![So where does business model innovation fit
exactly?
• Business Model Renovation
[BMR] is presented as the
highest level of a strategy for
managing change that usually
cannot be handled by
continuous improvement and re-
engineering methods or
organizational restructuring
(Kovacic, 2001).
53](https://image.slidesharecdn.com/businessmodelinnovation-newvalue-120305223813-phpapp01/75/Business-model-innovation-new-value-53-2048.jpg)
Uploaded byMarcus Tarrant
Business model innovation new value
The workshop led by Marcus Tarrant focuses on business model innovation as a key competitive advantage in today's market, emphasizing that companies must not only innovate products but also their business models. The agenda includes discussions on defining business models, assessing innovation types, and implementing these innovations within organizations, supported by case studies such as Kodak and FujiFilm. Participants are encouraged to engage in exercises to explore practical applications of business model innovation tailored to their businesses.
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Business model innovation new value
- 1. Workshop: How toCreate New Value in Your Business Through Business Model Innovation Prepared and Presented by Marcus Tarrant Managing Director Mission HQ Pty. Ltd. ATF the Innovate Trust Bryce Steele Managing Director Enterprise Accelerators
- 2. A thought Starter The competition of today is between business models, not just products or solutions. • FujiFilm Vs Kodak • Skype Vs Telstra • Mailchimp Vs Vertical Response • Toner Vs Printer 2
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- 5. About Mission HQPty. Ltd. Marcus Tarrant, BEc MEI Past Roles • Senior Consultant - Strategy at Deloitte Consulting • Head of Professional Services – Offspring Ventures/ipernica Current • Managing Director Mission HQ • Chargantt.com • Business Planning HQ .com • HyperQuestion.com 5
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- 7. Workshop Agenda Agenda Item Time Introduction 15 mins About Innovation 30 Mins What is a Business Model? 30 Mins Does it apply to me? 5 Mins Kodak/Fuji Film Case Study 10 Mins Morning Tea 20 Mins The Business Model Framework 30 Mins Workshop Exercise – Ballast Blaster 45 Mins Assessing Business Models 10 Mins Implementing Business Model Innovation 5 Mins How you could use Business Model Innovation in your organisation 5 Mins Feedback Forms and Close 10 Mins 7
- 8. What is itall about?
- 9. There are threekinds of companies, those that make new things happen, those that watch new things happen, and those that wonder what happened Anonymous 9
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- 36. About Innovation What is innovation and how is it used?
- 37. So Who CaresAbout Innovation Anyhow? 37
- 38. Mini-Workshop – Whatis Innovation? • How have you seen it applied in your organisation? • Is it core to your business? • What type of innovation have you done? • Has it contributed value to your business? • Can you identify a direct bottom line impact? • What effect has it had on your customers and suppliers? • What’s hard about doing innovation? 38
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- 40. Forms of Innovation •Radical – significant change that simultaneously affects both the business model and the technology of the company. If the radical innovation also shifts an industry into another direction and brings out fundamental changes to the competitive landscape, it can also be called as disruptive innovation. • Semi-Radical – From a company’s perspective, semi-radical innovation involves substantial change in either technology of an organization or its business model- but not to both. • Incremental – The most prevalent form of innovation, receiving more than 80% of a company’s total innovation investment. The goal is of course, to get as much as possible from an already existing innovation without making major changes in investment, or dislodging existing products or services. 40
- 41. Types of Innovation 1. Product 2. Process 3. Business Model
- 42. 1. Product andService Innovation “the creation of new products and services or the improvement of existing products to meet user needs” • New product design • New functionality • Completely new products • New ways of product delivery • Product/Service Packaging • Contract for service vs transactional sales • Consumables vs the unit itself • Customisation
- 43. 1. Product andService Innovation When to Apply Product and Service Innovation • Differentiate • Re-Position • Market Entry • Increase Margins • Diversify into new markets • To survive “Product and service can be a means of executing on business model innovation.” 43
- 44. Example of Product/ServiceInnovation resulting from business model innovation 44
- 45. 2. Process Innovation “improvingthe sequencing of work routines and information flow to achieve business improvement.” Results achieved through Process Innovation • Faster • Cheaper • More flexible • Simpler • Improved communication • Greater levels of customisation
- 46. 2. Process Innovation Whenand Why? • Better meet customer needs • Improve cost efficiency • Enable greater organisational flexibility • Enhanced consistency • Improved delivery of “Brand Promise” • Focus on “Core Business” – Process Outsourcing
- 47. An Example ofProcess Innovation 47
- 48. 3. Business ModelInnovation “a conceptual framework for identifying how company creates, delivers and extracts value” • Identifies a market segment and defines the customer • Articulates the value of the proposed offering • Focuses on the key attributes of the offering" • Defines the value chain to deliver that offering • Creates a way to get paid • Establishes a value network that is needed to make the model self sustaining
- 49. 3. Business ModelInnovation When and Why? • Underpin the business planning process • Provide an absolutely IDEAL starting point for the creation of a financial model. • Create a deeper understanding of you plans with collaborators, partners and suppliers • Provide a clear picture of a planned business to investors or internal stakeholders • Develop business cases for market entry • Optimise the value obtainable for a given business concept • Assist in evaluating alignment with organisational strategy
- 50. The context ofInnovation Innovation Program Product Business and Service Model Innovation Innovation Process Innovation 50
- 51. Bringing the elementstogether Traditional Innovation Product and Service Innovation Process Innovation 51
- 52. What To DoWhen Strategy Operational Domain Domain Product Business and Service Model Innovation Innovation Process Innovation 52
- 53. So where doesbusiness model innovation fit exactly? • Business Model Renovation [BMR] is presented as the highest level of a strategy for managing change that usually cannot be handled by continuous improvement and re- engineering methods or organizational restructuring (Kovacic, 2001). 53
- 54. Return on Investmentfor Business Model Innovation (BMI) • Boston Consulting Group Innovation Research – BMI delivered returns that were more sustainable, even after 10 years – BMI innovators continued to outperform product and process innovators – BMI earned innovators a 4 times greater return on investment than product or process 54
- 55. What is abusiness model?
- 56. White-Board Discussion • Whatis a business model – Characteristics of a business model – Relevance to my organisation – Have you heard the term before? – What do people mean when they talk about a business model? 56
- 57. White-Board Discussion –Word Cloud 57
- 58. Business Model Definition Abusiness model describes the rationale of how an organization creates, delivers, and captures value (economic, social, or other forms of value). The process of business model construction is part of business strategy. 58
- 59. The context ofthe business model what are intangible assets? Strategy Business Financial Model Implications (Value) Operating Environment
- 60. How often shouldyou renovate your business model? Business Model Renovation Lifecycle 6 Months 50-100 Years 1900 2020 60
- 61. Why is BusinessModel Innovation Relevant Today? • Business Model innovation is particularly valuable in times of instability – Provides a mechanism to break out of intense competition – Address disruptive environmental changes • Regulatory • Exchange rates and cost structure • New technologies • Customer capabilities and or expectations 61
- 62. Does it applyto me?
- 63. Does Business ModelInnovation Apply to Me? • Manufacturing • Services • Retail • Mining Need • Engineering Sustainable • Infrastructure Revenue to • Finance • Online Survive • Not for profit • Government Agencies 63
- 64. For how longwill you be able to keep charging what you are for what you do? • Exchange Rate – Aust Red Wine Example • Rise of Asia • Disruptive technology • New products and services • New ways of doing business • New delivery systems • Virtualisation • Freemium • International Barriers in Communications • Customer problem evolution • Service Automation • ...even the Ipod! Nano 4gb 2007 - $364 Today $149 64
- 65. Discussion on Kodak/FujiFilm Case Study
- 66. Discussion Points • Digitalphotography's impact on the Kodak Business Model • Who invented digital photography? • What was the Kodak business model? • What should the Kodak business model take into account? • How did Fuji Film handle the same issues differently? • Does the business model support the same skills and number of resources? • Does having a great business model today mean that you will also have one in the future? 66
- 67. Morning Tea –20 Minute Break
- 68. The Business ModelFramework
- 69. The business modelFramework 1. Value Proposition – What are you offering? 2. Capabilities/Resources – What skills and capacity do you require? 3. Partnership – Who do you need to work with? 4. Activities – What will you do? 5. Costs – What are your significant costs likely to be? 6. Relationship – What formal and informal relationships are required 7. Channel – What are our channels to market? 8. Revenues – What will our customers pay for? 9. Customers – Who are our customers? 69
- 70. Traditional business modelMatrix 70
- 71. High Level BusinessModel Framework Innocatalyst™ Customer Value Financial Delivery External 71
- 72. InnoCatalyst™ Business Model Framework Capabilities Customer Value Revenue Value Who Proposition Financial Purchaser Delivery Activities User Costs Influencer Partner External Channels to Market Relationships Partnerships 72
- 73. A real worldexample – 4-5 Items 73
- 74. 1. The ValueProposition • Value can occur at any of the following stages of the customer engagement and deliver process. Evaluation Process Value Co- Creation Purchase Process Set-up/ Installation Use/ Operation Complement .product/ services Maintenanc e & After sales Ending Value and Value Transfer 74
- 75. Mapping out yourvalue proposition Evaluation Value Co- Purchase Set-up/ Use/ Complem. Maint./ Ending/ Process Creation Process Installation Operation products after sales Value transfer Increasing customer productivity Simplicity for customer Convenience for customer Reducing Customer Risk Impact on Customer’s Image -75-
- 76. Evaluation Process • Simplify a customer’s evaluation process • Example: ISELECT -76-
- 77. Value Co-Creation • Through various technological advances the integration and participation of the customer in the value creation process is increasingly possible. • Together with the knowledge and networks of customers additional value can be created and facilitated. • Examples: Ebay & Amazon -77-
- 78. Purchasing Process • Customers highly value an efficient, simple and convenient purchase process. Example: Creative Mobile Technologies back-seat swipe and entertainment for Taxi Cabs -78-
- 79. Set-Up/Installation • In some cases set-up or installation is necessary. The simplification of this process is of enormous value to the customer. • Example: Dick Smith: Mobile Techxphert Services -79-
- 80. Use/Operation • In many cases most of the value in a value proposition comes from the use or operation of an actual product or service. However, to differentiate themselves companies try to create value beyond a simple product or service. • Salesforce is carefully creating additional value by offering continuous updating "behind the scenes" and providing easy access to complementary products by third party vendors. -80-
- 81. Maintenance & aftersalessupport • Value is often created during the maintenance and after-sales phase. This can be either by offering high quality service or by offering a value proposition that minimizes the need for maintenance & after-sales. • Example: The attractiveness of salesforce.com’s value proposition essentially comes from the fact that the hosted software model (application service provider - ASP) minimizes the need of software maintenance by the customer. -81-
- 82. Ending and valuetransfer • In many cases once a customer does not need a product or service anymore he has to terminate the service or dispose of the product. Example: BMW Recycling Programme -82-
- 83. 2. Capabilities/Resources • Whatphysical assets does our business model require? – Factory – Machinery – Etc. • Intellectual Assets – Trademarks (licensed or owned) – Patents – Processes – Systems • Human Resources – Skills – Team structures • Financial – Access to finance 83
- 84. 3. Partnerships • Describesthe network of suppliers and partners that will make the business model work – Joint Ventures – Strategic Alliances – License agreements – Service agreements – Outsourcing arrangements 84 © Mission HQ Pty. Ltd. All Rights Reserved
- 85. 4. Activities • Theactivities outline the most important things that the organisation will do. – Production – Problem Solving – Platform management – License management 85
- 86. 5. Costs • Outlinesthe primary areas of cost under the business model – Fixed Costs – Variable Costs – Economies of scale – Key cost ratchet points 86
- 87. 6. Relationships • Whatrelationships other than partnerships may be required. – Affiliations (E.g. affiliated companies) – Government Agencies (E.g. CSIRO) – Brand cross licensing (E.g. Australian Made) – Embedded licensing (E.g. Intel Inside, Windows 7) – Accreditations (E.g. CPA) 87
- 88. 7. Channels toMarket • What channels to market will the model employ? 88 © Mission HQ Pty. Ltd. All Rights Reserved
- 89. 8. Revenue • Whatelement of our value proposition will our customers actually pay for? – Asset Sales – Usage fees – Subscription – Advertising revenue – Renting or leasing – Licensing – Financing 89
- 90. 9. Customers • Thedifferent groups of people or organisations that the organisation hopes to reach and serve. • Forms of Segmentation: – Geographic – Demographic - Gender, age, income, housing type, and education level are common demographic variables – Channel – Media – Price 90
- 91. The Power ofConstraints To be To Have – Biggest – More market share – Best – Profitable customers – Fastest growing – Greater access to capital – Most profitable – More business relationships – Most flexible – Greater revenue To Create – New products/services – New markets Innovation 91 Catalyst™ Seminar
- 92. Workshop Exercise: BallastBlaster
- 93. Workshop – BallastBlaster • We have a new technology that we are seeking to build a new business model for. • What is it? – An ultrasonic device that removes microbes from the ballast water carried on ships. – Can be mounted either ship-side or shore-side – It is more effective than other approaches to microbe removal 93
- 94. Ballast Blaster Rulesand Constraints • Workshop Rules – Each table must appoint a team leader – All ideas are worthy of consideration – Write down your ideas on the post-it notes – Add them to the model – Use only the constraint your table is provided – Work together as a team – Develop a holistic, logically consistent model – You may be asked to present your model • Constraints – You will be allocated one only! 1. Largest 5 Year Exit 2. Fastest to Market 3. Minimum Start-Up Cost 94
- 95. Creating an IdealModel for Ballast Blaster News Flash! New information has come to light regarding Ballast Blaster. ISO standard 100434 has just been ratified requiring all ballast water purified by 2014 to a purity of 99.58% The founders have just completed a $16m Capital Raising, however the venture capitalist that has backed the project needs to exit in 3 years rather than the usual 5. He has also demanded that the founders re-locate to Fiji so that he can keep an eye on them from his mansion just out of Nadi. The directors reluctantly agreed. He has requested the founders re-cut their Business Model prior to the first tranche being paid. His core objective is to build value in the business very rapidly. 95
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- 97. An Sample BusinessModel Evaluation Framework Level of Investment Required 200k 20m Time to revenue Short Long R&D spend to achieve development Low High Access to technical expertise Low High Level of risk Low High Organisation's Profile if successful Low High Financial return if successful Low High 97
- 98. One Model isnot enough! 98
- 99. Implementing Business ModelInnovation
- 100. The Business ModelImplementation Hexagon Structure Process Skills Business Information Model Technology Culture 100 © Mission HQ Pty. Ltd. All Rights Reserved
- 101. Use Business ModelInnovation To – Underpin the business planning process – Provide an absolutely IDEAL starting point for the creation of a financial model. – Create a deeper understanding of you plans with collaborators, partners and suppliers – Provide a clear picture of a planned business to investors or internal stakeholders – Develop business cases for market entry – Optimise the value obtainable for a given business concept – Assist in evaluating alignment with organisational strategy 101
- 102. Pivoting Your BusinessModel • The pivot can be applied to any element of the business model, without changing the underlying vision. Here are some of the most common pivot elements that Eric and others have noted: • Customer problem pivot. Use essentially the same product to solve a different problem for the same customer segment. Starbucks famously did this pivot when they went from selling coffee beans and espresso makers to brewing drinks in-house. • Market segment pivot. This means you take your existing product and use it to solve a similar problem for a different set of customers. • Technology pivot. Engineers always fight to take advantage of what they have built so far. So the most obvious pivot for them is to repurpose the technology platform. • Product feature pivot. Here especially, you need to pay close attention to what real customers are doing, rather than your projections of what they should do. • Revenue model pivot. One pivot is to change your focus from a premium price, customized solution, to a low price commoditized solution. • Sales channel pivot. Leverages existing sales channels. • Product versus services pivot. Sometimes products are too different or too complex to be sold effectively to the customer with the problem. Now is the time for bundling support services. • Major competitor pivot. What do you do when a major new player or competitor jumps into your space? 102
- 103. Key Questions toConsider • What compromises does our current business model force our customers to make? • Why are nonusers or defectors dissatisfied with our offering? • Do we offer customers a better value proposition than that of our competition? • What alternative models are gaining share at the edges of our industry? • If we were an industry outsider, what would we do to take advantage of the gaps or weaknesses in our business model? • Do we have a plan for identifying potential business models, implementing them, and embedding Business model capabilities within the organisation? • What do we need to change in our organisation and operations to implement a new business model? • What information would we need to make a commitment to a new business model? • How urgent is the perceived need for a change in our organisation? 103
- 104. Discussion: How thiscould be applied in your company?
- 105. Services, Process andSpecial Event Pricing
- 106. Products and Services •Business Model Renovation Service – Ensure you create new value in your business with this unique service offering – 30% Event Discount for first 5 customers only – must book first month within 48hrs of the event. • Business Planning HQ – Totally revolutionary business planning tool that puts the Business Model at the heart of the business planning process. – Create a 40pg Business Plan, Slide Deck and Business Overview document in as little as 4 hours. – 20% Discount for first 5 customers only – must book within 48 hours of event • Chartgantt – Excel based gantt chart and project planning solution built by Mission HQ for NASA – 20% Discount 106
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- 109. More Events Please recommendto colleagues in the following areas, or come again yourself! Geelong – Thursday 8th March Dandenong – Tuesday 20th March Bendigo – Thursday 22nd March Cross Venue – Best Business Model Prize 109
- 110. Event Materials andNetworking We have a linkedin Group (Invitation Only). All materials and links will be posted in this group. We will send out a link following the event so please join up. 110
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- 112. Some Ideas • Perhapsyou already have a great business model buried inside your business – pull it out, polish it up and put all your resources into it. • Start with current or desired capability of your organisation and assess this against market requirements. If there is a fit – design around this. 112
- 113. Contact Details Marcus Tarrant Managing Director Mission HQ Pty. Ltd. ATF the Innovate Trust Marcus.tarrant@missionhq.com.au +61 3 9005 9710 www.missionhq.com.au 113 © Mission HQ Pty. Ltd. All Rights Reserved
Editor's Notes
- #55 The Boston Consulting Group (BCG) and BusinessWeek recently conducted their annual survey to identify the most innovative companies. “We analyzed our database of innovators segmenting them into business model innovators and product or process innovators.”Our analysis showed that while both types of innovators achieved a premium over the average total shareholder return for their industries, business model innovators earned an average premium that was more than 4 times greater than that enjoyed by product or process innovators. Business Model Innovation delivered returns that were more sustainable, even after ten years, business model innovators continued to outperform competitors and product and process innovators.Business Model Innovation – When the game gets tough, change the game – The Boston Consulting Group