From an idea to a great and sustainable business model

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Material for entrepreneurs from a masterclass at TiasNimbas Business School, The Netherlands, Apri 2011 in association with Philips

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From an idea to a great and sustainable business model

  1. 1. From a business idea to asustainable business modelThe Art of Strategic Innovation!Masterclass TiasNimbas Business SchoolOpen Innovation Entrepreneurship April 18th 19th, 2011 Dr. oec. Patrick Stähler
  2. 2. „Your expectation?“
  3. 3. A word of warning This masterclass might begood enough in its ownway, but it is a mightybloodless substitute forstarting a new venture inreal life. Adopted from Robert Louis Stevenson
  4. 4. Agenda Monday April 18th Tuesday, April 19th Morning Session (9-12.30) ! Get-to-know your ideas (Present your idea to ! How to find customer insights as a source of an the group in 5min) innovative business model ! It’s not the product, stupid! The importance of ! Customer development step in step with business model for innovation and startups product development ! What is an innovation? ! Business model innovation or the art of being ! What is a business model? different Lunch Break 12.30-13.30 Afternoon Session (13.30-17.30) ! First pitching to the group and feedback ! Business Model Design process tools ! It is the customer, stupid! The importance of the ! How to write a good business plan value proposition and the jobs you solve for ! Wrap up your customers ! Preparation of the pitching in the evening Evening (starting 18.15) Reception and Live Pitching
  5. 5. 1st part Innovation and Your Business Model
  6. 6. The Reality: Nobody waits for you! We have too much of everything! We have too much choice! We are bombarded by advertising and commercials!
  7. 7. Why should any- body care about your idea?What is the purpose of your business?
  8. 8. 1.  Make Meaning Great idea s What is your meaning? for starti ng something !2.  Make Mantra Source: Great ideas for starting something (by Guy Kawasaki) Take the meaning and make a mantra out of it 3.  Get Going Start creating and delivering, not pitching, writing or planning 4.  Define your business model The whole business model counts, not just the product 5.  Weave a Mat (Milestones, Assumptions, and Tasks)
  9. 9. «What is the biggest innovation in your firm?»
  10. 10. What are innovative companiesfor you? What can we learn from them?
  11. 11. „Which innovation expanded the global addressable market for mobile communication the most?*“ *After the invention of mobile telephony itself
  12. 12. Which innovation made this possible?!Dr. Patrick Stähler | 12
  13. 13. A smal l chang opened e in bill new ma ing Africa, rkets in Asia, L Americ at a, Yout in hs, etc ..!Prepaid
  14. 14. «But what is an innovation?»
  15. 15. Technological Innovation
  16. 16. Process Innovation
  17. 17. Process Innovation
  18. 18. Product Innovation
  19. 19. Business ModelInnovation
  20. 20. The magicformular for Customer utility great firms customer + value price company + profit costs
  21. 21. Would yo say this u dare to ? would b What e of your the answer boss?!“Well, I know we are in acommodity market where theprice is key, but I believe we cansell the good for 10x as muchas before.”
  22. 22. The Transistor was invented at theimportance of end of the 1940s businessmodel thinking!
  23. 23. But SONY made in 1955 a successfulproduct out of the transistor anddeveloped a successful business modelout of it for the next 50 years.
  24. 24. Do you know this man? Hans Rausing = Inventor of theTetra Pack Systems Dr. Patrick Stähler | 26
  25. 25. He could have sold hispackaging machines, but…
  26. 26. But he sold packaged services Tetra Pack is not a product innovation but an innovation of an innovative business model!
  27. 27. Business Modelinnovation»  Beats Technology»  Beats Product»  Beats Process
  28. 28. The business model creates value not technology or aproduct itself technology X value / utility creates enables business model defines business strategy
  29. 29. To develop a business model with a purpose, isTo Do theright thingsAnd not to do things right
  30. 30. Strategy is often seen as the corporate strategy of a firm, but the businessstrategy decides upon success or failure in the markets Owner Strategy Corporate Strategy Business strategy Business Strategy Product Product Product strategy 1 strategy 2 strategy .. That is where the business is! That is were innovation should start.!
  31. 31. Awareness Test
  32. 32. „What is a business model?“
  33. 33. Are you aware o f your DN A?!The business model is theDNA of your business
  34. 34. The business model givesmeaning to your employeesand customers
  35. 35. The purpose ofa business is tocreate customers. Peter Drucker
  36. 36. 1.  What value/ benefit do we create for whom? 2.  How do we do it? 3.  How do we earn money? 4.  What values do we pursue?
  37. 37. Now, we need a common language for describing a business model Dr. Patrick Stähler | 40
  38. 38. Components of a business model Value Proposition What value or benefit do we create for our customers and partners? Value Architecture How do we create the value? Revenue Model How and with what do we earn money? Values/ Culture What values do we pursue?
  39. 39. „What industry are we in? Who are our competitors? “ Dr. Patrick Stähler | 42
  40. 40. „In which industry are we in? “ Dr. Patrick Stähler | 43
  41. 41. „That was the job the customer “ wanted to do. Dr. Patrick Stähler | 44
  42. 42. Value Proposition/ customer Wertschöpfungsarchitektur customers Value Proposition/ Kunden Angebot Distributionskanäle Kunden §  Wie sieht mein Angebot §  WhoWie erreicht das Angebot §  are our §  Wer ist mein Kunde? aus? meine Kunden? §  Welchen „Job“ customers? übernehme ich für §  What job do we solve meinen Kunden? Wertschöpfungskette for our customers? §  Was sind die wichtigsten Schritte der Aktivität 1 Aktivität 2 Aktivität 3 Aktivität 4 Kunden Aktivität 1 Nutzen Wertschöpfung? §  Welchen Nutzen stifte ich für meinen Kunden? value proposition §  Welchen Nutzen stifte Kernfähigkeiten Partner ich für meine Partner? §  Welche Kernfähigkeiten §  What value do we create §  Welche Partner brauche ich? benötige ich? for our customers? §  What value do we create for our partners? Ertragsmodell Kostenstruktur Ertragsquellen §  Die Kostenstruktur wird durch §  Womit verdiene ich die Wertschöpfungs-architektur Geld? festgelegt. Kultur/ Werte Führungsstil Beziehungskultur Werthaltung §  Welchen Führungsstil §  Wie gehen wir §  Welche Werte prägen uns? pflege ich? miteinander um?
  43. 43. “To refresh the world”
  44. 44. “To put a computer on every desk and in every home”
  45. 45. “To organize the world’s information and make it universally accessible”
  46. 46. Wertschöpfungsarchitektur Value architecture Value Proposition/ Kunden Angebot Distributionskanäle Kunden §  Wie sieht mein Angebot offer §  Wie erreicht das Angebot distribution architecture ist mein Kunde? §  Wer aus? meine Kunden? §  Welchen „Job“ §  What is our offering? §  How do we reach our übernehme ich für meinen Kunden? customers? Wertschöpfungskette §  How do we communicate §  Was sind die wichtigsten with our customers? Schritte der Aktivität 1 Aktivität 2 Aktivität 3 Aktivität 4 Kunden Aktivität 1 Nutzen Wertschöpfung? value chain §  Welchen Nutzen stifte ich für meinen Kunden? §  What Kernfähigkeitenare our value Partner §  Welchen Nutzen stifte ich für meine Partner? §  Welche Kernfähigkeiten steps? creating §  Welche Partner activity 1 activity 2 activity 3 activity 4 customer activity §  What is our value brauche ich? benötige ich? chain? core capabilities partner Ertragsmodell Kostenstruktur Ertragsquellen §  What are§ the Kostenstruktur wird durch Die core §  Which partners do ich §  Womit verdiene die Wertschöpfungs-architektur capabilities we need? festgelegt. we need? Geld? Kultur/ Werte Führungsstil Beziehungskultur Werthaltung §  Welchen Führungsstil §  Wie gehen wir §  Welche Werte prägen uns? pflege ich? miteinander um?
  47. 47. Revenue model cost structure sources of revenue §  Cost structure is §  With what do we defined by the value earn money? architecture
  48. 48. Culture/ values leadership style relationship style values §  What leadership §  How do we §  What values do style do we have? interact with each we pursue? other and the customer?
  49. 49. What business are we in? Our business model Value architecture Value Proposition/ customer offer distribution architecture customers §  What is our offering? §  How do we reach our §  Who are our customers? customers? §  How do we communicate §  What job do we solve with our customers? for our customers? value chain §  What are our value creating steps? value proposition customer activity 1 activity 2 activity 3 activity 4 §  What is our value chain? activity §  What value do we create for our customers? core capabilities partner §  What value do we §  What are the core §  Which partners do we create for our partners? capabilities we need? need? Revenue model cost structure sources of revenue §  Cost structure is defined by the §  With what do we earn value architecture money? Culture/ values leadership style relationship style values §  What leadership style do §  How do we interact with §  What values do we we have? each other and the pursue? customer?
  50. 50. What business are we in? Our business model Value architecture Value Proposition/ customer offer distribution architecture customers §  What is our offering? §  How do we reach our §  Who are our customers? customers? §  What job do we solve for our customers? value chain §  What are our value creating steps? value proposition customer activity 1 activity 2 activity 3 activity 4 §  What is our value chain? activity §  What value do we create for our customers? core capabilities partner §  What value do we §  What are the core §  Which partners do we create for our partners? capabilities we need? need? Revenue model cost structure sources of revenue §  Cost structure is defined by the value architecture §  With what do we earn money? Culture/ values leadership style relationship style values §  What leadership style do §  How do we interact with §  What values do we we have? each other and the pursue? customer?
  51. 51. 2nd part Develop Your Business Model
  52. 52. Use the can vasto develop y ourbusiness mo del!
  53. 53. Checklist for writing your business model §  Be specific §  Keep it simple §  Self-explanatory §  Focus on the relevant points §  Do not reinvent the world
  54. 54. Checklist for positioning your business model §  differentiated §  customer-centric §  specific §  better narrow than broad §  relevant §  based-on core capabilities
  55. 55. Innovation is all about beingdifferent
  56. 56. But if everybody is doing hesame, you have to findsomething else
  57. 57. Optimal is when differentbusiness models exists and allhave devoted customers
  58. 58. Checklist for writing your business model Complete this sentence: If your organization never existed, the world would be worse off because ____________________________ ___________________________________________
  59. 59. Please start !
  60. 60. 3rd part The Art of Pitching
  61. 61. The most salient phrase for an entrepreneu r!I pitch,therefore I am
  62. 62. Know your audience for the pitch Pitch to Sales pitch to Investor‘s pitch partners customers
  63. 63. What do you do? What is a good pitch for Problem you solve investors? Your solution benefit for the customer Your business model (the essentials) Your competitors Underlying magic (uniqueness) Management Team Key Financials Current Status, timeline
  64. 64. What do you do? What is a good pitch forinvestors? (short version) Problem you solve Your solution benefit for customer Your business model (the essentials) Underlying magic (uniqueness) Key financials Current Status, timeline
  65. 65. From a business idea to asustainable business modelThe Art of Strategic Innovation!Masterclass TiasNimbas Business SchoolOpen Innovation Entrepreneurship April 18th 19th, 2011 Dr. oec. Patrick Stähler
  66. 66. «Everybody wants to be innovativ: But what is an innovation?»
  67. 67. 80 devices in Germany
  68. 68. 1 device
  69. 69. Innovation is all about beingdifferent
  70. 70. But if everybody is doing hesame, you have to findsomething else
  71. 71. Optimal is when differentbusiness models exists and allhave devoted customers
  72. 72. The Case
  73. 73. At the beginning of the 1990s the world in the power tool industry was inperfect order ▪  Established brands in a growing, European market ▪  Competition was well defined and Bosch was the uncontested market leader
  74. 74. Die Ausgangsituation And then the Chinese came along….. ▪  Over 200 new competitors in a short period of time
  75. 75. …and the market stagnated at the same time.
  76. 76. Dire consequences: A steep decline in the average price per sold tool and…. 5,9 Sales(Mio. units) 3,8 307 Sales (Mio. Euro) 329 88 Ø – price in Euro 78 69 65 64 67 62 58 56 52 93 94 95 96 97 98 99 00 01 02 Source: GfK Do-it-yourself chains in Germany: 1993 until 2002
  77. 77. … and declining market share for the established brands and exponentialgrowth for the no-names and trade brands Market Share Powertools (Germany) 100% 6 27 29 33 No Names Trade Brands Established Brands 95 73 71 67 0% 1991 2000 2001 2002 Source: GfK, Do-it-yourself shops ▪  Strong increase of market share for no-names and trade brands ▪  Bosch Power Tools DIY 2002 with a market share of 33% but loss making
  78. 78. Simple task from your board: §  Defend market leadership §  Improve profitability
  79. 79. Which directions should we take? Dr. Patrick Stähler. Leuphana University Lüneburg 82
  80. 80. How about this crazy idea? “ How about making a power tool which is much weaker than the last generation but we make it also very handy and nicely designed. For that we charge a premium and market it to people who are not really into DIY. ” “ Great idea, isn’t it? ”
  81. 81. The solution: Tools for theIKEA Generation
  82. 82. Here is the solution for Bosch: the IXO, the first power tool for the IKEAgeneration ▪  Bosch introduces the IXO to the market ▪  Instead of following the traditional mantra of “better, stronger, faster” Bosch used a new battery technology to make tools smaller and more user friendly ▪  Instead of going for the traditional market of MMS (men, muscles and sweat) the IXO addresses the soft DIYs that assembles its IKEA furniture but not more ▪  Thereby, it addresses a new, previously unserved market of non-customers ▪  The IXO is a typical value innovation that opened up new, uncontested markets
  83. 83. Shift from technology to user orientation … prior 2002 since 2002 … Technologie §  §  User and usage orientation orientation Building and §  §  Building/repair, planning repairing and home decoration reliable, very powerful and §  §  reliable, easy to use long-living products products and services unemotional §  §  inspiring people technology orientation
  84. 84. The traditional market:MMS or Men, Muscles and Sweat
  85. 85. New market: Addressing previously non-customers like soft DIYlers andparticularly woman Dr. Patrick Stähler | 88
  86. 86. Changed consumer behavior The first power tool for the kitchendrawer
  87. 87. Bosch IXO is the world record holder in units sales 10 Mio. times so ld 2004 2005 2006 2007 2008 2009 2010 ▪  IXO was first power tool with Li-Ionen technology ▪  IXO is the best selling power tool in the world
  88. 88. Growing market share and highly profitable Market share in power tools (DIY Shops Germany) 27 29 33 35 34 38 38 No Name / Trade Brands 40 38 29 34 31 26 25 Other Brands Bosch 33 33 33 34 37 36 37 00 01 02 03 04 05 06 Source: GfK
  89. 89. OK, let’s do some analytics andtheory 92
  90. 90. Bosch used the new battery technology for a disruptive value innovation Sustaining innovation = Serving today’s customers ▪  Extend performance in direction of whatAdvantages of Li-Ion today’s customers like ▪  can be formed into a variety of shapes and sizes so as to efficiently fill available space in the ▪  Use the Li-Ion technology for stronger and devices more heavy duty tools ▪  lighter than other—often much lighter. ▪  do not suffer from the memory effect ▪  low self-discharge rate of approximately 5% per Disruptive innovation = Finding new customers month, compared with over 30% per month in with different needs nickel metal hydride batteries (Source Wikipedia) ▪  Use for a new market segments that values different performance parameters like usability, handiness than traditional customers ▪  Performance of tool will be worse in parameters current customers value
  91. 91. The strategy canvas of Bosch IXO: A clear profile of the value innovation 6 Traditional brands No-Name Bosch 5 4 3 2 1 0 -1
  92. 92. If you are in a market forgiants...
  93. 93. .. and you play with their rulesyou will get nowhere…
  94. 94. „…but if you can create your own rules of engagement than you can compete even in a market for giants. “ Dr. Patrick Stähler |97
  95. 95. Sounds t rival, but it isn ‘t!Business model innovation 1.  Value Innovation (We offer a better value proposition for an existing or new problem) 2.  Architectural innovation (We reconfigure the value chain so that a better value proposition emerges) 3.  Revenue model innovation (We change the revenue mix and thereby creating a better value proposition)
  96. 96. Fight eye diseases in India with mass production processes for low costs the basic idea behind Aravind Eye Hospitals §  The network of not-for-profit hospitals and vision centers performs 300,000 eye surgeries each year -- 70% for free -- using broadband connections to on-call doctors in city hospitals for instant diagnosis. §  Camps in rural areas screen thousands of patients weekly. We are going from village to village to provide eye care to the unreached, says Aravinds chairman, Dr. P. Namperumalsamy. §  Aravind won the 2008 Gates Award for Global Health. Dr. Patrick Stähler | 99
  97. 97. §  paramedics scanning §  middle class Indians §  eye surgery rual villages §  poor Indians §  highly standardized surgeries §  high division of labor §  good quality eye surgery §  affordable eye surgery even for the poor §  process know- §  Doing good for middle class indians how §  cross- subsidies between middle class §  low cost production system patients and the poor Dr. Patrick Stähler | 100
  98. 98. Dr. Patrick Stähler | 101
  99. 99. A deliberate change of a business model is a good strategy Starting points of businessmodel innovation §  All components of a business model are starting points for innovation §  Value Innovation §  Architectural Innovation §  Revenue Model Innovation §  At the end, all business model innovation must create more value to the customers
  100. 100. Case IKEA Value Architecture §  Customers have to transport and assemble the furniture by themselves, thereby saving IKEA to expensive steps in their value creating process Value Proposition §  At the same time a new value proposition is created: Instant satisfaction without waiting for the later delivery of the furniture Revenue Model §  Due to the high volume, furniture can be produced in an industrial fashion that leads to even lower production costs §  Therefore, the furniture can be sold for a much lower price
  101. 101. The Andermatt Challenge retreat of Swiss Army from Andermatt §  Andermatt was strongly depending on the Swiss Army but Army withdrew §  Tourism infrastructure is dated and no-investor could be found §  Reputation of area Urserental in Switzerland mixed due to Army time (cold, windy and very wet) Dr. Patrick Stähler | 104
  102. 102. + Dr. Patrick Stähler | 105
  103. 103. + Dr. Patrick Stähler | 106
  104. 104. The Challenge §  Traditional Swiss style touristic development did not work since just small investments eg. one hotel was not sufficient to bring the whole valley back to modernity §  Valley was seen as not-developable Dr. Patrick Stähler | 107
  105. 105. The “Alps Pharaoh” §  Sawiris with his company Orascom had the idea to build a whole resort into the Urserental not just one hotel Dr. Patrick Stähler | 108
  106. 106. Dr. Patrick Stähler | 109
  107. 107. Dr. Patrick Stähler | 110
  108. 108. Dr. Patrick Stähler | 111
  109. 109. The Orascom Innovation: Resort vs. single development Traditional Swiss Andermatt resort single development of §  §  plan for a whole one hotel or appartment resort ranging from golf, complex hotels to apartments No international §  §  Internationals sales of distribution networks apartments Villas §  International management short term profit from §  §  mid-term profit since some construction companies real estates stay with (traditional developers) Orascom problem of cold beds §  §  ??? Dr. Patrick Stähler | 113
  110. 110. Geberit – a product innovator? From plumber supply to under-the-wall systems for baths Dr. Patrick Stähler | 114
  111. 111. Geberit has developed an innovative business modelFrom plumbers’ supplier to baths renovator •  Plumbers are as well •  Homeowners, customers as the •  Plumbers distribution channel •  Plumbers are also reached via trainings •  Faster and more convenient renovation of baths•  Partner management •  Plumbers •  Plumbers have all•  Training of components from one plumbers source. High margin•  Higher costs due to more •  Higher revenues since plumbers expenses e.g. trainings know only „Geberit“Dr. Patrick Stähler | 115
  112. 112. Today’s job posting market. More sites than ever but that makes it muchmore difficult for the candidate to find the right job Too much!! y Too man t ! irrelevan ! postingsDr. Patrick Stähler | 116
  113. 113. Experteer.com: „To develop your carrier is already difficult enoungh, wefind the right jobs for your next carrier step.“ = Experteer odel revenue m ! innovation Customer Insight §  The offering on the web is too broad and too much noise §  How do I find the right job? Value Proposition for customer §  Experteer classifies the jobs on the different websites according to carrier level and salary §  Based on the her profile the user get‘s just the relevant job offerings. Revenue model dia Without new me §  Instead of the employer the user ess Experteer‘s busin pays for getting just the relevant job postings model would be impossible!
  114. 114. Business Models with a Actuall Sustainability y, notpurpose: Profit Impact Impact a new id ea.! Sustainability + old school Business Models non-profit with a purpose do-gooders non-profit for profit old school companies Dr. Patrick Stähler | 118 ˗ Source: Inspired by Alexander Osterwalder’s presentation: Business models beyond profits
  115. 115. Self-help, self-responsibility and self-administration the basic idea of Friedrich Wilhelm Raiffeisen Hermann Schulze-Delitzsch: Founder of the cooperative movement in Germany in the mid 1850s §  Cooperative banks for low-priced loans and advantageous investment opportunities for farmers to enable farmers to purchase agricultural equipment, fertilizers and livestock. §  The members then provided each other with mutual assistance. Dr. Patrick Stähler | 119
  116. 116. The mo dernMicro credits version in BangladeHelp for Self-help: sh!the basic idea of Muhammad Yunus §  Yunus set up the Grameen Bank in 1976 to give credit to the very poorest in his country, particularly women, in order to let them set up tiny businesses without collateral. The members then provided each other with mutual assistance.
  117. 117. Business Model Innovation How to find fresh customer insights
  118. 118. ! squareBack to derstand unone to on! what is going „What is a newspaper?* “ *from a business point
  119. 119. „ I buy a newspaper for news, comments and background stories!“ 1.  business ! content f or readers!
  120. 120. s!2. busines „ With the WSJ I can reach 30% of ders‘sa les of rea oattention t the decision makers! “ ! marketeers
  121. 121. „ I buy the paper since I am looking for a job.“ 3. busines s ! Matching demand and supp ly e.g. for jobs!Dr. Patrick Stähler |125
  122. 122. Where do we get a ValueInnovation from? Let‘s findnew customer insights as a Customers’starting point insight New value proposition Business model innovation
  123. 123. „How can we find customer insights? “
  124. 124. How about asking your customers?
  125. 125. How can we find systematically new customer insights? Buyer Utility Map Delivery/ Comple- Buy Usage Service Disposal Assembly ments§  Understand how the customers are buying, §  How can we improve the buyer‘s utility cycle? using and disposing the product §  Can we do more for the customer? §  Understand the whole lifecycle of customers‘ §  Can we leave something to the customer? utility Source: cp. Kim, W.C., Mauborgne, R., Knowing a Winning Business Idea when you see one, HBR Sep-Oct. 2000
  126. 126. Where can I start in the buyer utility map? – value The Dyson Vacuum Cleaner Dyson = ! innovationStarting Buy Delivery Use Complements Service Disposal Points Customer Productivity Simplicity Usability ++ Risk Image fun Enviromental friendlyness
  127. 127. Dyson vacuum cleaner – inspired by technologyThe vacuum cleaner for men Dyson = ! Value n! Innovatio Customer Insights §  Bags and filters get clogged and restrict airflow. Loss of suction §  Vacuum cleaners are marketed as household aids. Are there different segments? Value Proposition for customers §  Dyson vacuum cleaners have NO bags and do NOT get clogged due Cyclone technology. Therefore, NO loss of suction. §  Dyson positions itself as technical, highly engineered products that address men. Revenue Model §  Dyson demands premium prices for its vacuum cleaners.
  128. 128. Blacksocks – we save the world from socks problems PuttingStarting Buy Delivery Use Washing Disposal in pairs Points Customer Productivity Simplicity Usability Risk Image fun Enviromental friendlyness
  129. 129. Blacksocks – We solve the world from its socks problems ks = Blacksoc odel revenue m ! Socks subscription innovation (2001-2008) Customer Insights 40000 §  Buying socks is no fun 40000 §  Putting socks in pairs even less fun 20% market share! §  Good socks are a sign of „Being well dressed“ in Switzerland*! 30000 Value Proposition §  Blacksocks subscription solves all 25000 problems §  Always enough new socks §  No pairing needed since all socks are20000 identical 12000 Revenue Model 10000 §  Upfront payment 10000 §  Easy planning and negative working capital 0 2001 2002 2005 2008 * premium segment starting at 9CHF!
  130. 130. What is your first thought as an insurer?
  131. 131. What are the firstt thoughts of the owner? rs he fi What is t your f thought o ?! customer
  132. 132. How can we find systematically new customer insights e.g. in an insurance company? Customer’s Insurance Utility Map Understand Do I need an ▪  Understand how the customers are buying and Buy Insurance using your insurance. Look at the emergency insurance? case ▪  Understand the whole lifecycle of customers‘ utility not just the parts you are responsible for Nothing Pay insurance happens Change Emergency Getting back to ▪  How can we improve the buyer‘s utility cycle? happens normal ▪  Can we do more for the customer? ▪  Can we do more to prevent damage? ▪  Can we leave something to the customer? Claim settlement
  133. 133. With HelpPoints Zurich Insurance improved customer satisfaction ANDachieved lower cost for claim settlement Dr. Patrick Stähler |137
  134. 134. „ How do I do this?“
  135. 135. „What tools do we have? “
  136. 136. Creating Business model innovations is a creative andanalytical process at the same time. There is a reasonwhy god gave us two brain hemispheres
  137. 137. Buyer Utilitiy Map for Customer Insights PuttingStarting Buy Delivery Use Washing Disposal in pairs Points Customer Productivity Simplicity Usability Risk Image fun Enviromental friendlyness
  138. 138. Develop you rbusiness mo del,play with al lcomponents !
  139. 139. Map your positioning and show your difference 6 Traditional brands No-Name Bosch 5 4 3 2 1 0 -1
  140. 140. „Is there aprocess?“
  141. 141. If you want to find a disruptive businessmodel innovation you just have tofollow the prescription to the right.Your success is guaranteed!
  142. 142. Sorry, life is not a fairy tale.You can find sustaining innovation witha structured process, but not disruptivebusiness model innovation. Business model innovation are all abouttry and error under high uncertainty
  143. 143. The fluidminds way of business model innovation Understand Unlearn mobilize Ideate •  Find customer insights •  Unveil tacit assumptions •  Generate via jobs-to-be-done about the industry •  value ideas •  Describe current •  Create discomfort with •  architectural ideas business model current situation •  revenue ideas •  Understand market trendsDesign Select Prototype Build Learn • Design new business • Select business models • Execute business model models • Prototype customer • Gather customer feedback • Check interdependen-cies Development data in business model • Write Business Case • Adapt business model • Select new business model
  144. 144. The magicformular for Customer utility great firms customer + value price company + profit costs
  145. 145. „And nowsuccess?“
  146. 146. Beware of your existing customers. They want More-of-the-Same-for- Less! Dr. Patrick Stähler. Leuphana University Lüneburg
  147. 147. But also it takes time to find newcustomers and teach them theadvantages of your solution Dr. Patrick Stähler | 151
  148. 148. Even innovations that are self-evident have no competition do not diffuse easily. The example of lemon juice and the British Navy Discovery that lemon juice prevents scurvy in 1601 146 years Confirmation of the results 1747 48 years Introduction to the Navy 1795 70 years Introduction to the Merchant navy 1865 Source: Mosteller, 1981 cited in Rogers, 1995
  149. 149. Business model innovation demands often new consumer behavior. Learning takesTIME and a GOOD REASON to do so! §  Have you ever thought of, how much knowledge consumer have about the consumption process? §  Most consumer knowledge is learned via from other peers §  To implement a new business model in the heads of the consumer takes time! Explain how to “get the right gas” t o an alien. Easy, isn‘t it ! ;-)!
  150. 150. What is a good strategy? trend differenti focus ation build on strengths
  151. 151. It’s about finding the righttrend to surf!
  152. 152. It is about differentiation
  153. 153. „Business model innovation is about being DIFFERENT!“
  154. 154. NO, REALLY DIFFERENT!
  155. 155. Dr. Patrick Stähler | 159
  156. 156. DOING not learning to do, is the essence of entrepreneurship Guy Kawasaki, The Art of the Start 2004, p. xi
  157. 157. „Scary to be this nail. Wherewill the hammer hit nexttime?“
  158. 158. Weitere Informationen!http://blog.business-model-innovation.com!Dr. oec. Patrick Stähler fluidminds GmbH Seefeldstrasse 5a CH-8008 Zürich Patrick.Staehler@fluidminds.ch www.fluidminds.ch blog.business-model-innovation.com
  159. 159. 4th part Why do we not do it? Dr. Patrick Stähler | 164
  160. 160. Innovation Killers How Tools Destroy Your Capacity to Do New Things Dr. Patrick Stähler |165
  161. 161. 1 2 40% gross 23% gross profit profit I n which project sho uld we invest?!* You are in the same industry under the same rules of competition Dr. Patrick Stähler |166
  162. 162. 1 Dr. Patrick Stähler |167
  163. 163. 2
  164. 164. Think more about ROI not just sales margin, but be aware of what the totalassets are Profit ROI = TotalAssets ROI = ProfitMargin × AssetTurnover NetIncome Sales ROI = × Sales TotalAssetsDr. Patrick Stähler |169
  165. 165. Besides having aBoth cases have approx. the same profitability higher n margin, discou the nte growing r market is !! 1 = Department stores 2 = discounters NetIncome Sales ROI = × Sales TotalAssets ROCII1 = 40% × 3 = 120% ROCII2 = 23% × 5.5 = 126.5% Figures are taken from Christensen, Raynor (2003), The innovator‘s solution, p. 106
  166. 166. Ok, let’s assume we are this turkeyhere. Let’s call him Joey Dr. Patrick Stähler | 17 171 1
  167. 167. Joey is a good student. He learnedthat analytics will help him tobecome a better turkey. Dr. Patrick Stähler | 172
  168. 168. So he introduces his well-being index that increases by the day since hisowner treats him so well….. Joey’s confidence level that he lives in paradise 8 7 6 5 4 3 2 1 0Dr. Patrick Stähler |173
  169. 169. y!!P oor Joe hear erD id he ev ksgiving?! han a bout T Dr. Patrick Stähler | 174
  170. 170. Ok, I understand, you think he is just a turkey.! But think what you usually do in market analysis!!Dr. Patrick Stähler |175
  171. 171. Dr. Patrick Stähler | 176
  172. 172. Disruption can come from the low end of the market or from non-consumption sustaining technology bringing a better product into an established market most demanding customers different measure of performance performance least demanding customers low end disruption addressing overserved customers with a low cost business model time new market disruption compete against nonconsumption time based on: the Innovators dilemma by Clayton M. Christensen and the innovators solution by Clayton M. Christensen and Michael E. Raynor, slide taken from provenmodels.com
  173. 173. We have a view of the world of what made us andour firm successful Most assumptions are tacit and unspoken These assumptions help us in normal circumstances very well!
  174. 174. Our mental model of our world. In a firm a dominant logic of how thingsought to be done exists Market reports Customer Feedback Competitor Analysis Domiant logic of the firm ▪  resides in the people ▪  gets stronger with success ▪  filters information ▪  helps to get things done with out too much coordination ▪  gets strengthens by knowledge management, best The world according practice and benchmarking ▪  is extremely important in a world of sustaining to our firm innovations, but an impediment to disruptive innovations Dr. Patrick Stähler |179
  175. 175. Hidden flaws in strategy making We believe that with analytical tools of thepast we can foresee the future! For asustaining world we have the right tools!
  176. 176. Hidden flaws in strategy making Typical flaws Our successful human rationality §  Overconfindence in our our capabilities and in §  Our decision process is well suited for our ability to judge the future normal environments §  The status quo bias: What we know can we §  Bounded rationality: impossible to analyse analyze better and we love the present all facts §  Ancoring: §  Ecological rationality Mental shortcuts to reach a quick decision that are good §  The double-sided sunk-cost problem enough in normal situations §  The herding instinct: What the others do can‘t be §  Preference to be exactly wrong to wrong! One reason for Me-too Strategies. vaguely right §  False consensus: confirmation bias, selective recall, group thinking
  177. 177. The peepoo bag. Short brainstorming what business models are possible? peepoo bag is a single-use, self-sanatising toilet bags Dr. Patrick Stähler | 182 Source: Idea taken from Alexander Osterwalder
  178. 178. Dr. Patrick Stähler | 183

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