1.
BREAKING THE
DOMINANT LOGIC
How to design and implement
superior business models in
an established company
Felix Hofmann, CEO of BMI Lab AG, Sept 18, 2019
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2.
The BMI Lab
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The BMI Lab (Business Model Innovation Lab)
is a spin-off of the Institute of Technology
Management at the University of St.Gallen.
We believe that tomorrow's businesses need
sustainable business models and advanced
innovation capabilities.
Peter Brugger

3.
What is business model innovation
Why it matters for established companies
Six obstacles to BMI in established companies
I’ll leave you with:
• A methodology to successfully design and test new business
models
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Agenda

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The “Wait-and-See-
Problem”

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Toys R Us faces bankruptcy, putting
3200 jobs at risk The Guardian, Feb 23, 2018

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Toys 'R' Us has accused
Amazon.com of breaking the
contract that gave Toys 'R' Us the
right to be the exclusive toy and
game seller on Amazon's site.

8.
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“If you don't cannibalize yourself,
someone else
will.”
Steve Jobs

9.
Why is it so Hard to
Innovate an Existing
Business?
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10.
Challenge #1
Lack of Urgency

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Challenge #2
Thinking in Business
Models

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Definition Business Model Innovation –
The Magic Triangle
<
Value
Propositio
n
Revenue
Model
Value
Chain
What?
How?Why?
Who?
Why is it
profitable?
What do you offer
to the customer?
Who is your target
customer (segment)?
How is the value
proposition created?

13.
A Holistic Innovation Approach
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“Business Model Innovation means
changing
at least two of a business model’s
dimensions.”

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Challenge #3
Disrupting the Dominant
Industry Logic
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Revenue 2006: EUR 400 m
Revenue 2012: EUR 500 m
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CEWE DIGITAL
Digital
Analog

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Challenge #4
Missing Systematic
Approach
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5 years of intensive
research –
Detailed analysis of more
than 250 successful
business model
innovations in the last 50
years

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BMI Pattern Cards

19.
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Business Model Pattern «Razor and
Blade»
Apple
iTunes
Nestlé
Nespresso
Nestlé
Special.T
Nestlé
BabyNes
Gillette Hewlett-
Packard
Standard
Oil
Company
Based on product + consumables
1880 1904 1984 1986 2003 2010 2012

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Challenge #5
Commitment for Long-
term Success
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Example Mibelle Group
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The Mibelle Group is the third-largest
force in the European proprietary
brand market and part of the MIGROS
Group.
Serving the largest Swiss retailer
MIGROS, the company is a full-service
customer brand manufacturer.
The Company

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Workshops with BMI Lab
BMI Lab guided Mibelle through the Initiation, Ideation and Integration
phases of the Business Model Navigator and provided coaching during
Implementation.

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This process resulted in 19
business model ideas.
Business model
concepts
Six of these ideas were chosen to be
developed into business model
concepts.
Business model
ideas
Ideation Process

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By providing an online laundry service,
Tick offers a convenient solution
including
• pick-up,
• cleaning as well as
• delivery of clothes.
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What was Different With This Idea?

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Joelle

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66 Practices to Develop Innovation
Culture Agility
Inspiration
Motivation
Alignment
Transparency
Empowerment
The
Innovation
Culture
NavigatorTM

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Challenge #6
Resource Allocation
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90%
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90% of all startups fail. Source: „Startup Genome Report 1 Why Startups Succeed"
90% of ideas change until success: Source: Bhide, A.V. (2000). The Origin and Evolution of New Business.
Percentage of Startups That Fail

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BMI: Affordable Loss
Management: Expected
Return
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?
?
Affordable Loss

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1. Required Profits
2. Required Revenues
3. Number of Units
4. Marketing Budget
5. Other Direct Costs
Return on Sales?
Price?
CAC?
Cost Buffer
7. Anticipated Costs
6. Indirect Costs
2. Allowable Costs
Reverse Financials are based on Discovery-Driven-Planning developed by Rita
Gunther McGrath and Ian C. MacMillan
Reverse Financials

32.
Challenge #7
Evidence-based Decision
Making
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90% 90%
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90% of all startups fail. Source: „Startup Genome Report 1 Why Startups Succeed” 2014
90% of ideas change until success: Source: Bhide, A.V. (2000). The Origin and Evolution of New Business.
Percentage of Startups That Pivot

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Business Model InnovationManagement
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Flexible Goals

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Business Model Testing Cycle

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Testing Cards

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Our Methodology

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St.Gallen Business Model NavigatorTM
DESIGN REALIZATIO
NImplementatio
n
Test the business
model
Test
Adapt
Try and Learn
Market
Introduction
Iteration
Initiation
Analyze the
ecosystem
Players
Change
Drivers
Ideation
Adopt the patterns
Iteration
Similarity
Confrontation
55+ Patterns
Integration
Detail the business
model
I d e a s e l e c t i o n
Internal
Consistency
External
Consistency
Iteration
What?
How?Why?
Who?
Old
Business Model
What?
How?Why?
Who?
Old
Business Model
What?
How?Why?
Who?
New
Business Model
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39.
40
Superior Business Models
1
High
Low
External Scalability
Low
High
Internal
Scalability
1
3
St. Moritz
Skiing
Resort
Steinway
& Sons
2
2 3
Uber
Zalando
PAN AM
Stanford
Online
DB
Navigator
iPhone
Google
Search
1. Pick a Big and Growing
Market
2. Think of Market Constraints
3. Target the Right Customers
4. Do Something That is
Relevant
5. Use External Resources
6. Develop and Monitor a
Virtuous Cycle
7. Add Virality to Your
Business Model
8. Use Algorithms and
Automation
9. Find the Right People to
Scale

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Outlook

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• Deep dive into tools (Patten Cards, Reverse Financials, Testing
Cards etc.)
• Scalability of Business Models and Platforms
• Business Model Testing
• How to Manage Innovation Culture
• Sustainable and Circular Business Models
… let me know what topic you’d prefer!
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Upcoming Webinars

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• https://bmilab.com/workshops
• München, 7 & 8 November 2019, Deutsch
• St.Gallen, 19 & 20 November 2019, English
Super Early Bird Price (€1800 2200) available until September
27, 2019
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Upcoming Workshops and Q&A

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Contact Me & Learn More
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bmilab.com
https://www.linkedin.com/in/felixhofmann1/