der Welchen Nutzen Wertschöpfung? stifte ich für meinen value proposition Kunden? Kernfähigkeiten Partner Welchen Nutzen Welche What value do we Welche Partner stifte ich für meine Kernfähigkeiten benötige ich? Partner? brauche ich? create for our customers? What value do weErtragsmodell Kostenstruktur Ertragsquellen create for our Die Kostenstruktur wird Womit verdiene ich durch die partners? Geld? Wertschöpfungs- architektur festgelegt.Kultur/ Werte Führungsstil Beziehungskultur Werthaltung Welchen Führungsstil Wie gehen wir Welche Werte prägen pflege ich? miteinander um? uns? Dr. Patrick Stähler | 46
  • 46. Wertschöpfungsarchitektur Value architecture Value Proposition/ Kunden Angebot Distributionskanäle Kunden Wie sieht mein offer Wie erreicht das distribution architecture mein Wer ist Angebot aus? Angebot meine Kunde? What is our Kunden? How do we reachWelchen „Job“ our übernehme ich für offering? customers? meinen Kunden? Wertschöpfungskette How do we Was sind die communicate with our Kunden wichtigsten Schritte Aktivität 1 Aktivität 2 Aktivität 3 Aktivität 4 customers? Aktivität 1 Nutzen der value chain Welchen Nutzen Wertschöpfung? stifte ich für meinen What are Kernfähigkeiten our value Partner custoKunden? activit activit activit activit mer Welchen Nutzen Welche creating steps? Welche Partnery 2 y1 y3 y4 activitstifte ich für meine Kernfähigkeiten is our value benötige ich? y Partner? What brauche ich? chain? core capabilities partnerErtragsmodell Kostenstruktur Ertragsquellen What are theKostenstruktur wird Die core Which partners do ich Womit verdiene capabilities wedie durch Wertschöpfungs- we need?Geld? need? architektur festgelegt.Kultur/ Werte Führungsstil Beziehungskultur Werthaltung Welchen Führungsstil Wie gehen wir Welche Werte prägen pflege ich? miteinander um? uns?
  • 47. Wertschöpfungsarchitektur Value Proposition/ Kunden Angebot Distributionskanäle Kunden Wie sieht mein Wie erreicht das Wer ist meinRevenue model Angebot aus? Angebot meine Kunde? Kunden? Welchen „Job“ < übernehme ich für cost structure sources of revenue meinen Kunden? Wertschöpfungskette Cost structure is With what do we Was sind die Kostenstruktur defined by the valueAktivität 3 ErtragsquellenErtragsmodell wichtigsten Schritte Aktivität 1 Aktivität 2 Aktivität 4 Kunden Aktivität 1 earn money? Nutzen architecture der Wertschöpfung? Die Womit Welchen Nutzen stifte ich für meinen Kernfähigkeiten Kostenstrukt Partner verdiene Kunden? Welchen Nutzen Welche ur wird Führungsstil Welche Partner ich Geld?ich für meine Beziehungskultur stifte Werthaltung Kernfähigkeiten benötige ich? Partner? brauche ich? durch die Wertschöpfu ngs- architektur festgelegt.Kultur/ Werte Welchen Wie gehen Welche Dr. Patrick Stähler | 48 Führungss wir Werte til pflege miteinande prägen
  • 48. What business are we in? Our business modelValue architecture Value Proposition/ customer offer distribution architecture customers What is our How do we reach our Who are our offering? customers? customers? What job do we solve for our customers? value chain What are our value creating steps? value proposition customer activity 1 activity 2 activity 3 activity 4 What is our value activity What value do we chain? create for our customers? core capabilities partner What value do we What are the core Which partners do create for our capabilities we we need? partners? need?Revenue model cost structure sources of revenue Cost structure is defined With what do we by the value architecture earn money?Culture/ values leadership style relationship style values What leadership style How do we interact What values do we do we have? with each other and pursue? the customer?
  • 49. What business are we in? Our business modelValue architecture Value Proposition/ customer offer distribution architecture customers What is our How do we reach our Who are our offering? customers? customers? What job do we solve for our customers? value chain What are our value creating steps? value proposition customer activity 1 activity 2 activity 3 activity 4 What is our value activity What value do we chain? create for our customers? core capabilities partner What value do we What are the core Which partners do create for our capabilities we we need? partners? need?Revenue model cost structure sources of revenue Cost structure is defined With what do we by the value architecture < earn money?Culture/ values leadership style relationship style values What leadership style How do we interact What values do we do we have? with each other and pursue? the customer?
  • 50. «Everybody wants to be innovativ: But what is an innovation?»
  • 51. 80 devices in GermanyDr. Patrick Stähler | 52
  • 52. 1 deviceDr. Patrick Stähler | 53
  • 53. Innovation is all aboutbeing different
  • 54. But if everybody is doinghe same, you have to findsomething else
  • 55. Optimal is when differentbusiness models existsand all have devotedcustomers
  • 56. „ How do I do this?“ “Dr. Patrick Stähler | 57
  • 57. If you are in a market forgiants...
  • 58. .. and you play with theirrules you will getnowhere…
  • 59. „…but if you can create your own rules of engagement than you can compete even in a market for giants. “
  • 60. Business model innovation1. Value Innovation (We offer a better value proposition for an existing or new problem)2. Architectural innovation (We reconfigure the value chain so that a better value proposition emerges)3. Revenue model innovation (We change the revenue mix and thereby creating a better value proposition)
  • 61. Fight eye diseases in India with mass production processes for low costs the basic idea behind Aravind Eye Hospitals The network of not-for-profit hospitals and vision centers performs 300,000 eye surgeries each year -- 70% for free -- using broadband connections to on-call doctors in city hospitals for instant diagnosis. Camps in rural areas screen thousands of patients weekly. "We are going from village to village to provide eye care to the unreached," says Aravinds chairman, Dr. P. Namperumalsamy. Aravind won the 2008 Gates Award for Global Health.Dr. Patrick Stähler | 62
  • 62. A deliberate change of a business model is a good strategyStarting points ofbusiness modelinnovation All components of a business model are starting points for innovation Value Innovation Architectural Innovation Revenue Model Innovation At the end, all business model innovation must create more value to the customers Dr. Patrick Stähler | 63
  • 63. The fluidminds way of business model innovationUnderstand Unlearn & mobilize Ideate • Find customer insights • Unveil tacit assumptions • Generate via jobs-to-be-done about the industry • value ideas • Describe current • Create discomfort with • architectural ideas business model current situation • revenue ideas • Understand market trendsDesign Select & Prototype Build & Learn • Design new business • Select business models • Execute business model models • Prototype & customer • Gather customer • Check interdependen- Development feedback & data cies in business model • Write Business Case • Adapt business model • Select new business model
  • 64. The peepoo bag. Short brainstorming what business models are possible? peepoo bag is a single-use, self- sanatising toilet bags Source: Idea taken from Alexander OsterwalderDr. Patrick Stähler | 65
  • 65. Dr. Patrick Stähler | 66
  • 66. Dr. Patrick Stähler | 67
  • 67. Business Model Innovation is an analyticaland creative process. There is a reasonwhy God gave us two brain spheres.
  • 68. Weitere Informationenhttp://blog.business-model-http://blog.business-model-innovation.comDr. oec. Patrick Stählerfluidminds GmbHSeefeldstrasse 5aCH-8008 ZürichPatrick.Staehler@fluidminds.chwww.fluidminds.chblog.business-model-innovation.com