25 ways to reinvent your business sniukas

25 Ways to Value Innovation ! Reinvent your Business Model Innovation! Market Innovation! Business! By Marc Sniukas! www.sniukas.com!

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!

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!

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!

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!

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!

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!

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!

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!

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!

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.! #8  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 traditionally been neglected because the industry focused on a particular type of customer.! Segment Questions:! - When is your product being bought?! - In which circumstances do people really use it?! according to - For what purpose is it used in these circumstances?! Examples! circumstance - Looking at McDonaldʼs the need might primarily be to satisfy 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.! s! - 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!

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!

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!

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!

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!

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!

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!

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!

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!

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!

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!

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!

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!

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)! - Do you sell variations (e.g. special editions) of your products?! Invent new 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!

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!

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!

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 outsource?! your key - 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 assets and steps in the value chain?! 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!

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!

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A presentation by Marc Sniukas! Strategy & Innovation Expert.! Management Consultant & Researcher.!

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25 ways to reinvent your business sniukas

by Marc Sniukas

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