Business Development Forum 2012 - Business Model Innovation

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Business Development Forum 2012 - Business Model Innovation

  1. 1. Business Model Innovation Business Development Forum Morten Hejlesen, May 24 2012Mail: moh@implement.dkPhone: 4138 0012
  2. 2. A challenging test of your observation skills… 2
  3. 3. Through single-minded focus on rigid measurement and data, we will only be able to imagine the future as an extrapolation of the past ”The potential market for ”If I had asked people what wireless phones could be they wanted, they would 900.000 phones by 2000” have said faster horses.” McKinsey & Company, 1980 Henry Ford, 192325 May 2012 33
  4. 4. Close the growth gap through exploiting the core and exploringadjacencies as well as transformational growth optionsRisk-taking and big bets are rewarded... ...but only when balancing your innovation efforts 100% 100% 10% 14% 90% 90% 80% 38% 80% 20% 70% 70% 70% 60% 60% 86% 50% 50% 86% 40% 40% 70% 30% 62% 30% 20% 20% 20% 10% 10% 14% 10% 0% 0% Market launches Total revenues Total profits Allocation of resources Total returns Incremental innovation Radical innovation Core growth Adjacent growth Transformational growthSource: Kim & Mauborgne (2004): Value Innovation, HBR Source: Nagji & Tuff (2012): Managing Your Innovation Portfolio 4
  5. 5. The prerequisite for sustained high performance is the capability tocontinuously identify and develop new opportunities Continuous alignment and Analytical systems and individual realignment of specific tangible capacities to learn and to sense, and intangible assets through filter, shape and calibrate strategic agility opportunities. Transforming Sensing Seizing Enterprise structures, procedures, processes and incentives for seizing opportunitiesSource: David Teece (2009) 5
  6. 6. A challenging Innovation Intent pushed Grundfos to move beyondconventional wisdom and to explore new paths to growth 6
  7. 7. Danish pumps on an African adventure makes cleandrinking water a sustainable business opportunity 7
  8. 8. Rethink the scope of innovation to move beyond new productdevelopment and to seize sustainable competitive advantage ”Strategic fit among many activities is fundamental not only to competitive advantage but also to the sustainability of that advantage. Positions built on systems of activities are far more sustainable than those build on individual activities.” Micheal Porter, 1996, What is Strategy? 8
  9. 9. Innovation must be informed by a deep dive into multiple knowledgeperspectives and exploring all business model components Context: Trends and technologies Internal perspective Value perspective External perspective Customer Capability: Capabilities and resources Key processes relationships Customers: Users and markets Customer Partner network Value proposition segments Key resources Channels Cost drivers Revenue streams Financial perspective Competitors: Industry structure and value chain 9
  10. 10. Leverage innovation across all the components of the businessmodel to explore and exploit new growth options New Expand the market Create new market Customers Existing Rethink existing Disrupt existing market market Incremental Radical Business model change 10
  11. 11. Exploring the business model offers a range of growth opportunities Rethink existing market Expand the market Disrupt existing market Create new market • Improve performance along • Rethink industry segmentation • Develop ‘good enough’ solutions • Target non-consumers through ‘traditional attributes’ to target the variables, geographic focus or for the ‘low end’ of overserviced low performance along ‘traditional ‘high end’ or rethink the value dominant logics of the industry to customers or create a new niché attributes’ and rethinking all proposition to turn products into create new market components of the business • Competition: Existing solutions model • Competition: Existing incumbents • Competition: Existing incumbents and non-consumption • Competition: Non-consumption • Risks: Existing incumbents or incumbents • Risks: Existing incumbents and niché strategy fails • Risks: Market adoption • Risks: Existing incumbents market adoption 11
  12. 12. The Segway was intended to revolutionize human transportation - butturned out to be an excellent case of failing and learning slowly “I would stake my reputation, my money and my time on the fact that 10 years from now, this will be the way many people in many places get around. If all we end up with are a few billion-dollar niche markets, that would be a disappointment. It’s not like our goal was just to put the golf-cart industry out of business” Dean Kamen, CEO and Founder, Segway 12
  13. 13. To reduce risk, we need to accelerate and strengthen learning in theearly phases of the innovation process Level Knowledge Significance of decision Time 13
  14. 14. Development of new business models is based on an iterative frontend innovation process and a comprehensive toolbox Abstract Direct Design Generate insights Create ideas and solutions Analysis Synthesis Define Frame the challenge Discover Develop Collect data and knowledge Test and feedback Real 14
  15. 15. A shared set of working principles for cross-functional andmultidisciplinary business model innovation teams Work creatively & knowledge-based Foster co-creation & collaboration Be iterative & learning-oriented Assume a prototyping & high touch mindset Stretch goals & challenge conventions Apply lean development principles 15
  16. 16. Discovery Driven Innovation is about investing a little to learn a lot -in orden to get to ’plan B’ No business plan survives first contact with customers - so search for a business model 16
  17. 17. An innovation is fundamentally a set of “untested hypotheses” thatshould be implemented assumption-based and learning-oriented Assumption N Rapid prototyping and customer co-creation Assumption N-1 Adjustment Adjustment Pilots and in-market Exit 2 Assumption … learning launches Exit 1 Assumption 3 Adjustment Evolutionary entry and expansion strategies Adjustment Assumption 2 Risk reducing exit strategies Adjustment Assumption 1 17
  18. 18. Build a disciplined innovation engine into your organisation tosupport innovation on all levels and across all business areas Leaders and organisational structures aligned around a shared innovation intent and innovation strategy Leadership & organisation Portfolio and project processes that Processes Culture Collaborative, open and facilitate innovation supported by explorative culture supported by tools and efficient work practices & tools & values incentives that reward innovation and new ideas People & skills A critical mass of people across the organisation proficient in innovation approaches and tools 18
  19. 19. Hypotheses about the high performance corporate businessdevelopment units of the future 1. Must drive the creation of a company-wide innovation intent and establish firm resource allocation structures that balance core, adjacent and transformational innovation 2. Should develop strong competences for integrative thinking combining both traditional analytical tools and innovation tools based on intuitive ways of thinking 3. Be a driving force in all transformational innovation initiatives across business units that require unique business development skills and high risk tolerance 4. Act as innovation leaders on all levels in order to facilitate cross-functional collaboration and to unleash the potential of innovating across all business model components 5. Build capabilities for spotting opportunities across the operating units and become designers of ‘smart experiments’ to test and learn fast about growth opportunities 19
  20. 20. Industry does not matter when it comes to performance– even the most obscure industries can be insanely profitable... 20
  21. 21. Inspiration for your work on creating new business models and turbo-charging innovation in your organisation 21

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