Our strategy professors always taught us that you have to position yourself in the right industry, analyze the market or have the right core competencies. And innovation will happen in products and processes. Really? With the classical units of analysis for strategy like industry, markets we do not understand what is happening out there in the digital area. We need a new unit of analysis. The only constant in the digital tsunami is the job we solve for our customer. And only the business model is in the end decisive for value creation aka solving the job of the customers. The locus of innovation in the digital age is the business model and all its elements. The business model gives us new boxes to think in an thereby breaking the barriers of our conventional thinking about products, markets or industries. Besides the business model, we need a new process to plan in. Strategic planning does not work since it wants to predict the future. With entrepreneurial design, we do not plan the result of the process but the process itself to discover the future.

1. What your
professors
forgot to teach
you in strategy
& innovation
m’gmt
CEMS Alumni Conference 2015
Dr. Patrick Stähler, fluidminds
Do we have
the right
units of
analysis for
strategy?

2. The company invented
the digital camera in
1973 …

3. …was the partner of
choice for Apple to
enter the digital camera
market

4. …but never understood that
digital is not a product
innovation but demands a
whole new business model

5. Digital was not about the
great quality of pictures that
the traditional customer of
Kodak loved
Digital is different.

6. From keeping to
sharing memories –
Digital solves new
jobs for customers

7. Customers discovered
new uses, no sane
person would have
ever thought off

8. Too bad for Kodak that
now even professional
photographers love the
quality of digital

9. 1
We can only understand what we can see
Classical innovation &
strategy frameworks can
not explain reality anymore
We need new boxes to think in

10. Would you invest
into this business?
„We will have sales of USD 100 Mio. With
a margin that is much, much higher
than today. To do so, we just need 30
employees and will have a market share
of 80%.”

11. A little quiz
What is this?

12. 10.000 mio. USD classified market vanished because of Craigslist‘s business
model innovation
Craiglist 100 Mio. USD
turnover (30 employees,
highly profitable
but replaced a
substantially larger
market)
10.000 Mio. USD
decline in classifieds
2000-2008
Source: http://mediamemo.allthingsd.com/20090610/another-way-to-describe-the-newspaper-
crisis-the-craigslist-boom/
You would have never investedas a traditional media houseinto Craiglist. You would nothave cannibalized yourtraditional business.

13. What is this?

14. What is this?

15. Same thing,
different
perspective!

16. „What was one of the most
successful aid programs for the
developing world?“
*Actually, it has nothing to do with governmental aid or NGOs.

17. „Which innovation
expanded the global
market for mobile
communication the
most?*“
*After the invention of mobile telephony itself

18. Dr. Patrick Stähler |
18
Which innovation
made this possible?

19. Prepaid
A small change in billingopened new markets inAfrica, Asia, Latin America,
Youths, etc..

20. „Wow, I have invented the future of
advertising. We do not need any videos
or pictures or even color anymore.
The future will be a text ad with maximal
95 characters.
It‘s brilliant, isn‘t it?
Would you havedared to saythis?

21. § Instead of looking at better
products, Google Adwords
brought back relevance to
the ad industry
§ Google is blamed to be the
killer of newspapers
§ Sales around 59 bn. USD
(2014)

22. 2
Beyond product and process innovation
Business Model Innovations
are »strange« and will
change the world we know

23. product/technology value
creates
X
enables
business model
Technology or a new produt does not create value.
It is the business model

24. 3
Beyond product innovation
Your business model is
decisive for value creation
not a new technology

25. Your Head
We can only think outside
the boxes if we have new
boxes.

26. 4
Innovation can start anywhere
The business model gives
you new boxes to think in
and innovate in

27. „What is a
business
model?“

28. The business model is
the DNA of your
business
Are you
aware of yourDNA?

29. The business model
gives meaning to your
employees and
customers

30. 4 key questions for a successful business:
What excites
our
customers?
Value Proposition
How do we
create value
for our
customers?
Value Architecture
How do we
earn money?
Revenue Model
Who is our
team?
What values
do we
pursue?
Team & Values

31. What industry
are we in? Who
are our
competitors? “
„

32. In which industry
are we in?“
„

33. Dr. Patrick Stähler |
33
That was the job
the customer
wanted to do.
“
„

34. Customer job to be done
We do not need a drilling
machine, screws and dowels.
We want to hang up a picture.
That’s the job-to-be-done.
Customers hire a product or
service to get a job done. The
products are a means to an
end, not an end in themselves.
The value proposition
creates the value for
the customer, not the
product!

35. Value Proposition
The job-to-get-done is
solution neutral. The job is to
hang up a picture.
Potential solution:
§ The drilling machine, the
dowel and screws
§ Hammer and nail
§ Powerstrips® by Tesa
§ A friend with a drilling
machine
It is of uttermost
importance to
understand the core
job we solve for our
customers

36. product/services happy customers
creates
X
value proposition
solves
delivered by
business model
The customer perspective: Technology does not create value. It
is the value proposition the customer loves
customer problem
addressed
by

37. Value
Proposition
Customer
• Who is our
customer?
• What job do we
solve for them?
Value
• What value do we
create for our
customers? What
value do we create
for our partners?
What excites our customer?

38. Value
architecture
Offer
• What is our offer?
Distribution &
Communication
Channels
• How do we reach
our customers?
• How do we
communicate with
our customers?
How do we create the value?
Value Chain
• What activities do
we have to do to
produce our offer?
• How does our
value chain look
like?
Partner
• What partners do
we need?
Core Capabilities
• What are the core
capabilities we
need?

39. Revenue
Model
Cost Structure
• Cost structure is
defined by your
value architecture.
Revenue Sources
• With what do we
earn money?
How do we earn money?

40. Team &
Values
Team
• Who is our team?
• What
competencies do
we have in our
team?
Values
• What values do we
life in our team?
• How do we
interact with each
other and with
customers?
Who is on our team? What values do we live?

41. Customers
Who are our customers?
What job do we solve for our
customers?
Customer Benefit
What benefit do we create for our
customers?
What benefit do we create for our
partners?
Offer
What is our offer?
Value Chain
What are our value creating steps?
What is our value chain?
Core Capabilities
What are the core capabilities
we need?
Distribution & Communication
Channels
How do we reach our customers?
How do we communicate with
our customers?
Partner
Which partners do we need?
Questions for a Successful Business Model
Cost Structure
Cost structure is defined by the
value architecture.
Revenue Sources
With what do we earn money?
Team
Who is on our team?
What competencies do we have
on the team?
Values
What values do we pursue?
How do we interact with each other
and the customers?
Revenue Model
Team & Values
Value PropositionValue Architecture

42. All building blocks of a business model are a starting
point for innovation, even your Team & Values
§ All components of a business
model are starting points for
innovation
§ Value Innovation
§ Architectural Innovation
§ Revenue Model Innovation
§ Cultural Innovation
§ At the end, all business model
innovation must create more
value to the customers
Starting points of business
model innovation
Customers
Customer Benefit
Offer
Value Chain
Core Capabilities
Distribution & Communication
Channels
Partner
Business Model:
Cost Structure Revenue Sources
Team Values
Revenue Model
Team & Values
Value PropositionValue Architecture

43. Your goal as a business model
innovator: Be different from
your competitors and being
loved for what you do by your
customers

44. Uber is more than a Taxi
app. It wants to
revolutionize how people
move. It wants to disrupt the
taxi & people moving
industry

45. AirBnB opened a whole new
segment of offers to the
individualistic traveler of
today

46. 5
Analysis of the past is not enough
We need a different
strategic planning process
for disruptive innovation
Start with customer insights not current
markets

47. Point of View
We do not plan the result of the process but
the process to discover the future strategy
1
Customer
Insight
3
Ideate
2
Understand
4
Design
5
Decide &
Prototype
6
Build & Learn

48. 1
Customer Insight
- Observe your customers
What job is not yet or
badly solved?
- How does the Customer
Experience Cycle look
like?
- On what customer insights
is your idea based?
- validate customer insight
2
Understand & Unlearn
- understand the current
solutions and their
strength & weakness
- understand how the
potential customer
thinks and decides
- understand the market &
market mechanism
3
Ideate
Develop as many ideas as
possible in the area of
- customers/ value
proposition
- value architecture
- revenue model
4
Design
- decide for three or four
options
- design the business
models for the options
- check the
interdependencies in the
business models
- work on the uniqueness
(positioning)
- optimize the building
blocks
5
Decide & Prototype
- decide for the best
model to go for
- build prototype
- test prototype with
customers
- write business case
- decide again or work on
different option
6
Build & Learn
- execute business model
- learn continuously from
customer feedback and
control KPIs
- adjust and refine
continuously the
business model

49. Unsolved job-to-be-done
What is the biggest
problem with socks?
Always start with thejobs-to-be done andinsights

50. JUST DO IT.

51. More Information on
http://blog.business-model-innovation.com
Dr. oec. Patrick Stähler
fluidminds GmbH
Kreuzstrasse 2
CH-8008 Zürich
Patrick.Staehler@fluidminds.ch
www.fluidminds.ch
blog.business-model-innovation.com
@business_inno