The document discusses business model innovation and provides an overview of SAP's approach to business model development and innovation (BMDI). The BMDI approach is presented as a systematic, iterative process involving four types of iterations: analyze and improve, challenge and change, test and verify, and evaluate and decide. It allows teams to develop an appropriate business model through diverging and converging ideas. Specific considerations for complex business models involving multiple customer groups are also outlined. An example use case of applying the BMDI approach to transform a cloud business is briefly mentioned but not described in detail.
The Business Model Handbook provides a practical approach on how to describe, evaluate and (re)invent your business model. Use it on your own or as a discussion guide with your team. DOWNLOAD YOUR COPY AT http://www.e-junkie.com/sniukas
Presentation provided at the Enterprise Connect WIIN workshop series titled Business Model Innovation > New Value. Questions regarding this presentation should be directed to Marcus Tarrant, Managing Director, Mission HQ at marcus.tarrant(AT)missionhq.com.au
Architecture for the masses - An Open Group WebinarCraig Martin
An overview of the journey that Enterprise Architects has started in making the discipline of enterprise architecture available to a broader audience. The goal is to move it from the "black arts" space to be more accessible. This was done through the use of a MOOC.
The presentation discusses the education landscape and the business model disruption required. It then looks at where MOOCs fit into this disruption and introduces the EA MOOC journey.
The Business Model Handbook provides a practical approach on how to describe, evaluate and (re)invent your business model. Use it on your own or as a discussion guide with your team. DOWNLOAD YOUR COPY AT http://www.e-junkie.com/sniukas
Presentation provided at the Enterprise Connect WIIN workshop series titled Business Model Innovation > New Value. Questions regarding this presentation should be directed to Marcus Tarrant, Managing Director, Mission HQ at marcus.tarrant(AT)missionhq.com.au
Architecture for the masses - An Open Group WebinarCraig Martin
An overview of the journey that Enterprise Architects has started in making the discipline of enterprise architecture available to a broader audience. The goal is to move it from the "black arts" space to be more accessible. This was done through the use of a MOOC.
The presentation discusses the education landscape and the business model disruption required. It then looks at where MOOCs fit into this disruption and introduces the EA MOOC journey.
Who is your customer? What does the customer value? How do you deliver value to customers at an appropriate cost? Business models that focus on the who, what, and how to clarify managerial choices and their consequences underpin the operations of successful organizations
Bridging business analysis and business architecture - The Open Group webinarCraig Martin
To design business models of the future requires a comprehensive set of skills. The skills are diverse in nature and range from the typical business analysis delivery focused requirements management tools and techniques to the more business architect MBA style and business model innovation techniques.
But how can we leverage the two skillsets to create more cohesion in the industry?
Where is the overlap and is there a career path between the two?
What about the frameworks that support these two disciplines?
This presentation will deal with:
Shifts occurring in the market;
Where the business architect and the business analyst provide value individually;
Where the business architecture and the business analyst provide value together;
How are the disciplines merging; and what the future could look like.
Today, business architecture is everywhere. So what is the definition and scope of business architecture? As a concept, business architecture is often misunderstood, over-used, under-used, or wrongly-used.
In this session we are going to consider some lessons that Business Architecture practitioners might learn from Lean. Business Architecture has traditionally delivered ivory tower models which are slow to generate, hard to understand, and require heavy maintenance.
We'll start with a '101' level introduction to Business Architecture, discussing both the process of defining a Business Architecture and also some of the models that Business Architecture produces. We'll also try to understand the value of Business Architecture.
We'll then start to map some Lean Principles to Business Architecture and try and understand how we could potentially optimise the value stream. We'll consider where Business Architecture can be wasteful, discussing the diminishing value of information and the concept of analysis paralysis.
Finally I'll introduce you to a leaner approach to Business Architecture that focusses on rapid techniques for model generation and heavier engagement of system actors in both the development and the maintenance of models. I'll also share my technique for rapid enterprise modelling which can help you to build a capability model in hours rather than weeks/months.
Building a more cohesive organisation using business architectureCraig Martin
In shifting the focus away from enterprise architecture being seen purely as an IT discipline, organizations are beginning to formalise the development of business architecture practices and business architecture outcomes.
The OpenGroup has made the differentiation between business, IT and enterprise architects through their various working groups and certification tracks.
However, industry at present is grappling to try and understand where the discipline of business architecture resides in the business and what value it can provide separate of the traditional project based business analysis focus.
This presentation will take the audience through an overview of some of the critical questions being asked by business and how these are addressed through the discipline of business architecture.
Using both method as well as case study examples, I will show the audience an approach to building more cohesion across the business landscape using business architecture techniques and artefacts.
The presentation will focus on using business motivation models, strategic scenario planning and capability based planning techniques to provide input into the strategic planning process.
It will also highlight some of the outputs through examples from engagements.
That is a PPT presentation used for a lesson about the Business Model Innovation.
The class was held in December 2014 as a part of the larger course "General Management" at the University of Rome Tor Vergata.
Main contents are: business modeling, business model innovation, blue ocean strategy, BMI as a set od key decision.
Bringing Architecture Thinking to the People - An introduction into the PEOPL...Craig Martin
The successful implementation of an architecture plan or blueprint is often challenged not in the efficacy of the design elements of the architecture, but in its implementation by people in business operations. Transformation programs will often struggle as a consequence of the failure to consider the issues impacting and the role of people in supporting the target operating state of the architecture once implemented, it is therefore imperative that when architects innovate, model and design to solve business problems, that they equally consider the people dimension. Capability based planning is incomplete unless we address the optimum mix of people, process and tools to drive out the target outcome of that capability. This presentation will look at a case study from within the Australian market in which Business Capability Based Planning was applied to assess people capabilities and organisation preparedness to support a target business model. It will also discuss some of the more effective people levers that can be applied to deliver more impactful and long lasting architectural change.
Emerging Business Models for the Open Data Industry and Open Data Value Capab...Fatemeh Ahmadi
This presentation presents a comprehensive model and the relations between Innovation, Business Model, Business/Industry, Open Data and Entrepreneurship. Later slides presents Open Data Business Model (the 6-Value Model) and Open Data Capability Matrix.
In April 2016, one of EA Learning’s experienced Business Architecture instructors, Judith Oja-Gillam, delivered a webinar to a community of Architects and IT professionals within the IASA network. Judith discussed the discipline of business architecture, its potential value to the business and some of the challenges it looks to address. The approaches discussed are linked closely to the content delivered in EA Learning’s Applied Business Architecture.
This presentation describes the Business Modeling Starter Kit, an out-of-the-box workshop that helps entrepreneurs exploring viable business models for a new or existing business. It was created by Prof. Dr. Henning Breuer and his colleagues at the Telekom Innovation Laboratories in Berlin and revised, extended and translated by UXBerlin.
This can be downloaded in PPT, the presentation is in 16:10 which distorts on the slideshare viewer. This template can be applied to your powerpoint by saving in PPT - google it to create automatic templates and save yourself a ton of time.
Who is your customer? What does the customer value? How do you deliver value to customers at an appropriate cost? Business models that focus on the who, what, and how to clarify managerial choices and their consequences underpin the operations of successful organizations
Bridging business analysis and business architecture - The Open Group webinarCraig Martin
To design business models of the future requires a comprehensive set of skills. The skills are diverse in nature and range from the typical business analysis delivery focused requirements management tools and techniques to the more business architect MBA style and business model innovation techniques.
But how can we leverage the two skillsets to create more cohesion in the industry?
Where is the overlap and is there a career path between the two?
What about the frameworks that support these two disciplines?
This presentation will deal with:
Shifts occurring in the market;
Where the business architect and the business analyst provide value individually;
Where the business architecture and the business analyst provide value together;
How are the disciplines merging; and what the future could look like.
Today, business architecture is everywhere. So what is the definition and scope of business architecture? As a concept, business architecture is often misunderstood, over-used, under-used, or wrongly-used.
In this session we are going to consider some lessons that Business Architecture practitioners might learn from Lean. Business Architecture has traditionally delivered ivory tower models which are slow to generate, hard to understand, and require heavy maintenance.
We'll start with a '101' level introduction to Business Architecture, discussing both the process of defining a Business Architecture and also some of the models that Business Architecture produces. We'll also try to understand the value of Business Architecture.
We'll then start to map some Lean Principles to Business Architecture and try and understand how we could potentially optimise the value stream. We'll consider where Business Architecture can be wasteful, discussing the diminishing value of information and the concept of analysis paralysis.
Finally I'll introduce you to a leaner approach to Business Architecture that focusses on rapid techniques for model generation and heavier engagement of system actors in both the development and the maintenance of models. I'll also share my technique for rapid enterprise modelling which can help you to build a capability model in hours rather than weeks/months.
Building a more cohesive organisation using business architectureCraig Martin
In shifting the focus away from enterprise architecture being seen purely as an IT discipline, organizations are beginning to formalise the development of business architecture practices and business architecture outcomes.
The OpenGroup has made the differentiation between business, IT and enterprise architects through their various working groups and certification tracks.
However, industry at present is grappling to try and understand where the discipline of business architecture resides in the business and what value it can provide separate of the traditional project based business analysis focus.
This presentation will take the audience through an overview of some of the critical questions being asked by business and how these are addressed through the discipline of business architecture.
Using both method as well as case study examples, I will show the audience an approach to building more cohesion across the business landscape using business architecture techniques and artefacts.
The presentation will focus on using business motivation models, strategic scenario planning and capability based planning techniques to provide input into the strategic planning process.
It will also highlight some of the outputs through examples from engagements.
That is a PPT presentation used for a lesson about the Business Model Innovation.
The class was held in December 2014 as a part of the larger course "General Management" at the University of Rome Tor Vergata.
Main contents are: business modeling, business model innovation, blue ocean strategy, BMI as a set od key decision.
Bringing Architecture Thinking to the People - An introduction into the PEOPL...Craig Martin
The successful implementation of an architecture plan or blueprint is often challenged not in the efficacy of the design elements of the architecture, but in its implementation by people in business operations. Transformation programs will often struggle as a consequence of the failure to consider the issues impacting and the role of people in supporting the target operating state of the architecture once implemented, it is therefore imperative that when architects innovate, model and design to solve business problems, that they equally consider the people dimension. Capability based planning is incomplete unless we address the optimum mix of people, process and tools to drive out the target outcome of that capability. This presentation will look at a case study from within the Australian market in which Business Capability Based Planning was applied to assess people capabilities and organisation preparedness to support a target business model. It will also discuss some of the more effective people levers that can be applied to deliver more impactful and long lasting architectural change.
Emerging Business Models for the Open Data Industry and Open Data Value Capab...Fatemeh Ahmadi
This presentation presents a comprehensive model and the relations between Innovation, Business Model, Business/Industry, Open Data and Entrepreneurship. Later slides presents Open Data Business Model (the 6-Value Model) and Open Data Capability Matrix.
In April 2016, one of EA Learning’s experienced Business Architecture instructors, Judith Oja-Gillam, delivered a webinar to a community of Architects and IT professionals within the IASA network. Judith discussed the discipline of business architecture, its potential value to the business and some of the challenges it looks to address. The approaches discussed are linked closely to the content delivered in EA Learning’s Applied Business Architecture.
This presentation describes the Business Modeling Starter Kit, an out-of-the-box workshop that helps entrepreneurs exploring viable business models for a new or existing business. It was created by Prof. Dr. Henning Breuer and his colleagues at the Telekom Innovation Laboratories in Berlin and revised, extended and translated by UXBerlin.
This can be downloaded in PPT, the presentation is in 16:10 which distorts on the slideshare viewer. This template can be applied to your powerpoint by saving in PPT - google it to create automatic templates and save yourself a ton of time.
LIS - Lideranças Inovadoras para a Sustentabilidadesusanaleallis
A PUC-SP Pontifícia Universidade Católica de São Paulo, uma das mais tradicionais universidades do país e da América Latina desenvolveu o LIS – Lideranças Inovadoras para a Sustentabilidade, desenvolvido por idealizadores e integrantes do programa LIDERA - Lideranças Empresariais para um Nordeste Sustentável, que foi realizado pelo Instituto Ação Empresarial pela Cidadania Pernambuco inicialmente em 2005, e com histórico de sucesso em 4 edições. Tem o patrocínio do Instituto C&A, entidade reconhecida pelo seu compromisso com a educação.
OVERVIEW Business model innovation is often the key to capturing .docxaman341480
OVERVIEW: Business model innovation is often the key to capturing value from innovation within corporations. Developing and implementing new business models in practice, however, is difficult and fraught with risk. This paper discusses a systematic approach to developing new business models and identifies concrete steps to reduce the risks associated with them. It draws on literature on elements of the process as well as experience developing and implementing new business models at Goodyear.
FEATURE ARTICLE
A systematic approach to business model innovation can help capture value and reduce risks
KEYWORDS: Business model innovation; Adoption risks; Co-innovation risks; Business model canvas
Business model innovation has gained increased attention over the last five years, driven in large part by the tremendous returns generated by companies that have developed new business models--Netflix, Dell, and the Apple iTunes store are the most frequently noted examples. The term itself, however, has been only vaguely defined. Keeley and coauthors (2013), for example, characterize business model innovation by the number of attributes of a business that are changed, while Osterwalder and Pigneur (2010) define a business model in terms of a completed canvas. The vagueness of these representations makes it hard to study (or even to discuss) the process of developing a successful business model to harvest value from innovation.
The concept of the business model is actually simple: the business model is the means by which a firm creates and sustains margins or growth. The business model, defined in this way, is inherently embedded in a firm's competitive environment: the ability to create margins and growth is dependent on what competitors are doing to create margins and growth for themselves. The business model is not simply the means by which a firm creates and captures customer value. Focusing on creating customer value without regard to competitive advantage will leave a firm vulnerable to both margin erosion and anemic growth. Because the competitive environment is forever changing, business models require constant vigilance; they must be adapted and strengthened over time as the competitive environment evolves.
Business model innovation, in this context, is any innovation that creates a new market or disrupts the competitive advantage of key competitors. Business model innovation is confused in many discussions with building new capabilities (for instance, a new channel). This may or may not be business model innovation: while business model innovation may require new capabilities, new capabilities will constitute business model innovation only when they significantly disrupt the competitive dynamics of an industry. A few common examples of business model innovation make this distinction clear:
* Dell: Dell disrupted the cost structure of the personal computer industry with its build-to-order model by eliminating the costs of retail outlets, which rad.
OVERVIEW Business model innovation is often the key to capturing .docxhoney690131
OVERVIEW: Business model innovation is often the key to capturing value from innovation within corporations. Developing and implementing new business models in practice, however, is difficult and fraught with risk. This paper discusses a systematic approach to developing new business models and identifies concrete steps to reduce the risks associated with them. It draws on literature on elements of the process as well as experience developing and implementing new business models at Goodyear.
FEATURE ARTICLE
KEYWORDS: Business model innovation; Adoption risks; Co-innovation risks; Business model canvas
Business model innovation has gained increased attention over the last five years, driven in large part by the tremendous returns generated by companies that have developed new business models--Netflix, Dell, and the Apple iTunes store are the most frequently noted examples. The term itself, however, has been only vaguely defined. Keeley and coauthors (2013), for example, characterize business model innovation by the number of attributes of a business that are changed, while Osterwalder and Pigneur (2010) define a business model in terms of a completed canvas. The vagueness of these representations makes it hard to study (or even to discuss) the process of developing a successful business model to harvest value from innovation.
The concept of the business model is actually simple: the business model is the means by which a firm creates and sustains margins or growth. The business model, defined in this way, is inherently embedded in a firm's competitive environment: the ability to create margins and growth is dependent on what competitors are doing to create margins and growth for themselves. The business model is not simply the means by which a firm creates and captures customer value. Focusing on creating customer value without regard to competitive advantage will leave a firm vulnerable to both margin erosion and anemic growth. Because the competitive environment is forever changing, business models require constant vigilance; they must be adapted and strengthened over time as the competitive environment evolves.
Business model innovation, in this context, is any innovation that creates a new market or disrupts the competitive advantage of key competitors. Business model innovation is confused in many discussions with building new capabilities (for instance, a new channel). This may or may not be business model innovation: while business model innovation may require new capabilities, new capabilities will constitute business model innovation only when they significantly disrupt the competitive dynamics of an industry. A few common examples of business model innovation make this distinction clear:
* Dell: Dell disrupted the cost structure of the personal computer industry with its build-to-order model by eliminating the costs of retail outlets, which radically reduced working capital, enabled customization of orders, and (riding Moore's law) .
Why do we need business models or Mindset behind Business Model ApproachVasily Ryzhonkov
Entrepreneurship is about creating innovative ideas and transforming them into ventures that generate value. Through the years the only way how entrepreneurs documented their ideas and presented to investors was writing business plans. However, it is widely recognized that business plans immediately become obsolete after first meeting with reality. Business plans are also too long to write, they are seldom updated, almost never read by others (even investors for whom they were written). Nowadays everyone in the entrepreneurship world speaks about business model as more important issue than business plan. There are plenty of materials about what is a business model, how to use them; more than 40 different types of business models appeared since 1985 (M. Porter). However, only a few words said about why and when particular model of business model should be used for idea development and venture creation. This article is aimed at disclosure of mindset behind business model approach to entrepreneurship. Second purpose is to define main ways how business models could be applied to entrepreneurship.
The 4 Bases of the BUSINESS MODEL DIAMOND: Why Some Businesses Thrive While O...Rod King, Ph.D.
This article introduces a universal model for Business Model Project Management, which covers creative problem solving, strategic management, business model visualization, and project management.
FEATURE ARTICLEB u s in e s s M o d e l I n n o v a t i .docxssuser454af01
FEATURE ARTICLE
B u s in e s s M o d e l I n n o v a t i o n in P r a c t i c e
A system atic approach to business m o d e l innovation can help capture value and reduce risks.
Jim Euchner and Abhijit Ganguly
OVERVIEW: Business model innovation is often the key to capturing value from innovation within corporations. Develop
ing and implementing new business models in practice, however, is difficult and fraught with risk. This paper discusses a
systematic approach to developing new business models and identifies concrete steps to reduce the risks associated with
them. It draws on literature on elements of the process as well as experience developing and implementing new business
models at Goodyear.
KEYWORDS: Business model innovation, Adoption risks, Co-innovation risks, Business model canvas
Business model innovation has gained increased attention
over the last five years, driven in large part by the tremen
dous returns generated by companies that have developed
new business models—Netflix, Dell, and the Apple iTunes
store are the most frequently noted examples. The term it
self, however, has been only vaguely defined. Keeley and
coauthors (2013), for example, characterize business model
innovation by the number of attributes of a business that are
changed, while Osterwalder and Pigneur (2010) define a
business model in terms of a completed canvas. The vague
ness of these representations makes it hard to study (or even
to discuss) the process of developing a successful business
model to harvest value from innovation.
The concept of the business model is actually simple: the
business model is the means by which a firm creates and sus
tains margins or growth. The business model, defined in this
James Euchner is editor-in-chief o f Research-Technology Management and
vice president o f global innovation at Goodyear. He previously held senio'
management positions in the leadership of innovation at Pitney Bowes and
Bell Atlantic. He holds BS and MS degrees in mechanical and aerospace
engineering from Cornell and Princeton Universities, respectively, and an
MBA from Southern M ethodist University. This paper is adapted from his
talk at the 2014 IRI Annual Meeting in Boston in May. [email protected]
Abhijit Ganguly is manager, business m odel innovation at Goodyear.
Before jo in in g Goodyear, he was responsible fo r leading grow th in itia
tives across m ultiple geographies fo r a manufacturing company. He
holds a bachelor's degree in mechanical engineering from Jadavpur Uni
versity (India) and an MBA from the Tuck School of Business at Dartmouth.
[email protected]
DOI: 10.5437/08956308X5706013
way, is inherently embedded in a firm's competitive environ
ment: the ability to create margins and growth is dependent
on what competitors are doing to create margins and growth
for themselves. The business model is not simply the means
by which a firm creates and captures customer value. Focus
ing on creating ...
[Whitepaper] Business Model Innovation: Creation of Scalable Business Models ...Flevy.com Best Practices
More Information:
https://flevy.com/browse/flevypro/business-model-innovation-bmi-scalable-business-models-5182
Scalability is described as possible meaningful changes in magnitude or capacity. In business terms, it’s the capability of a system to enhance productivity upon resource augmentation. Scalability provides an organization the capabilities to develop compelling value propositions — that are hard to imitate by the rivals — and achieve profitable growth even in the wake of external threats, cut-throat competition, stringent laws, or financial downturns.
Today’s challenging business ecosystems and economic outlook demand from the enterprises to develop novel and Scalable Business Models that are able to leverage positive returns on investments. To accomplish this, leaders need to identify and eradicate any capacity issues, enhance collaboration with existing partners, build new partnerships, or develop platforms to work with their opponents.
Executives should invest in scaling options only when they are sure to boost returns. They have to be quick to exit a business when returns on investment to scale backfire.
5 Patterns of Business Model Scalability
Benchmarking a number of successful organizations reveals that their Business Models were flexible enough to sustain internal and external pressures. Business Model Scalability hinges on aligning the strategic partners and Value Propositions to serve the customers.
To drive Business Model Innovation (BMI), leading organizations consistently display 5 critical patterns of Business Model Scalability:
Operate with multiple distribution channels
Eliminate typical capacity limitations
Outsource capital investments to partners
Allow customers and partners assume multiple roles in the business
Create platform models
Got a question about this presentation? Email us at support@flevy.com.
1. 360° – the Business Transformation Journal No. 11 | August 2014
6
Abstract
Business model innovation becomes increasingly more important. It is without doubt the most power-
ful driver for competitive advantage in today’s economy and has started to outshine product innova-
tion. There are many cases in which a changing market environment requires an innovative business
model that can sustain market leadership.
After several years of business model innovation research and the application thereof, SAP provides a
systematic, iterative approach to identify the appropriate business model. The approach is suitable for
industries and for businesses of any size. It interrelates with other well-known approaches such as De-
sign Thinking or Lean. Together they offer a meaningful and solid foundation for any business.
To better understand the approach, a use case is used to show step by step how it successfully
turned a cloud business into a cloud of insights.
2. 360° – the Business Transformation Journal No. 11 | August 2014
DRIVERS
7
The increasing difficulty to differentiate
based on services and products has led
to significantly greater interest for busi-
ness model innovation in research and
practice (Chesbrough, 2007; IBM, 2012).
Today, it is well understood that busi-
ness models are decisive for a compa-
ny’s long-term success or failure and
are probably the most powerful driver for
competitive advantage (Johnson et al.
2008). Nevertheless, there is still a strik-
ing discrepancy within most companies
between the degree of awareness about
the importance of Business Model De-
velopment and Innovation (BMDI) and
its implementation (Bucherer et al. 2012;
Chesbrough, 2010).
What is needed is a systematic approach
to continuously develop and improve the
business models of a company and to
come up with business model innova-
tions whenever it makes sense. Compa-
nies have to maintain and develop their
business models with the same profes-
sionalism and seriousness as they do
for their product and service portfolio.
Hence, processes, organizational struc-
BUSINESS MODEL
DEVELOPMENT &
INNOVATION
A Strategic Approach to Business
Transformation
Even the best companies cannot sustain themselves by simply focusing on product
innovation. To succeed, companies have to evolve their business model innovation
skills. In this article you will learn how business models can be developed and
evaluated based on an agile and iterative approach.
by Julia Doll and Uli Eisert
tures, and accountability need to ensure
that each business unit and, if required,
even every single product or service is
embedded into an appropriate business
model. Appropriate means that under
given internal and external conditions
the most promising model is chosen and
that risks are mitigated by a comprehen-
sive validation of the underlying assump-
tions. This will ensure that the economic
viability of the unit and the entire enter-
prise is ensured in the best way possible.
BMDI: The Silver Bullet for Economic
Viability?
Most scholars and practitioners today
agree that successful innovations should
satisfy three perspectives: technical fea-
sibility, human desirability, and economic
viability (Brown, 2008; IDEO, 2012). Like-
wise, products or services already in the
marketplace are only successful if their
quality lives up to user’s expectations,
users want to use them, and buyers are
willing to pay for them. While technical
feasibility and product quality had been
the focus of developers, engineers, and
3. 360° – the Business Transformation Journal No. 11 | August 2014
8
product managers for quite some time,
Design Thinking was a break-through
approach to successfully focus on hu-
man desirability and to ensure that us-
ers are keen to use (and maybe own) a
product. However, Design Thinking does
not sufficiently focus on the buyers’ per-
spective. It does not provide the required
mindset as well as tools to systematical-
ly cover economic viability and to make
sure that buyers are willing to pay a giv-
en price (this might be more obvious in
B2B industries where buyers and users
are often different people). We believe
that Business Models Development and
Innovation is the missing piece to cover
the economic viability dimension (see fig-
ure 1).
Business models specify the core logic
of a firm because they describe how val-
ue is created and delivered to the cus-
tomers and how the value is captured for
the producer or provider (Osterwalder et
al. 2005). If used in the right way, busi-
ness models also capture the competi-
tive advantage of a company. In a very
pragmatic way, they combine the market-
based view and the resource-based view
of the firm, which makes them a great
“unit of analysis” – that is an ideal basis
for a systematic development of business
activities.
Some people might think that business
cases and business plans are sufficient
to ensure economic viability for a new
product, business field or even compa-
ny. Both are necessary; nevertheless, if
done without a systematic development
of the appropriate business model be-
forehand, they will neither ensure that the
most promising approach is chosen nor
that the underlying assumptions are suf-
ficiently validated.
Only a systematic, iterative approach to
Business Model Development & Innovation
Design Thinking
Business Model
Development &
Innovation (BMDI)
(Lean) Engineering
Illustration by Tobias Hildenbrand based on IDEO, 2012
Fig. 1: BMDI:The
missing piece
Box 1: How was BMDI developed?
The approach was developed by SAP based on extensive
research in collaboration with the University of St. Gal-
len and practical experience from dozens of internal proj-
ects. It takes into account well-known concepts such as
the “Business Model Canvas” (Osterwalder, 2005), “Busi-
ness Model Patterns” (Gassmann, 2013) or “Lean Start-
Up” (Ries, 2011; Blank, 2013).
The approach was standardized and validated by coach-
ing multiple teams at SAP with innovative products facing
market entry or established products with insufficient suc-
cess. After several effective projects, we started to consult
SAP customers as well as HANA start-ups and Social Im-
pact start-ups.
4. 360° – the Business Transformation Journal No. 11 | August 2014
DRIVERS
9
identify the appropriate business model
such as the BMDI approach provides a
meaningful and solid foundation to calcu-
late business cases and develop business
plans (see box 1). In addition, it guides
you to a model that allows full exploita-
tion of ideas and capabilities, regardless
of whether this model is highly innovative,
totally new or “just” the adaption of a prov-
en, existing business model or something
in between.
Business Model Description
Business models can only be leveraged
as an appropriate “unit of analysis” if the
used description model allows to illus-
trate and convey the business logic in
a highly condensed and easy-to-under-
stand manner. This explains the success
of the Business Model Canvas from Al-
exander Osterwalder as the de-facto
standard for business models, at least
on the practitioner’s side. It uses nine
elements to describe a business mod-
el (Strategyzer, 2011). We call the can-
vas the “enterprise view” of the business
model (see figure 3 on the next page)
and complement it with a “network view”
that allows it to describe the relevant
network and interrelations around the
enterprise (see figure 2). This helps sig-
nificantly to understand dependencies
in complex business models and to en-
sure that competition is always consid-
ered when the business model is devel-
oped. Without a systematic development
of the approriate business model be-
forehand, business cases and plans are
not sufficient to ensure economic viabil-
ity (Eisert, 2013).
What is BMDI in a Nutshell?
The art of BMDI is to turn the baseline
(see box 2 on the next page) into an ap-
propriate model that is, under given in-
ternal and external conditions, the mod-
el that ensures economic viability in the
best way possible. In order to accomplish
that, the team has to go through different
activities, such as analysis, design, val-
idation, implementation, execution, and
scaling. However, it will never be a se-
quential, linear process. It must be tai-
lored to the specific challenges of the
My Company My Customers My Partners My Competition
Network View
Partner Network Customer Network Competition
Fig. 2: Network
view (adapted
from SAP SE/CC
BY 4.0)
5. 360° – the Business Transformation Journal No. 11 | August 2014
10
project and it has to be flexible enough
to take into account all the insights that
will be gained along the way. That is why
BMDI is a highly iterative and agile ap-
proach. Its beauty is the combination of
simplicity and flexibility with powerful
methods. BMDI offers four types of iter-
ation that allow project teams in any giv-
en situation to identify and carry out the
activities needed to develop their model
into the right direction.
The Four Types of Iteration
We distinguish four basic ways to sys-
tematically develop a business model.
All of them follow the diverge/converge
principle that has proven to be success-
ful in Design Thinking. First the team cre-
ates options, then it synthesizes its in-
sights and chooses the most promising
option(s). For each type of iteration we
have developed a set of methods while
leveraging good industry practices (see
figure 4).
Analyze & Improve: During this itera-
tion, parts of the business model are an-
alyzed in more detail to improve the busi-
ness model based on the gained insights.
This can be done in various areas, a few
examples are:
−− Analyze customer needs in detail and
improve the value proposition to bet-
ter address them
−− Analyze competitors and improve the
value proposition to increase unique
aspects
−− Analyze partnering options and im-
prove your needed key activities and
resources accordingly
Business Model Development & Innovation
Box 2: It All Starts with the Baseline
To develop the business model, the first exercise should al-
ways be to describe a baseline for the following activities.
This is straightforward, when a business model already ex-
ists, which is not as successful as expected or under pres-
sure from the competition. In this case the current state of
the business model is the baseline. However, even if you
are in a very early stage, e.g. for new product ideas or start-
ups, it is important to describe the baseline. In this case all
ideas, thoughts, and assumptions, regardless to which ex-
tent they are completed or validated, should be taken into
account, to reflect the current thinking and create a com-
mon ground for the team working on the business model.
Value Capture
Value Creation
Competition
Why?
How? What? Who?
My Company My Customers My Partners My Competition
Enterprise View
Fig. 3: Enterprise
view (adapted
from Business
Model Foundry
AG/CC BYSA 3.0)
6. 360° – the Business Transformation Journal No. 11 | August 2014
DRIVERS
11
Box 3: The Right Team and Mindset
Besides the four types of iteration described in this article,
the BMDI approach is also about the right team set-up and
mindset. The team has to unite various perspectives; so di-
versity is important. In addition, there is a need to access
experts (e.g. pricing, legal issues), stakeholders for valida-
tion (in particular customers), decision makers as well as
sponsors. The right mindset is very similar to the one need-
ed in Design Thinking projects (e.g. openness and endur-
ance are key).
−− Analyze customer experience and im-
prove customer relations accordingly
−− Analyze key activities to reduce relat-
ed costs
Challenge & Change: If there are val-
id triggers (opportunities or threats) to
challenge the business model base-
line at any point in time, a design chal-
lenge is formulated and dedicated ide-
ation methods are used to come up with
different alternative business model op-
tions. While some methods rather facil-
itate systematic ideation for incremental
improvements, others are more suited
for creative ideation that might bring up
disruptive, out-of-the-box alternatives. In
any case, the team has to cluster ideas
and finally has to decide which changes
will be used for subsequent processing.
Test & Verify: Each business model is
based on several assumptions that im-
ply risks if they turn out to be wrong.
That is why crucial assumptions should
be tested and validated at an early stage
with limited effort. Usually assumptions
are made regarding customers’ issues,
needs, and wants, as well as their will-
ingness to pay. Also, assumptions can
be made regarding appropriate chan-
nels, capabilities of key partners, and
the company itself. These assumptions
should be derived out of the business
model and the risks involved need to be
evaluated in order to figure out which as-
sumptions should be tested in which se-
quence. The “Lean Start Up” literature
(Ries, 2011) provides many insights as to
how these assumptions can be validated
depending on the maturity of the project.
Key elements are the “Build-Measure-
Learn” cycle, and the “MVP (Minimal Vi-
able Product) concept” to minimize the
involved effort, as well as “actionable
metrics” that should ensure some objec-
tivity throughout the test. Depending on
Baseline
Appropriate, Validated
Business Model
Create Choices Make Choices
Diverge Converge
Partner Network Customer Network Competition Partner Network Customer Network Competition
Evaluate &
Decide
Test &
Verify
Challange &
Chance
Analyze &
Improve
Fig. 4: BMDI in a
nutshell
7. 360° – the Business Transformation Journal No. 11 | August 2014
12
the results of the test, either an assumption
is confirmed and the team can move on,
or changes are required, sometimes sig-
nificant ones, so called “pivots”.
Evaluate & Decide: To figure out which
of the different business model options
are most promising, these have to be
evaluated both qualitatively and quanti-
tatively. For the overall evaluation two di-
mensions are decisive: impact vs. ease
of implementation. Impact summariz-
es all the relevant criteria that allow as-
sessment of the potential impact (includ-
ing revenue potential) of the business
model. Ease of implementation summa-
rizes all related efforts (including costs)
and risks. The evaluation criteria and its
relative weight have to be project-spe-
cific because stakeholders might look at
very different aspects. However, the two
dimensions can be depicted in a simple
decision matrix to illustrate the consoli-
dated feedback of various stakeholders
and experts to simplify decisions. The
quantitative evaluation can be done by
deriving a business case out of the re-
spective model. Therefore, all revenue
streams related to the addressed cus-
tomer groups are estimated based on
revenue models, price points, and num-
ber of customers/deals. In addition, all
costs related to value creating and deliv-
ering activities, resources, and partner-
ing are estimated and summarized. Fur-
thermore, towards the end of the project
the favored business model is evaluat-
ed in detail to provide the decision mak-
ers with a solid foundation for further
planning or investment decisions.
SpecificsofComplexBusinessModels
In two-sided or multi-sided business
models, more than one customer group
needs to be convinced because there is
a crucial relationship between the cus-
tomer groups. The best-known examples
for these types of models are platform-
based business models such as Airbnb
or Google Search. For these models you
have to create a win-win-win situation be-
cause value needs to be created for all
customer groups even those that do not
pay anything (such as the end user of a
search engine). This gets even trickier
if the model is subject to so-called net-
work effects. Network effects are pres-
ent if the value of the model depends on
the amount of other customers also us-
ing it and can appear within one customer
group (direct) or across customer groups
(indirect network effects). Network ef-
fects are extremely beneficial for the
owner of the business model as soon as
the required critical mass is reached, i.e.
when the adoption of the product or ser-
vice is self-sustaining (Mahler and Rog-
ers, 1999). However, until critical mass is
achieved, the network effects are hinder-
ing the adoption and success of the busi-
ness model. Investments as well as some
endurance are needed to be success-
ful in the end. As a consequence, BMDI
supports the systematic development of
strategies that can be used to accomplish
critical mass.
Box 4: Project Description Helix Nebula
In 2012, science organizations such as the European Or-
ganization for Nuclear Research (CERN), the European
Molecular Biology Laboratory (EMBL), and the European
Space Agency (ESA) teamed up with IT service compa-
nies, such as Atos, CloudSigma, Interoute, and T-Systems,
to establish a federated European cloud known as Helix
Nebula (HN).
Business Model Development & Innovation
The evaluation criteria and its
relative weight have to be project-
specific because stakeholders might
look at very different aspects.
A win-win-win situation has to be
created because value needs to be
created for all customer groups even
those that do not pay anything.
8. 360° – the Business Transformation Journal No. 11 | August 2014
DRIVERS
13
How BMDI Transformed a Cloud
Business into a Cloud of Insights
Helix Nebula (HN) cloud suppliers (see
box 4) faced several challenges, such as
addressing a new market segment called
“big science”, pressure on prices due to ap-
parently low-cost in-house solutions, and
building up an innovative partner ecosys-
tem with usually competing companies.
Major competitors such as Amazon Web
Services (AWS) offered cloud services at
extremely low prices. The fact that some
of the customers already used AWS
was reason enough to accelerate mar-
ket entry. At that point, the major remain-
ing question was if HN could, against all
odds, beat AWS based on pricing, or if a
value proposition tailored to the needs of
science could be found?
In “Analyze & Improve”, we started by
investigating related industries, exist-
ing and potential competitors, as well as
partner ecosystems with their drivers and
obstacles. Further, we analyzed the cus-
tomer side, the public sector, and specif-
ically the needs of “big science”. For this,
multiple interviews with public institutions
and the customers themselves were con-
ducted. We found that science organiza-
tions tend to have many publicly fund-
ed IT resources, which are maintained
by non-profit organizations. If HN could
integrate these resources with the com-
mercially-offered solutions, it would offer
a previously non-existing flexibility to the
market. This value proposition would set
HN apart from AWS. However, based on
the very restricted budget of science or-
ganizations, prices would still have to be
very low. Having this in mind, the chal-
lenge for the supply side was to create a
valuable business out of this ecosystem
without just covering its costs.
Focusing on this design challenge we
conducted several workshops with HN
suppliers in “Challenge & Change” to de-
velop multiple potential business mod-
els. Since the establishment of a not-
yet-existing cloud ecosystem required
room for innovation, many creative meth-
ods were applied to inspire innovative
ideas. A second challenge was to over-
come coopetition issues, in order to en-
able smooth business operations of the
proposed ecosystem. For this, multiple
broker roles were determined that would
enable interaction between suppliers and
buyers based on business and technical
processes.
In “Evaluate & Decide” these business
models were evaluated by experts at
SAP and HN suppliers. The result was
a business model roadmap, with a final
business model that goes beyond ge-
neric cloud computing by creating value
not only for science, but also for busi-
ness, government, and society based on
the analysis and aggregation of Big Data
brought to the cloud by science organi-
zations. For example, earth observation
data from ESA can be very valuable to oil
companies in order to predict landslides
near pipelines. This extension allows sci-
ence organizations to consume cloud
services for free by providing valuable
Key Learnings
►► It is not enough to rely on product innovation. Often
products fail, if they address the market with the wrong
business model.
►► Business models can be systematically developed and
evaluated based on an agile and iterative process that
ensures economic viability.
►► Business models are probably the most powerful driver
of competitive advantage and should be managed as it
is done with product portfolios.
►► Business cases by themselves are insufficient if they do
not build on a validated business model.
►► Business model development and innovation combined
with Design Thinking and lean offers a meaningful and
solid foundation for businesses.
Earth observation data from ESA can
be very valuable to oil companies
in order to predict landslides near
pipelines.
9. 360° – the Business Transformation Journal No. 11 | August 2014
14
Business Model Development & Innovation
data to the cloud and to open up a major
revenue stream for HN suppliers by giv-
ing room for innovative services. More-
over, it could help nations and cities pro-
tect their citizens based on early warning
systems. The growing ecosystem of re-
search organizations collaborating in the
cloud allows for the aggregation of near-
ly all conceivable scientific knowledge in
one cloud. Thus, it enables not-yet-exist-
ing insights based on inter-organization-
al and international research.
To fill the cloud with data, the design of
a profitable business model that pro-
vides cloud services tailored to the enor-
mous demand of “big science” was re-
quired. In this field the major competitor
was AWS. We had defined a clear differ-
entiation by integrating non-profit partners
offering publicly funded resources to Eu-
ropean big science organizations. Howev-
er, HN still needed to compete on price.
Hence, we conducted a business case to
compare HN prices to CERN’s in-house
costs and AWS prices. The results spoke
for themselves. HN’s prices beat AWS’s
prices and partly CERN’s in-house costs.
Assuming that CERN moves to the cloud
gradually while HN reaches economies
of scale, this is a perfectly valid starting
point. Therefore, we had proven econom-
ic viability, not only by offering a unique
value proposition but also by providing
a financially attractive alternative to in-
house solutions for science organizations.
The final challenge to tackle was the
roadmap to critical mass in order to es-
tablish the final business model. For this,
we worked closely with one of the major
flagships, namely ESA, in order to cre-
ate suitable steps for implementation.
We carefully considered a first potential
niche to start with, which would make use
of the satellite earth observation data al-
ready incorporated into the HN cloud.
Based on this niche, the market would be
expanded into other fields, based on data
enrichment in the cloud. The proposed
steps, amongst others, were to build up
a lively community with the first ecosys-
tem, to facilitate partner co-innovation
and complementation in order to enrich
the platform along the way, as well as to
enable the exchange between partners
and customers. Based on the proposed
business model roadmap and the road-
map for critical mass, the Helix Nebula
Marketplace was rolled out in May 2014.
This use case showed us the specif-
ic needs of partner ecosystems going
through the process of business model
innovation. Specific focus must be giv-
en to the needs of each partner, provid-
ing each of them with a suitable business
model underlying the common business
model of the ecosystem as a whole.
Conclusion
Consulting customers and start-ups has
proven that the BMDI approach is rele-
vant across industries and can be applied
to challenges faced by businesses of any
size. In order to succeed, companies will
have to realize that BMDI should be grant-
ed as much importance as product inno-
vation. The ultimate goal is to establish a
standardized BMDI process in each com-
pany, in which the business models im-
plemented are managed similarly to the
product portfolio of the company.
Learn more about: The approach is integrated into SAP innovation approach.
To receive further information on training and consulting services, contact
Peter Mittemeyer (peter.mittemeyer[at]sap.com).
Business Model Development
and Innovation is relevant across
industries and for businesses
of any size.
10. 360° – the Business Transformation Journal No. 11 | August 2014
DRIVERS
15
Service
AUTHORS
Julia Doll is a Project Lead for Business Model Innovation at SAP Switzerland. She has
coached several projects regarding analysis, design, and evaluation of business models.
During her career at SAP, starting in 2007, she has worked on several projects around the
globe. Julia holds a Master of Science from the University of Mannheim, Germany and a
Master of Business from the University of Queensland, Australia.
ju.doll[at]sap.com
Dr. Uli Eisert built up a SAP research lab at the University of St. Gallen and is heading a
research & innovation team that is currently focusing on Business Model Development &
Innovation (BMDI) as well as new approaches leveraging smart management of intangi-
ble assets. He published various journal papers and articles on innovation management
and BMDI. Before his current position, he was heading the global PLM solution manage-
ment at SAP and worked as a consultant and project manager for SAP implementations.
He holds degrees in mechanical and industrial engineering as well as a PhD in business
administration.
uli.eisert[at]sap.com
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