BMI is a consulting firm that works with large organizations to conceive and validate new, game-changing business models.

1. The Four Actions to
Take Now to Escape
Ground Zero

2. Business Model
Innovations (BMI), is a
consulting firm that
works with large
organizations to
conceive and validate
new, game-changing
business models.

3. At BMI, we have seen
upstart companies with
revolutionary technologies
and concepts threaten the
revenues, profits—even
the existence—of
successful companies
across industries. When a
company is threatened in
this way, we say that the
incumbents are at… Ground Zero

4. Startup companies,
backed by billions of
dollars of venture capital,
are working tirelessly to
create disruptive change.
They are redefining
industry economics,
resetting the value
proposition, and disrupting
channels. These startups
are putting you at Ground
Zero and they may even
render your business
model obsolete.

5. In fact, companies and entire industries that found themselves
at Ground Zero have even disappeared, while the former
upstarts have become household names.
INNOVATORSGROUND ZERO

6. We work with companies
to implement a proven
methodology that helps our
clients create new business
models and escape from
Ground Zero.

7. Our firm, BMI, is based in
Silicon Valley, home to
thousands of business model
innovators. The partners in our
firm have been entrepreneurs
as well as consultants. We
know how to create innovative
technologies and business
models because we have built
successful Silicon Valley
companies.
We can help you use Silicon
Valley strategies and tactics to
become an innovator and not
just a target at Ground Zero.

8. If your company is already at
Ground Zero, or can see it
coming, then there are four
actions your organization needs
to take to escape.
But before we talk about those,
let’s review some lessons
learned about surviving Ground
Zero. The following example
comes from the familiar, fast
changing video rental industry.

9. Between 1997 and 2010,
this industry saw VHS give
way to DVDs, and then
DVDs gave way to video
streaming. Each of these
shifts placed start-ups and
titans alike at Ground Zero.
Veterans of these industry
wars have a very important
lesson to pass on. It may
sound all too familiar.

10. “Management at Blockbuster
and Hollywood found it very
hard to step back and see the
strategic picture. They lost
focus on the core value
proposition: to provide
consumers with convenient,
timely access to movies. They
fought to protect the store,
while all around, the world was
changing. When the response
came, it was too little, too
late.”
- CFO, Hollywood
Videos

11. “At first, we were easy to
ignore. During this time, we
validated the value
proposition, fulfillment and
the core economics. All this
was hard and took time.
By the time Blockbuster
took notice, Netflix was
years ahead on
technology and know how
AND we had the
momentum.”
- Jim Cook,
Netflix employee #6
and current CFO, Mozilla

12. Now, let’s discuss in detail the four
actions you need to take to become
a technology and business model
innovator and escape Ground Zero.
These four steps comprise a
scientific approach to planning,
developing, and implementing
new business models.
4 Actions

13. Action No. 1
Build compelling value propositions
based on deep insights.

14. Compelling value
propositions come from
Deep Insights. Deep
Insights most often come
from two sources: an
awareness of tectonic forces
that impact your industry
and data mining, especially
for unmet needs.

15. Tectonic forces include
demographic shifts, technology
shifts, regulatory shifts, even
changes in the competitive
landscape.
Data mining for latent, unmet
needs means scouring data sets
such as customer databases,
supplier data, transaction data,
or historical data. Data mining
reveals customer habits and
practices, usage patterns and
attitudes, and key buying
factors.

16. Disciplined and
careful analysis of
tectonic forces,
combined with data
mining, produces
Deep Insights that
lead to compelling
Value
Propositions.

17. For example, the initial, compelling value proposition for
Netflix—web-based, DVD rental through the mail—was
built on three Deep Insights:
①A clear understanding of consumer needs:
fast, convenient, easy access to video content
with no late fees.
②Timely awareness that the tectonic shift from
VHS to DVD opened up a whole new channel:
through-the-mail.
③A detailed understanding of the lifecycle of a
DVD disc – both physically and financially.

18. Action No. 2
Design new business models
based on a compelling value proposition.

19. Compelling value propositions are the entry points to new business
models. They must address value creation, value capture and value
chain entry. It requires a number of iterations to get these right.
Value
Created
Value
Capture
Value
Chain
Entry
Value
Prop
New
Business
Model

20. Action No. 3
Validate new business models.

21. New business models must be
validated through testing and
experimentation. This step
concludes with a robust
business plan with assumptions,
financials, risk assessments,
and key metrics.

22. The validation stage can
include market tests,
consumer focus groups, a
limited market roll out, or a
time limited trial. It usually
includes speaking with
potential partners,
suppliers, and users.
Validation always requires that
objectives are set and that
progress against those
objectives is tracked.
Validation also requires the
meticulous collection and
thorough analysis of the data.

23. The first three actions
that we have just
outlined, must be
done outside of the
organization, with
full support of the
executive team.

24. The reason for this is that
a corporation’s strategy
and culture act like an
immune system. They
defend against threats
from the outside, threats
to the current business
model in particular.
When the inevitable
moment comes when a
CEO must choose
between defending a
declining core or
investing in a new,
unproven business
model, the immune
system reacts.

25. “Getting new initiatives
working inside a well-
functioning (for now)
business model is almost
impossible. Product
innovation occurs well inside
a company because it is
within the existing business
model. Innovation outside
the existing business
model should occur
outside the company’s
walls if it is to have a
chance of succeeding.”
- CFO,
Hollywood Videos

26. Action No. 4
Bring validated new business models back into the
organization for the Ramp & Run phase.

27. Once the new business
model has been validated, it
needs to be brought back
into the organization for the
Ramp & Run phase.
During the Ramp & Run
phase, an organization takes
the new business model and
scales it by deploying it
through its distribution
channels.

28. We find that organizations
are extremely adept at
successfully rolling out
proven concepts.
Once the new business
model has the financial and
political support of executive
management, most
organizations are well-
positioned to incubate and
grow the new business
successfully.

29. BMI collaborates with your
organization in the first three
stages we presented above:
Value Proposition, Business
Model Design + Validation.
Compelling
Value
Proposition
Business
Model
Design
Validation Ramp & Run

30. With our experience,
track record, and proven
methodology, we’re certain
we can help you, as we’ve
helped other corporations,
survive—and then thrive—
when they’re at Ground
Zero.

31. A number of companies at
Ground Zero have learned the
hard way. They waited too
long to begin the discussion.
You can avoid this pitfall by
clicking our logo to schedule a
free, initial consultation with
one of our partners.
New Beginnings