This document discusses business model innovation. It provides examples of companies like Apple, Netflix, and Pixar that achieved success through innovative business models rather than just products. The innovation cycle is accelerating due to factors like falling technology costs. Temporary competitive advantages can only be sustained through continual re-examination of a company's business model. The document then discusses what a business model is, focusing on key elements like customer value, revenue streams, and the value chain. It provides examples of different business model patterns and outlines a process for business model innovation including initiation, ideation, integration, and implementation.

1. Generating new income
Business Model Innovation

2. Experience

3. Lets start at the end
Tomorrow’s competitive
advantage of companies will
not be based on innovative
products and processes but on
innovative business models

4. Apple is the largest music retailer in the world.
It does not sell CD’s

5. Netflix reinvented video rental despite
not owning a single physical shop

6. Pixar won 11 Academy Awards without
there being a single human actor in its films

9. What can we learn from these
successes?

10. Innovation Cycle
Commodity
Innovation
Competitive
Advantage
Imitation
Innovation cycle
is now spinning
faster and faster

12. Why is it spinning faster?
Tumbling
tech costs
The rise of
a start-up
culture
The rise of
new tools
Networked
capital
Changing
world

13. Failure to innovate – fast enough

14. The consequence for companies in the
innovation race are drastic.
Even if they are currently successful, it is
important for businesses to regularly test their
business model.
We live in an era of temporary competitive
advantage: success can only be maintained if
its roots are continually re-examined and
nurtured.

15. Ikea redefined
the furniture
business
Ebay changed
the world of
trade

16. HOW DID THEY DO IT?

17. BUSINESS MODEL
INNOVATION

18. What is a
business model?

19. What is a business model?
Stories that explain
how enterprises work

20. That answer fundamental questions:
Who is the customer?
What does the customer
value?

21. We must also not forget the issue of revenue
“A million people walk into a
Silicon Valley bar. No one buys
anything. The bar is declared a
massive success”

22. What makes up your business model?

23. Or….
Value
Proposition
Revenue
model
Who?
Value Chain
What do you offer to your
customer?
How do you create value?
How do you make money?
Who is your target
customer?
What?
How?Value?
Who?

24. By understanding these 4
associated points we can create a
tangible business model

25. What is your business model?

26. It all started with
You can have it in any
colour you want as
long as its black

27. And turned into this…..

30. Examples
Direct Selling
Businesses sell direct to the customer, not via an
intermediary. This way savings can be made and
passed to the customer
Freemium
The basic version of an offering is given away in the
hope of persuading customers to pay for the premium
version.
A more advanced version of this is pay what you
want.

31. Add on
The core product is priced competitively, but there are
numerous extras that drive the final price up
Platform
Digitally enabled marketplaces for matching
buyers and sellers.

32. Mass customisation 2.0/
personalisation
Initially this was companies like Dell tailoring products
to individual customers needs. On demand is replacing
in stock and increasing technology is allowing this to
happen.
Mega Hyperlocal
Components for a product or service are source and
assembled locally and then also sold locally. Here
companies quickly create a strong brand presence and
loyal customers.
Can be expanded through the use of a Land and
Expand strategy.

33. Initiation
Ideation
Integration
Implementation
Application of business model innovation

34. Initiation
•What is the problem?
•Where is it happening?
•When is it happening?
•How can we overcome the problem?
•When do you need to get involved?
•How do you know when the problem is fixed?

35. What are your problems?
Where are they happening?

36. What are your clients problems?
Where are they happening?

37. Ideation
•Analyse against existing 55 business model patterns
•What can be
−Learnt?
−Copied?
−Adapted?

38. Ideation and the design thinking process

39. Integration
• Check the consistency of the new business model
• Examine all four questions of your new business model and check
organisational fit.
Does it work for you?
Does it work for your customers?
Does it work for your business?

40. Implementation – an iterative cycle

42. Thank you
Stuart Hartley
Managing Director
Incrementa Consulting
www.incrementa.co.uk
s.Hartley@incrementa.co.uk