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25 Ways to Reinvent Your Business
- 1. 25 Ways to Value Innovation !
Reinvent your
!
Business Model Innovation!
!
Business!
Market Innovation!
By Marc Sniukas!
www.sniukas.com!
- 2. A short introduction!
MARKET INNOVATION!
What is...! Market innovation is about creating new markets
and/or customer segments, by turning non-
!
customers into new demand or creating completely
VALUE INNOVATION!
! new markets.!
Value innovation is about inventing (or reinventing) your
value proposition. The big questions are:!
• What are we offering our customers?!
• What problems do we help them to solve?!
• What job do we (help them to) get done?!
BUSINESS MODEL INNOVATION!
Business Model Innovation is about inventing new ways to
do what you do. New ways to create value, new ways to
deliver value. New ways to do business and get paid for it.
Itʻs about HOW you do business.!
© 2010 Marc Sniukas!
www.sniukas.com!
- 3. What you can expect...!
VALUE INNOVATION!
#10 Offer complementary products and services!
WORKS ACROSS THE BUSINESS! #11 Offer solutions and experiences!
#1 Challenge industry assumptions! #12 Offer bundles!
#2 Look at completely different industries! #13 Switch your appeal: functional versus emotional!
! #14 Focus on the job to be done!
#14 Selectively eliminate, reduce, raise and create!
MARKET INNOVATION! #15 Look at subsitutes!
#3 Target non-customers! #16 Expand the use of your assets and capabilities!
#4 Target less profitable customers! #18 Look at the customer experience!
#5 Target the least satisfied customers!
#6 Target the chain of buyers!
#7 Segment according to commonalities! BUSINESS MODEL INNOVATION!
#8 Segment according to circumstances!! #19 Reinvent the customer interface (channels)!
#9 Desegment the customer based! #20 Reinvent your customer relationships!
#21 Invent new revenue streams!
#22 Price differently!
#23 Reinvent you cost base!
#24 Re-assess your key activities!
#25 Collaborate with suppliers, partners, the network and
ecosystem! © 2010Marc Sniukas!
www.sniukas.com!
- 4. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
1. Step: Draw a table with 3 columns on a flipchart!
- Label the first column „Dimension“.!
- Label the second column „Assumptions“.!
- Label the third column „Challenge“.!
2. Step: Define the dimensions!
- Under the first column list things like pricing, costumers,
products and services offered, delivery, costs, competitors, etc.
#1
Everything you consider being important in your industry.!
- What are the main competitive factors in your industry?!
- List all your functions: production, development, distribution,
marketing and sales, etc.!
Challenge !
3. Step: List industry assumptions!
- What are the main industry assumptions for each dimension?!
- What is considered being the norm in the industry?!
- What are the industryʻs restrictions, the dos and donʻts?!
Industry - Does the industry have a product-centric, customer-centric, or
!
rather competency-centric approach?!
4. Step: Challenge industry assumptions!
Assumptions! - For every assumption identified above write down the opposite
or come up with other ideas that depart from the industry
standards.!
Examples!
- Nintendo Wii!
- Low cost, no service airlines!
- Low cost airlines with service!
- Music for free download!
- Direct banking!
© 2010 Marc Sniukas!
www.sniukas.com!
- 5. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Other industries can teach you a lot about how to reorganize your
business model. !
!
Questions:!
- Which industries could you turn to, that face similar challenges!
#2
- You might also want to look at substitute industries: what makes
customers trade between your industry and another one? (see
card number 16)!
!
!
Look at !
Examples!
- Think about how a logistics company could turn to a organ
transport company to get inspiration on how to deliver goods
completely really fast.!
- McDonaldʻs brought manufacturing ideas to restaurants.!
different
industries!
© 2010 Marc Sniukas!
www.sniukas.com!
- 6. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Think about your market and organize it into 3 groups of
non-customers.!
- 1st group: „soon-to-be“ non-customers: They minimally use the
current offering, but are constantly searching for something
better or different and ready to switch easily. They are closest to
the existing customers.!
- 2nd group: „refusing“ non-customers: They either do not use or
#3
cannot afford to use the current market offerings because they
find the offerings unacceptable or beyond their means. These
customers are willing to buy, but not at the current terms.!
- 3rd group: „unexplored” non-customers: They are the farthest
away from the existing market. Typically they are being ignored
Target
completely as potential customers by the industry, either
because they have always been assumed to belong to another
industry or are not being considered worth the effort.!
Non-
Focus on the 1st group !
- Why would they switch?!
- What are they looking for?!
- What are the customersʼ needs and wants?!
Customers! Focus on the 2nd group!
- Why are they refusing?!
- How could the offer become more attractive for them?!
Focus on the 3rd group!
- Why are these potential customers being ignored?!
- Which non-customers might have the same needs as your
current ones?!
- How could reach them with the existing offer?!
© 2010 Marc Sniukas!
www.sniukas.com!
- 7. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
1. Step: Think about potential customers that either!
- would need your product, but cannot afford it, or!
- whom your industry and/or company consider not being worth
the effort as margins would currently be too small.!
2. Step: Ask yourself !
- What are these customersʻ needs?!
#4
- Could a simpler, less costly version of your product fulfill this
need?!
- What would this product and/or service look like?!
- How would you have to modify the existing offer?!
- How could reach them with the existing offer and still make a
Target less profit?!
- How would the business model have to change to still make a
profit?!
profitable Examples!
- Grameen bank!
- Rental cars for 1.- Euro!
- Low cost airlines!
customers!
- Discount supermarkets (Lidl, Hofer,...)!
- Discount mobile phone providers (Yesss, Bob,...)!
- Juraxx low cost lawyers!
- Disount hotels (Etape, Formula 1, Ibis,...)!
- Direct banking!
- Tata Motors!
© 2010 Marc Sniukas!
www.sniukas.com!
- 8. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
1. Step: Think about your customers!
- Who is least satisfied?!
- Why are they not satisfied?!
- Is your offer too expensive?!
- Is quality too high or too low?!
- Is your product too complicated for them to use?!
- Do you offer too many or too little features for them?!
#5
- Which part of your offer are they not satisfied with?!
2. Step: How would your offer have to change to attract these
customers and satisfy them?!
Target the
least satisfied
customers!
© 2010 Marc Sniukas!
www.sniukas.com!
- 9. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Instead of focusing on the buyer of your product, who is often
best known, you might want to consider looking at the chain of
buyers. !
!
1. Step: Write the buyer experience steps on a flipchart!
- Awareness!
- Evaluation!
#6
- Purchase!
- Delivery!
- Use!
- Supplements!
- Maintenance!
Target the - Disposal!
2. Step: Identify the chain of buyers!
- For each of these steps in the customer experience identify
chain of
individuals or groups of people having to deal with each of these
steps separately.!
- What is it that they are looking for?!
- What are each member of the chainʻs needs?!
buyers! Examples!
- Cars!
- McDonaldʻs!
- McCafé!
© 2010 Marc Sniukas!
www.sniukas.com!
- 10. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Businesses typically segment their customers along differences
such as gender, age, status, class, income, etc. But what do
customers, and even non-customers, have in common? !
!
1. Step: List your main!
- Customers!
- Non-customers!
!
#7
(refer to card number 2 for categorizing your customers)!
2. Step: Ask the following questions!
- What do your customer have in common?!
Segment
- Are there other segments that might have the same needs,
although they donʼt appear on your radar (yet)?!
- What needs do they share?!
- What are they trying to get done?!
according to Examples!
commonalities! If you observe customers at McDonaldʼs youʼre likely to see a lot
of differences (students, male and female, kids, parents, lawyers,
shop floor workers,….) which essentially donʼt really matter. !
© 2010 Marc Sniukas!
www.sniukas.com!
- 11. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Whereas strategy #7 looks at the customers as such and usually
uses criteria for which data is readily available, you can also try to
describe what need the customers are trying to fulfill and why
they are buying your product.!
!
Identifying these circumstances can again help in two ways:
either bring ideas for new or enhanced offerings or you can target
additional customers that have the same need, but have
#8
traditionally been neglected because the industry focused on a
particular type of customer.!
!
Questions:!
Segment - When is your product being bought?!
- In which circumstances do people really use it?!
- For what purpose is it used in these circumstances?!
according to Examples!
- Looking at McDonaldʼs the need might primarily be to satisfy
circumstances! your hunger. Another reason might be to spend time with
friends, get the kids to shut up, escape from the cold, not having
to cook, kill time, whatever.!
- Think about Smartphones: people use them to kill time while
sitting in restaurants, waiting in line, at airports,... This way you
think about the product in a completely different way and build
features for this purpose, like on the iPhone.!
© 2010 Marc Sniukas!
www.sniukas.com!
- 12. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
It seems to me the trend has gone towards finer segmentation in
recent years. Mass-customization has been the result. Think
about the car industry in Europe: customers have so many
choices to individually configure their car that the result is more
than a million different possible configurations of a single model.!
!
Focusing on commonalities might help to find bigger segments
#9
and simpler products and product lines as a result. Bigger
segments might also be worth the effort, even if profitability is low.
Instead of desegmenting using commonalities or circumstance
you might find other ways to do so.!
!
Desegment Questions:!
- What do your customers have in common?!
- What do your non-customers have in common? (see card
number 3)!
the customer
based!
© 2010 Marc Sniukas!
www.sniukas.com!
- 13. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Selling a new product or new services to core customers is one of
the most commonly pursued and highest-potential growth
strategies. !
The approach allows for first wins, is not too risky and will
probably not upset others within your organization. And you could
indeed be creative regarding the kind of products and services
you offer.!
#10
!
Questions:!
- Think about the buyer experience (see card number 18): what
complementary products and services would enhance the
Offer customer experience along the experience cycle?!
- What products can you offer along your services?!
- What services along your products?!
complementary
- Which complementary services would make your customersʼ life
easier and the buying experience a lot more satisfying?!
- Which other products do your customers typically buy along
yours, but have to get somebody else?!
products and !
Examples!
services! - McCafé: coffee and cake are complimentary products to the
main course.!
- W Hotels teamed up with Bliss to offer spa facilities in its hotels
and Bliss products to take home. !
- Fries + ketchup.!
- Cars + insurance.!
- Cars + financing.!
- iPod + iTunes.!
© 2010 Marc Sniukas!
www.sniukas.com!
- 14. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Does the customer merely want to own your product, or is he
buying it for a purpose? What is that purpose?!
!
Questions:!
- Look at your customersʼ total buying experience (see card
number 18): what it is that they are trying to accomplish and
offer the according solutions.!
#11
- What solutions can you offer along the buying experience?!
- How can you engage your customers in „co-creation“
experiences?!
- Could the customers design the products or parts of it
themselves?!
Offer - Why do people buy your product? To own it, or because they
want to solve a problem or satisfy a need?!
- What could a total solution, making the customerʻs total
experience more worthwhile, look like?!
solutions and !
!
Examples!
experiences!
- As a Lego customer you can put together your own very special
box of Lego bricks. It might also require you to shift from a
functional appeal to an emotional one (see card number 13).!
- The iPhone is not simply a phone, itʼs an experience.!
- UPS went from shipping boxes to offering supply chain
management solutions.!
- Emirates offers business class passengers the service of being
picked up and driven to the airport. Itʼs not only the flight that
counts, but getting to the plane is part of the solution and
customer experience. !
© 2010 Marc Sniukas!
www.sniukas.com!
- 15. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
The difference between complementary products (see card
number 12) and bundles is that with bundles thereʼs no choice.
You get the bundle and not the separate products.!
!
Questions:!
- Which services and/or products could you use along yours?!
- Which does the customer buy anyhow?!
- Which bundles would make the customerʻs life easier?!
- What is the total solution that customers want?!
- Can you offer additional services and/or prodcuts for different
stages of the buyer cycle? (see card number 18)!
#12
Examples!
- Computers + Operating System!
Offer bundles! - McDonaldʻs meals!
- Mobile Phone + contract!
© 2010 Marc Sniukas!
www.sniukas.com!
- 16. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Think Apple. People donʼt buy the iPhone simply because of itʼs
functions. Indeed the first version was not even state of the art!
But thatʼs not what Apple was: It was much more about being
cool! !
!
#13 Switch
Questions:!
- What is the appeal of your industry?!
- Does it focus more on the functional aspects of the product? On
customer service? Or on emotions?!
- What if you switched your appeal to the opposite of the industry:
your appeal: !
!
!
What would that mean?!
functional Examples!
- Apple focuses above all on the emotions!
- New Windows 7 campaign!
- Blackberry “Love what you do” campaign!
versus
emotional!
© 2010 Marc Sniukas!
www.sniukas.com!
- 17. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Customers donʻt simply buy a product. They buy it for a purpose.
They want to satisfy a need or get something done.!
!
Questions:!
- What are the customersʼ needs and wants?!
- What is the job they are trying to get done?!
- What is the problem they are trying to solve?!
- What job can customers not get done?!
!
!
#14
!
Examples!
- Starbucks: Itʻs not about the coffee, but the atmosphere.!
Focus on the
job to be done!
© 2010 Marc Sniukas!
www.sniukas.com!
- 18. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Instead of adding new features all the time think about what
elements you can eliminate, because nobody needs them
anyway, which ones you can reduce below industry standards,
which ones to raise and which ones to create.!
!
#15
Questions:!
- What factors should be reduced well below the industry
standard?!
- What factors should be raised well beyond the industry
standard?!
Selectively - What factors should be created that the industry never offered?!
- What factors should be eliminated that the industry has taken for
granted?!
- Is consumption constrained by any factors, which might be
eliminate,
reduced?!
!
!
Examples!
reduce, raise - Nintendo Wii: Compared to the Xbox or the Playstation you canʼt
play DVDs or Blurays, no storage (eliminate), graphics are a lot
less powerful (reduce), fun was raised and the new motion
control technology was created.!
and create! - Low cost airlines eliminated and reduce several parts of the
offering that certain customers did not want, need or value.!
© 2010 Marc Sniukas!
www.sniukas.com!
- 19. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
This might be a potential spot to get inspiration for additional
products and services, solutions and experiences. The questions
is why people might trade your products for substitutes from other
industries or strategic groups. Why do you prefer the car to the
train or a flight? !
!
Questions:!
- What other products do customers buy and/or use instead of
yours (when they are trying to get the same job done)?!
- What other products do non-customers buy instead of yours?!
#16
- What offerings do alternative industries have?!
- What offerings do other strategic groups have?!
!
Look at
!
Examples!
- ÖBB Railjet: the Railjet First Class brings the typical Business
Class experience from airlines to the train.!
substitutes! - Low cost airlines compared to train, bus or car.!
© 2010 Marc Sniukas!
www.sniukas.com!
- 20. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
!
Questions:!
- Which unique assets do you have and how can you use them
differently?!
- Which of your assets, capabilities, and core competencies are
#17
truly unique?!
- Which of those are valued most by current customers?!
- How could you offer your value proposition to other customers,
the industry hasnʻt thought of?!
- What can your assets be used for? (List everything you could do
Expand the with them!)!
- What do you use them for today?!
- What else, even completely unrelated to your current use, could
you use them for?!
use of your !
!
Examples!
assets and - McCafé: How could McDonaldʼs use its prime locations to attract
additional business? By offering a new solution: the McCafé.!
capabilities!
© 2010 Marc Sniukas!
www.sniukas.com!
- 21. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
1. Step: Think about the customer experience from
becoming aware of the product and buying it to the final
disposal.!
2. Step: What are the biggest obstacles for the customer in
each phase?!
#18
3. Step: What could you do to remove these blocks? !
Look at the
customer
experience!
© 2010 Marc Sniukas!
www.sniukas.com!
- 22. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
To analyse how you interact with your customers you might want
to think about the customer buying cycle, which typically includes
the following steps: (see card number 18)!
- Awareness of your offer!
- Evaluation of the offer!
- Purchase!
- Delivery!
#19
- Use!
- Supplements!
- Maintenance!
- Disposal!
!
Reinvent the Questions:!
- How do you reach your customers?!
- Do you rely on conventional channels?!
- Is every step of the buying cycle addressed by the channels you
customer
use?!
- How easy is it for the customer to reach you?!
- Which of these steps are covered by which channels?!
- Which interfaces/channels are owned by your company?!
- Which ones are outsourced?!
interface! - How aligned are our channels and processes with the needs of
the customers?!
- Do you offer co-creating experiences for the customers?!
!
!
!
Examples!
- Amazon to sell books.!
- iTunes to sell music and software.!
- Open Innovation to engage 3rd parties.!
© 2010 Marc Sniukas!
www.sniukas.com!
- 23. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Treacy and Wiersema have suggested the following three images
customers can have of your company:!
- “Smart shopper”, i.e. you focus on operational excellence!
- “Best brand”, i.e. you focus on customer intimacy!
- “Best product”, i.e. you focus on product leadership and
innovation.!
!
#20
Questions:!
- Whatʼs the image your customers have of your company, your
employees, and your products and services?!
- What would a change of image require?!
- Whatʻs the typical focus of your industry!
Reinvent your - Whatʻs the focus of your competitors?!
!
!
!
customer Examples!
- Direct banks: from a personal relationship to practically no
relationship.!
- Dell: from service and consulting to do-it-yourself.!
relationships!
- Hypermarkets: from personal service to do-it-yourself.!
- Juraxx low cost lawyers: from best brand to smart shopper.!
© 2010 Marc Sniukas!
www.sniukas.com!
- 24. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
New revenue streams could include going from selling a good to
renting or leasing it. Think about Hilti: Instead of only selling their
tools, Hilti gives you the option of renting them. The additional
services that come with this bring in additional revenues. Apple
introduced the App Store and iTunes to bring in additional
revenues.!
!
#21
Questions:!
- Which are your current revenue flows (Sales, Licensing,
Renting, Leasing, Usage, Subscription,…)!
- How could you use your assets differently (see card number 17)!
Invent new
- Do you sell variations (e.g. special editions) of your products?!
!
!
!
Examples!
revenue - Google: AdWords + Apps!
- Apple: iTunes + Apps!
- GE: Industrial + Financial Services!
- McCafé!
streams! - FlyNiki: preordered menus!
- Nine Inch Nails: not simply selling the music, but additional
products and special editions.!
© 2010 Marc Sniukas!
www.sniukas.com!
- 25. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Reinventing your pricing can be a powerful source of
differentiation. Pricing options:!
- Pay-per-use!
- Subscription!
- List price / menu price!
- Product feature dependent!
- Customer characteristic dependent!
- Volume dependent!
- Value-based!
- Bargaining!
#22
- Yield management!
- Auction!
- Reverse auction!
- Dynamic market!
Price
!
Questions:!
- Is your price affordable to the mass of customers?!
- Do you benchmark your prices against competition or alternative
industries?!
differently! - Is your price affordable to the masses?!
- Do you think cost plus or price-minus?!
- How can you creatively change your pricing? Going from fixed
pricing to dynamic pricing.!
- Can you offer a part of your offer for free and charge for more
advanced versions?!
!
Examples!
- iTunes: from buying a record to buying a song.!
- Google!
- EasyMotion: 1.- Euro for the rental car, financed by advertising!
© 2010 Marc Sniukas!
www.sniukas.com!
- 26. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
!
Questions:!
- Does your cost structure enable a strategic price targeted at the
masses?!
- What is the most expensive part of your business?!
- How can you drive it out?!
- Streamlining might be one option, another might be to outsource
or partner with a supplier that can offer the same service at a
lower cost.!
- How can you turn fixed costs into variable costs?!
#23
!
!
!
Examples!
Reinvent your - Dell/Amazon: low inventory cost due to high turnover and the
way products are sold.!
- Adecco: leasing human resources.!
cost base!
© 2010 Marc Sniukas!
www.sniukas.com!
- 27. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Think about people, technology, equipment, information,
channels, exclusive access to partnerships and alliances,
brands,...!
#24
Questions:!
- What is really a core competency you require to fulfill the
customersʼ needs.!
- What does the job for the customer? !
Re-assess - How well do the activities you perform balance and reinforce
each other?!
- What are really your key activities and processes?!
- Which one do you perform best and which one could you
your key
outsource?!
- Which are most critical to your business?!
- Which assets are most valuable to your business? !
- How could you use your assets differently?!
- How well do your activities fit internally and externally?!
activities, - How well do the activities reinforce each other?!
- Could you redesign core processes differently to improve
efficiency and effectiveness?!
- How can you either perform additional or eliminate unnecessary
steps in the value chain?!
assets and !
!
Examples!
processes !
- Nike: development and marketing inhouse. Manufacturing and
sales outsourced.!
- EasyMotion uses its main assets, the cars, not only to make
revenue by renting them out, but additionally by selling them as
advertising space.!
- Hilti not only sells its assets, but rents them including additional
services.!
- Dell/Amazon: eliminatation of retail.! © 2010 Marc Sniukas!
www.sniukas.com!
- 28. Value
Innova+on
Business
Model
Innova+on
Market
Innova+on
HOW!
Partnering can provide a fast way to drop cost, but the danger
#25
might be that you outsource a capability you might need at a later
stage. If you can lower your cost by buying standardized
components that donʼt provide any additional benefits to your
customers, you should certainly do so. Networks and the whole
Collaborate
ecosystem become increasingly important through open
innovation and engaging all stakeholders in co-creating
experiences.!
!
Questions:!
with - How well do you use your connections to suppliers, partners and
alliances?!
- Could you enhance your collaboration to create competitive
advantages?!
suppliers, !
!
Examples!
partners, the - Automotive industry: joint ventures to develop hybrid technology.!
- Travel industry: collaborations to offer customers a total solution.!
network and
ecosystem!
© 2010 Marc Sniukas!
www.sniukas.com!