Designing For
                Innovation:
 How can I
              Business Models
improve the
  way I do
  business




 ...
What are the expectations for today
why have a
business model?
how do we describe our business




                     without a common language
how do we communicate
                                 about the business?




so other people understand
how we implement our business?




                             outdated methods?
how do we change a business?




re-invent the wheel?
what is innovation?
technology innovation
process innovation
product & service innovation
business model innovation
four levels of innovation

                  business model innovation
                 product & service innovation
     ...
Nearly all CEOs are adapting their
                     business models — two-thirds are
                     implementing...
Benefits Cited by Business Model
                         Innovators




                                           percen...
How does one
describe a business
      model?
THE BUSINESS MODEL

   CANVAS
a business model describes the logic and rationale underlying the
        way in which we implement the business strategy
...
business model framework



  HOW               WHAT     WHO




                  HOW MUCH
BUILDING
BLOCKS
business model framework

                     KEY                        CLIENT
 INFRASTRUCTURE                   OFFER  ...
the big picture
                    Key Resources                    Client Relationship




                             ...
Value creates revenue
                    Key Resources                    Client Relationship




                       ...
Creating value requires infrastructure
                     Key Resources                    Client Relationship




     ...
Infrastructure generates costs
                    Key Resources                    Client Relationship




              ...
Operational viability
                     Key Resources                    Client Relationship




                      ...
describing SAMPLE
 business model
Amazon.com’s basic business model…
                                     Courtesy of Alexander Osterwalder, with permission...
Four questions about
                       Amazon.com‘s business model
 what is their BM‘s major
 weakness?

 what are th...
Innovating the business model
                                           Courtesy of Alexander Osterwalder, with permissio...
The Innovating Approach

                                  How does one innovate
          Consider
           Consider
  ...
If you wish to use material
from this presentation please
observe the rules of creative
commons licensing.



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Designing For Innovation: Business Models

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Transcript of "Designing For Innovation: Business Models"

  1. 1. Designing For Innovation: How can I Business Models improve the way I do business Presentation to IIBA-OO January 2009 Michael Lachapelle
  2. 2. What are the expectations for today
  3. 3. why have a business model?
  4. 4. how do we describe our business without a common language
  5. 5. how do we communicate about the business? so other people understand
  6. 6. how we implement our business? outdated methods?
  7. 7. how do we change a business? re-invent the wheel?
  8. 8. what is innovation?
  9. 9. technology innovation
  10. 10. process innovation
  11. 11. product & service innovation
  12. 12. business model innovation
  13. 13. four levels of innovation business model innovation product & service innovation process innovation technology innovation
  14. 14. Nearly all CEOs are adapting their business models — two-thirds are implementing extensive innovations. More than 40 percent are changing their enterprise models to be more collaborative. IBM Global CEO Study 2008 Extensive Business 69% Moderate Model Innovation 29% over next 3 Limited / none years 2%
  15. 15. Benefits Cited by Business Model Innovators percent of respondents Source: Expanding the Innovation Horizon [IBM, Global CEO Study 2006]
  16. 16. How does one describe a business model?
  17. 17. THE BUSINESS MODEL CANVAS
  18. 18. a business model describes the logic and rationale underlying the way in which we implement the business strategy areas
  19. 19. business model framework HOW WHAT WHO HOW MUCH
  20. 20. BUILDING BLOCKS
  21. 21. business model framework KEY CLIENT INFRASTRUCTURE OFFER CLIENT RESOURCES RELATIONSHIPS PARTNER VALUE CLIENT NETWORK PROPOSITION SEGMENTS KEY DISTRIBUTION ACTIVITIES CHANNELS COST REVENUE FINANCE STRUCTURE STREAMS
  22. 22. the big picture Key Resources Client Relationship Value Partner Network Key Activities Distribution Channel Client Segments Cost Structure Revenue Model
  23. 23. Value creates revenue Key Resources Client Relationship Value Partner Network Key Activities Distribution Channel Client Segments Cost Structure Revenue Model
  24. 24. Creating value requires infrastructure Key Resources Client Relationship Value Partner Network Key Activities Distribution Channel Client Segments Cost Structure Revenue Model
  25. 25. Infrastructure generates costs Key Resources Client Relationship Value Partner Network Key Activities Distribution Channel Client Segments Cost Structure Revenue Model
  26. 26. Operational viability Key Resources Client Relationship Value Partner Network Key Activities Distribution Channel Client Segments Cost Structure Revenue Model
  27. 27. describing SAMPLE business model
  28. 28. Amazon.com’s basic business model… Courtesy of Alexander Osterwalder, with permission fulfillment mass customization content CLIENT CLIENT KEY ACTIVITIES KEY ACTIVITIES RELATIONSHIPS management RELATIONSHIPS affiliates IT management delivery mass customers PARTNER  CLIENT retail stuff PARTNER  CLIENT 3rd party sellers OFFER overOFFER globally NETWORK SEGMENTS the web NETWORK SEGMENTS affiliates warehouses & inventory Amazon.com DISTRIBUTION  DISTRIBUTION  IT infrastructure KEY RESOURCES KEY RESOURCES CHANNELS CHANNELS affiliates people fulfillment REVENUE REVENUE technology & COST STRUCTURE sales margins COST STRUCTURE FLOWS FLOWS content marketing
  29. 29. Four questions about Amazon.com‘s business model what is their BM‘s major weakness? what are their BM‘s strongest competencies? where are their BM‘s highest costs? what big strategic innovation could Amazon bring to their BM? Courtesy of Alexander Osterwalder, with permission
  30. 30. Innovating the business model Courtesy of Alexander Osterwalder, with permission activities relationship fulfillment mass customization offer content CLIENT clients CLIENT CLIENT CLIENT KEY ACTIVITIES CLIENT CLIENT KEY ACTIVITIES partners management affiliates RELATIONSHIPS RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS SEGMENTS IT management delivery retail stuff mass customer over the web globally CLIENT PARTNER  CLIENT PARTNER  CLIENT CLIENT CLIENT CLIENT CLIENT OFFER CLIENT CLIENTS 3rd NETWORK OFFER party sellers CLIENTS SEGMENTS SEGMENTS NETWORK SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS IT services warehouses & Internet companies Amazon.com (e.g. S3, EC2) inventory affiliates DISTRIBUTION  DISTRIBUTION  CLIENT CLIENT CLIENT CLIENT KEY RESOURCES IT infrastructure affiliates KEY RESOURCES CHANNELS CHANNELS SEGMENTS SEGMENTS SEGMENTS SEGMENTS Internet interfaces people resources channels fulfillment Sales margins Sales margins technology & REVENUE REVENUE CLIENT CLIENT CLIENT COST STRUCTURE CLIENT COST STRUCTURE content FLOWS FLOWS SEGMENTS SEGMENTS SEGMENTS SEGMENTS utility fees costs revenues marketing
  31. 31. The Innovating Approach How does one innovate Consider Consider the clients the clients Start with as-is Create prototype Set the to-be Start with as-is Create prototype Set the to-be business model innovative models business model business model innovative models business model Consider the Consider the four questions four questions
  32. 32. If you wish to use material from this presentation please observe the rules of creative commons licensing. Content and development support provided by: Content and development support provided by: Dr. Alexander Osterwalder, PhD Dr. Alexander Osterwalder, PhD His material is posted on: business-model-design.blogspot.com His material is posted on: business-model-design.blogspot.com Business Model Community located at: www.thebusinessmodelhub.com Business Model Community located at: www.thebusinessmodelhub.com For further information, discussion you can contact me at: For further information, discussion you can contact me at: (w) mike.lachapelle@tpsgc-pwgsc.gc.ca (w) mike.lachapelle@tpsgc-pwgsc.gc.ca (h) michaell@magma.ca (h) michaell@magma.ca

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