Business model innovation 2 day workshop facilitation slides

1. $ 1.600.000,- © Marc Sniukas - Doujak Corporate Development

2. Free Download © Marc Sniukas - Doujak Corporate Development

3. Business Model Innovation

4. Business Model Innovation How to (re)invent your business. by Marc Sniukas www.sniukas.com

5. What will we do today? Agenda 1. Why is Business Model Innovation important? 2. What is a Business Model? 3. What is Business Model Innovation? 4. What is the Process of Business Model Innovation?

6. What will we do tomorrow? Agenda 1. How to develop and design new Business Models? 2. How to evaluate Business Models? 3. Case Study 4. What are characteristics of Business Model Innovators?

7. TEACHING We don‘t teach…we create opportunities to learn! LEARNING

8. Getting to know each other “ Who are you? “ What is your work (company, position, …) “ Why are you here? “ What do you know about business model innovation?

9. About Marc www.sniukas.com Consultant Author Researcher

10. How to (re)invent your Business Model? The Framework: Dimensions to consider Context Conditions Surrounding Business Model Innovation Activities Purpose Content Input to Result of Business Model Process Business Model Innovation Flow of Business Model Innovation Innovation Activities Activities Activities Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning

11. What are we going to do today? Agenda 1. Why is Business Model Innovation important? 2. What is a Business Model? 3. What is Business Model Innovation? 4. What is the Process of Business Model Innovation?

12. How to (re)invent your Business Model? The Framework: Dimensions to consider Context Conditions Surrounding Business Model Innovation Activities Purpose Content Input to Result of Business Model Process Business Model Innovation Flow of Business Model Innovation Innovation Activities Activities Activities Why to engage in business model innovation? Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning

13. “Get the business model wrong, and there is almost no chance of success...” Prof. David Teece University of California, Berkley.

14. “Business model innovation matters and it is a top priority of CEOs.”

15. „Innovation is front and center on the corporate agenda, according to a global survey. Executives are adding more breakthrough innovations and business model changes to their portfolio to fuel the growth engine.“ Business Week, November 16, 2009

16. Why do Business Model Innovation? Benefits cited by business model innovators Source: IBM Global CEO Study 2006

17. Why do Business Model Innovation? Profit outperformers focus on business model innovation Source: IBM Global CEO Study 2006

18. Why do Business Model Innovation? Operating margin growth in excess of competitive peers Source: IBM Global CEO Study 2006

19. Why do Business Model Innovation? Business model innovators outperform traditional innovators Source: Businessweek / BCG Innovation Survey 2008

20. Why is it important to you? How Business Model Innovation can help you. Entrepreneurs Managers Public Officers Market Entry Growth Enhanced Value for Citizens Commercializing a Competitive Innovative New New Technology Advantage Approaches needed Create New Markets Fend of new New Public entrants Management

21. Is it time to renew your business model? How to tell: Environmental Forces

22. Is it time to renew your business model? How to tell: Product/Technology Life Cycle Stagnating or declining revenues Source: Moore, GA 2004, Darwin and the Demon: Innovating Within Established Enterprises. Harvard Business Review, 82

23. Is it time to renew your business model? How to tell: Product/Technology Life Cycle Source: Moore, GA 2004, Darwin and the Demon: Innovating Within Established Enterprises. Harvard Business Review, 82

24. Any Questions?

26. How to (re)invent your Business Model? The Framework and Dimensions to consider Context Conditions Surrounding Business Model Innovation Activities Purpose Content Input to Result of Business Model Process Business Model Innovation Flow of Business Model Innovation Innovation Activities Activities Activities Dimensions and components of Business Models and Business Model Innovations. Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning

27. What is a business model? Some definitions “ “A business model is simply the ‘way of doing business’ that a firm has chosen: its entire system for creating and providing consistent value to customers and earning a profit from that activity, as well as benefit for its broader stakeholders. It refers to the core architecture or configuration of the firm, specifically how it deploys all relevant resources (not just those within the company boundaries), to create differentiated value for customers at a profit…” (Davenport, T. H., M. Leibold and S. Voelpel (2006). Strategic Management in the Innovation Economy. Publicis Wiley.) “ The business model is a company’s answer to the question of how to make money in its chosen business. It describes, “…as a system, how the pieces of a business fit together” (Magretta, J. (2002). "Why Business Models Matter." Harvard Business Review 80(5) May: 86-92.)

28. What is a business model? The essence and main components WHO WHAT HOW is your do you offer do you customer? your customers? do this? Markets Products & Services Create Value Customer Segments Solutions Deliver Value Individual Customers Experiences Capture Value Value Proposition

29. Describing your business business model Please describe your business by answering these 3 questions. Who is your customer? What is your value proposition? How are you creating and delivering your offer? Source: Marc Sniukas

30. What is a business model? The different layers / levels of detail of a business model • Offering Value • Customer Proposition • Needs and job to be done • Creation Value • Delivery • Capture • Activities and processes • Network and value chain partners Organization • Resources, assets and capabilities • Governance structures and processes Relationships • to all stakeholders • Costs Financials • Revenues • Profit Source: Marc Sniukas

31. What is a business model? Tools for describing your business model Source: Accenture Source: The Boston Consulting Group Source: Innosight Source: businessmodelgeneration.com

32. Describing your business model Source: Linder, J. C. and S. Cantrell (2000). "Changing Business Models: Surveying the Landscape." A Working Paper from the Accenture Institute for Strategic Change.

33. Describing your business model Four components Source: Johnson, M, Christensen, C, & Kagermann, H 2008, Reinventing Your Business Model. Harvard Business Review, 86

34. Describing and visualizing your business model Why is it important? Be able to communicate it Speak a common language See the big picture Have a basis for innovation

35. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES KEY RESOURCES CHANNELS COST CENTRES REVENUE STREAMS Source: Canvas by businessmodelgeneration.com

36. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES What‘s your offer? Which „jobs KEY to be done‚ RESOURCES CHANNELS do you satisfy? COST CENTRES REVENUE STREAMS Source: Canvas by businessmodelgeneration.com

37. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES What‘s your Who‘s your offer? customer? Which „jobs Which KEY to be done‚ RESOURCES CHANNELS customer do you segments do satisfy? you serve? COST CENTRES REVENUE STREAMS Source: Canvas by businessmodelgeneration.com

38. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES What‘s your Who‘s your offer? customer? Which „jobs Which KEY to be done‚ RESOURCES CHANNELS customer do you segments do satisfy? you serve? How do you reach your customers? COST CENTRES REVENUE STREAMS Source: Canvas by businessmodelgeneration.com

39. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES What‘s your relationship What‘s your to the Who‘s your offer? customer? customer? What‘s your Which „jobs image? Which KEY to be done‚ RESOURCES CHANNELS customer do you segments do satisfy? you serve? How do you reach your customers? COST CENTRES REVENUE STREAMS Source: Canvas by businessmodelgeneration.com

40. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES What‘s your What are relationship your core What‘s your to the activities and Who‘s your offer? customer? processes? customer? What‘s your Which „jobs image? Which KEY to be done‚ RESOURCES CHANNELS customer do you segments do satisfy? you serve? How do you reach your customers? COST CENTRES REVENUE STREAMS Source: Canvas by businessmodelgeneration.com

41. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES What‘s your What are relationship your core What‘s your to the activities and Who‘s your offer? customer? processes? customer? What‘s your Which „jobs image? Which KEY to be done‚ RESOURCES CHANNELS customer do you segments do satisfy? you serve? What are your How do you main assets reach your and customers? competencies? COST CENTRES REVENUE STREAMS Source: Canvas by businessmodelgeneration.com

42. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES What‘s your What are relationship your core What‘s your to the activities and Who‘s your offer? customer? You are processes? customer? What‘s your your main Which „jobs image? suppliers, Which KEY to be done‚ partners RESOURCES CHANNELS customer do you and segments do satisfy? alliances? you serve? What are your How do you main assets reach your and customers? competencies? COST CENTRES REVENUE STREAMS Source: Canvas by businessmodelgeneration.com

43. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES What‘s your What are relationship your core What‘s your to the activities and Who‘s your offer? customer? You are processes? customer? What‘s your your main Which „jobs image? suppliers, Which KEY to be done‚ partners RESOURCES CHANNELS customer do you and segments do satisfy? alliances? you serve? What are your How do you main assets reach your and customers? competencies? COST CENTRES REVENUE STREAMS What is driving cost? Source: Canvas by businessmodelgeneration.com

44. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES What‘s your What are relationship your core What‘s your to the activities and Who‘s your offer? customer? You are processes? customer? What‘s your your main Which „jobs image? suppliers, Which KEY to be done‚ partners RESOURCES CHANNELS customer do you and segments do satisfy? alliances? you serve? What are your How do you main assets reach your and customers? competencies? COST CENTRES REVENUE STREAMS What is How do you driving cost? make money? Source: Canvas by businessmodelgeneration.com

45. Any Questions?

46. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES KEY RESOURCES CHANNELS COST CENTRES REVENUE STREAMS Source: Canvas by businessmodelgeneration.com

47. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES What‘s your What are relationship your core What‘s your to the activities and Who‘s your offer? customer? You are processes? customer? What‘s your your main Which „jobs image? suppliers, Which KEY to be done‚ partners RESOURCES CHANNELS customer do you and segments do satisfy? alliances? you serve? What are your How do you main assets reach your and customers? competencies? COST CENTRES REVENUE STREAMS What is How do you driving cost? make money? Source: Canvas by businessmodelgeneration.com

48. Describing your business model The business model canvas KEY KEY OFFER RELATIONSHIPS CLIENTS PARTNER ACTIVITIES R1 Sales Offer 1 Customer 1 You are Offer 2 your main Customer 2 suppliers, KEY partners RESOURCES CHANNELS and alliances? What are your Direct Sales main assets and competencies? COST CENTRES REVENUE STREAMS What is How do you driving cost? make money? Source: Canvas by businessmodelgeneration.com

50. ‚Hey! They’re lighting their arrows! Can they do that?‛ © Marc Sniukas - Doujak Corporate Development

51. Business Model Innovation is about... The essence WHO WHAT HOW is your do you offer do you customer? your customers? do this? New Ways of New Markets New Offers Doing Business New Value Propositions Source: Marc Sniukas

52. The Innovation Map 4 Types of Innovation Internal Operational Management Innovation Innovation Continuous Discontinuous Product & Service Business Model Innovation Innovation External Source: Marc Sniukas

53. Nine Inch Nails KEY KEY VALUE RELATIONSHIPS CUSTOMERS PARTNERS ACTIVITIES PROPOSITION KEY RESOURCES CHANNELS COST CENTRES REVENUE STREAMS Business Model Canvas teamplate by : businessmodelgeneration.com – Content by Marc Sniukas

54. MinuteClinic Traditional Approach Business Model Innovation Who “ Everybody “ Everybody What “ Usually full treatment “ Focus on basic treatments “ Services covered by health insurance “ Quick “ Special treatment for additional cost “ Convenient “ Affordable How “ A range of specialist “ Generalists “ Special facilities “ Located in shopping malls / inside “ One central location CVS pharmacies “ “Solution shops” “ Multiple locations “ “Retail model” Source: Marc Sniukas

55. Grameen Bank KEY KEY VALUE RELATIONSHIPS CUSTOMERS PARTNERS ACTIVITIES PROPOSITION KEY RESOURCES CHANNELS COST CENTRES REVENUE STREAMS Business Model Canvas template by : businessmodelgeneration.com – Content by Marc Sniukas

56. Grameen Bank Traditional Approach Business Model Innovation Who “ (Rich and middle class) people who “ “Low income clients” are reliable to pay back the credits or “ Poor people who would not get have enough assets as security. any loans from traditional banks (especially women) What “ Classic loans, usually for larger sums “ Small loans to “unbanked people” to buy assets. How “ Strong risk management “ About 97% make their payments. “ The returns from the interests belong “ The borrowers are the owners of to the bank/ shareholders the bank. “ Profit focus “ The profit of the bank goes back to the owners. “ There is no collateral. No lawyers. “ Social business focus Source: Marc Sniukas

57. McCafé KEY KEY VALUE RELATIONSHIPS CUSTOMERS PARTNERS ACTIVITIES PROPOSITION KEY RESOURCES CHANNELS COST CENTRES REVENUE STREAMS Business Model Canvas template by : businessmodelgeneration.com

58. McCafé Traditional Approach Business Model Innovation Who “ People who want a quick bite to eat “ People who want to sit down and “ Get in, order, get served quickly, get remain seated for a while out quickly again “ Create a “3rd place” à la Starbucks What “ Pre-made food prepared constantly “ Coffee and cake according to demand “ Made to order (coffee) “ Standard menus “ Pre-produced (cakes) “ Some variations allowed How “ 1 counter “ 2 counters “ Standardized processes “ Separate seating area for McCafé “ Central locations with high “ Key is to increase share of wallet frequencies of the customer and keep him for “ The key is to serve a maximum a longer period of time in the number of people during a given restaurant time “ Innovative use of existing assets. Source: Marc Sniukas

59. Nintendo Wii Traditional Approach Business Model Innovation Who “ Kids “ Everybody from 4-99 “ Hard Core Gamers “ The whole family “ Casual Gamers What “ High Tech – High Performance “ Family Console Console “ Low tech console “ Focus on fun rather than technical performance How “ High tech, high end processors for “ Low tech, lower power processors, speed and graphics, connect over the no additional features internet, additional features (DVD, “ New movement technology internet,...)  lower cost  high cost  lower sales price (190.- €)  high sales price (250-300.- €) Source: Marc Sniukas

60. How innovative is your business model? The Business Model Evaluation Spider Dimension Scale 1 5 approach traditional innovative Who Customers Profitability existing customers most profitable 3rd tier noncustomers least profitable Satisfaction most satisfied least satisfied Segmentation differences commonalities Buyer single buyer chain of buyers Attributes vs attributes circumstances Circumstances What Total Solution Appeal single product according to industry (either functional or emotional) total solution; experiences against conventional logic Product vs product function Function Features improve and raise selectively raise, reduce, create, and eliminate How Customer interface conventional logic experiences; every element of buying cycle addressed Revenue streams conventional logic new streams and pricing strategic pricing Cost not aligned with strategic price of the masses aligned with strategic price of the masses Activity system low fit, me too logic high fit, creative rearrangement of activities Assets existing assets new assets Source: Marc Sniukas

61. How innovative is your business model? The Business Model Evaluation Spider Assets 5 Activity System Customers 4 Cost Profitability 3 Revenue Streams Satisfaction 2 1 Customer Interface Segmentation Features Buyer 1 = conventional me too Function Circumstances 2 = imitative innovation Appeal Total Solution 3 = slightly innovative; some new ideas; not too risky 4 = innovative; risky new ideas 5 = radically different Source: Marc Sniukas

63. How to (re)invent your Business Model? The Framework and Dimensions to consider Context Conditions Surrounding Business Model Innovation Activities Purpose Content Input to Result of Business Model Process Business Model Innovation Flow of Business Model Innovation Innovation Activities Activities Activities How to achieve business model innovation within your company? Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning

64. The process of business model innovation A discovery driven approach Setting the Stage A Discovery-Driven Approach Source: Marc Sniukas

65. Source: Marc Sniukas How to (re)invent your Business Model? The Process “ “ Define the purpose, scope and focus of innovation activities Align business and innovation strategies “ Build leadership alignment & commitment • Identifying “ Build a common language and understanding internal and “ Definition of governance structures and processes external opportunities • Sensing, seeking Setting the Stage and shaping opportunities “ Bringing successful ideas to market • Describe the “ Financial impact current business “ Incubation model “ Acceleration • Explore and “ Transition understand A Discovery-Driven consumer and customer needs, Approach motivations, behaviors • Understand emerging “ Turn ideas into market markets, industry ready concepts and socio- “ Road-test the idea portfolio ecological trends with key stakeholders, consumers, internal and external “ Design new business models “ Prototyping, Technical feasibility “ Develop and select ideas “ Experimentation & learning “ Develop an idea portfolio “ Customer & stakeholder feedback “ Idea Generation (In-house, cross-units, external) “ Business planning, venturing, secure founding “ Idea Evaluation “ Decide of organizational and governance structures “ Idea Selection “ Evolution & optimization “ Strategic decision making

66. Setting the stage Getting ready Description Project Set Up Input (Business Model Innovation idea) Tasks 1. Define purpose, scope and focus (Why) 2. Define and build team (Who) 3. Define goals and metrics 4. Define governance structure, process and project plan (How) 5. Build leadership commitment Output • Project Brief/Assignment • Project plan incl. milestones, tasks, responsibilities, 1st resource planning per phase • Team is established • Common understanding about the project has been created Gate • Stop/Go decision • Team established and resources have been committed Tools • Kick-off workshop • Business Model Handbook • Project Brief • Project Planning Source: Marc Sniukas

67. Any Questions?

68. Discovery Gaining insights Description Identify internal and external opportunities Input Project Brief Tasks 1. Company Assessment 2. Market Assessment 3. Industry Assessment 4. Future Trends Assessments Output • Description AS IS of current business model, market, competition, industry • Description of opportunities • Description of first ideas • Update project planning incl. resources needed estimation for next phase Gate • Stop/Go Decision • Is the idea still interesting? • Is it worth spending the resources for the next phase? Tools • Desk and real life research • Who/What/How, Canvas, SWOT • Customer Profile, Value Curve, Buyer Experience Cycle • 5 Forces Source: Marc Sniukas

69. Discovery Gaining insights Source: Marc Sniukas

70. What does your customer want? The Customer Profile What does he THINK and FEEL? Fears, worries, aspirations, wants, needs, frustrations,.... What does he What does he HEAR? SEE? What others Environment say Others Influencers What does the Companies market offer? ... ... What does he DO? Behaviors Attitudes Appearance ...

71. What does your customer want? The Customer Profile What does he THINK and FEEL? Fears, worries, aspirations, wants, needs, frustrations,.... What does he What does he HEAR? SEE? What others Environment say Others Influencers What does the Companies market offer? ... ... What does he DO? Behaviors Attitudes Appearance ... Source: Xplane

72. How do you reach your customers? Buyer Experience and Channels Pre-Purchase Steps The Six Stages of the Buyer Experience Cycle Awareness Evaluation Purchase Delivery Use Supplements Maintenance Disposal Customer Productivity: In which stage are the biggest blocks to customer productivity? The Six Utility Levers Simplicity: In which stage are the biggest blocks to simplicity? Convenience: In which stage are the biggest blocks to convenience? Risk: In which stage are the biggest blocks reducing risk? Fun and image: In which stage are the biggest blocks fun and image? Environmental In which stage are the biggest blocks to environmental friendliness? friendliness: Source: Marc Sniukas. Adapted from Kim and Mauborgne “Blue Ocean Strategy” Harvard Business School Press, 2005

73. How do you reach your customers? Buyer Experience and Channels Pre-Purchase Steps The Six Stages of the Buyer Experience Cycle Awareness Evaluation Purchase Delivery Use Supplements Maintenance Disposal Channels Source: Marc Sniukas

74. What is your value proposition? Low Cost Airline Average Airline Car Transport high low Price Meals Lounges Seating Class Hub Connectivity Friendly Service Frequent Point to Choice Point Departures Following Kim and Mauborgne “Blue Ocean Strategy” Harvard Business School Press, 2005

75. What is your value proposition? The Value Curve high low

76. Who are your non-customers? Why are they not buying? “ 1st group: „soon-to-be“ non-customers: They minimally use the current offering, but are constantly searching for something better or different and ready to switch easily. They are closest to the existing customers. “ 2nd group: „refusing“ non-customers: They either do not use or cannot afford to use the current market offerings because they find the offerings unacceptable or beyond their means. These customers are willing to buy, but not at the current terms. “ 3rd group: „unexplored” non-customers: They are the farthest away from the existing market. Typically they are being ignored completely as potential customers by the industry, either because they have always been assumed to belong to another industry or are not being considered worth the effort.

77. Any Questions?

78. What will we do tomorrow? Agenda 1. How to develop and design new Business Models? 2. How to evaluate Business Models? 3. Case Study 4. What are characteristics of Business Model Innovators?

79. Thanks for your attention! ....See you tomorrow.

80. Business Model Innovation How to (re)invent your business. by Marc Sniukas www.sniukas.com

81. What did we do yesterday? Agenda 1. Why is Business Model Innovation important? 2. What is a Business Model? 3. What is Business Model Innovation?

82. How to (re)invent your Business Model? The Framework: Dimensions to consider Context Conditions Surrounding Business Model Innovation Activities Purpose Content Input to Result of Business Model Process Business Model Innovation Flow of Business Model Innovation Innovation Activities Activities Activities Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning

84. How to (re)invent your Business Model? The Framework: Dimensions to consider Context Conditions Surrounding Business Model Innovation Activities Purpose Content Input to Result of Business Model Process Business Model Innovation Flow of Business Model Innovation Innovation Activities Activities Activities Why to engage in business model innovation? Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning

85. Why do Business Model Innovation? Benefits cited by business model innovators Source: IBM Global CEO Study 2006

86. Is it time to renew your business model? How to tell

89. What is a business model? The essence and main components Source: Marc Sniukas

90. What is a business model? Tools for describing your business model Source: Accenture Source: The Boston Consulting Group Source: Innosight Source: businessmodelgeneration.com

94. Business Model Innovation is about... The essence Source: Marc Sniukas

95. What will we do today? Agenda 1. How to develop and design new Business Models? 2. How to evaluate Business Models? 3. Case Study 4. What are characteristics of Business Model Innovators?

97. The Telco Business Model 3 models in one Source: businessmodelgeneration.com

105. Bharti Airtel Limited A new business model for the telco industry “ Bharti Airtel Limited, the largest telecom service provider in India, chose to strategically outsource its core functions. “ For a typical telecom operator, the pain point during the growth phase is planning for network requirements and preparing budgets for such a capital expenditure. “ Capacity has to be built ahead of demand, which usually means the telecom operator has to absorb the cost of unused capacity. “ Source: http://blogs.hbr.org/cs/2010/05/reverse_innovation_success_in_the_tele. html

106. Business Model Innovation is about… The Essence WHO WHAT HOW is your do you offer do you customer? your customers? do this? New Ways of New Markets New Offers Doing Business New Value Propositions Source: Marc Sniukas

107. Business Model Innovation Where to start? New Markets New Value Proposition New Ways New of doing Offers business Source: Marc Sniukas

108. What will we do today? Agenda 1. How to develop and design new Business Models? I. Who is the customer? II. What is the need / job to be done? III. How are you satisfying that need?

110. Which customers do you target? Creating new markets existing ↔ noncustomers (2nd and 3rd tier) most profitable ↔ less profitable most satisfied ↔ less satisfied (1st tier) specific buyer ↔ chain of buyers focus on differences ↔ focus on commonalities focus on finer segmentation ↔ focus on de-segmentation focus on attributes focus on circumstances (of customers and products) ↔ (needs and the job done) Source: Marc Sniukas

111. Who is the customer? Satisfaction B2B B2C Profitability Non-Customers Characteristics Demographics Source: Marc Sniukas

112. What will we do today? Agenda 1. How to develop and design new Business Models? I. Who is the customer? II. What is the job to be done? III. How are you satisfying that need?

113. What is the job to be done? 1. What problem is the customer trying to solve? “*Customer] wants to [solve problem] in [this context+.” 2. Which features are important to the customer? What does he want and value? 3. What are barriers for the customer? - Price: How cheap / expensive are existing solutions? - Access: How easy / complicated is it to get / install existing solutions? - Usage: How easy / complicated is it for the customer to use existing solutions? - Experience: What are barriers to a good experience?

114. How do you reach your customers? Buyer Experience and Channels Pre-Purchase Steps The Six Stages of the Buyer Experience Cycle Awareness Evaluation Purchase Delivery Use Supplements Maintenance Disposal Customer Productivity: In which stage are the biggest blocks to customer productivity? The Six Utility Levers Simplicity: In which stage are the biggest blocks to simplicity? Convenience: In which stage are the biggest blocks to convenience? Risk: In which stage are the biggest blocks reducing risk? Fun and image: In which stage are the biggest blocks fun and image? Environmental In which stage are the biggest blocks to environmental friendliness? friendliness: Source: Marc Sniukas. Adapted from Kim and Mauborgne “Blue Ocean Strategy” Harvard Business School Press, 2005

116. How to you define your product? Creating new offerings start anew, or use existing assets in a focus on existing assets ↔ new way single product or service ↔ total solution, bundling functional appeal ↔ emotional appeal and experiences focus on function fulfilled and the focus on product ↔ job-to-be-done raise, reduced, create, eliminate build new features ↔ selectively Source: Marc Sniukas

117. How do you do business? Creating new ways for creating, delivering and caputring value (co-creating) experiences conventional customer interface ↔ easy to do business with conventional pricing strategic pricing of the masses (either to cover cost or benchmarked against ↔ (benchmarked against substitutes and alternative competitors) industries) cost-plus thinking ↔ price-minus thinking; target costs network (with customers, suppliers, integrate activities ↔ partners, alliances) low fit of activities high fit of activities (internally and externally) ↔ (internally and externally) Source: Marc Sniukas

118. How to (re)invent your Business Model? 25 Strategies WHO #11 Target non-customers #1 Challenge industry assumptions #12 Target less profitable customers WHAT #13 Target the least satisfied customers #2 Offer complementary products and services #14 Target the chain of buyers #3 Offer solutions and experiences #15 Segment according to commonalities #4 Offer bundles #16 Segment according to circumstances #5 Switch your appeal: functional versus emotional #17 Desegment the customer based #6 Focus on the job to be done HOW #7 Selectively eliminate, reduce, raise and create #18 Reinvent the customer interface (channels) #8 Look at subsitutes #19 Reinvent your customer relationships #9 Expand the use of your assets and capabilities #20 Invent new revenue streams #10 Look at the customer experience #21 Price differently #22 Reinvent you cost base #23 Re-assess your key activities #24 Collaborate with suppliers, partners, the network and ecosystem #25 Look at completely different industries Source: Marc Sniukas

119. What is your value proposition? Type Features Product – Service – Solution – Experience Focused – Extensive Form Custom Tangible – Intangible Generic – Tailored Breadth Lifetime Single – Bundled Consumable – Durable

120. How is the value proposition purchased? Supplier Support Direct – Indirect Light – Heavy Frequency Availability Often – Rarely On-Demand – Limited Timing Autonomy Immediate – Delayed Assisted – Independent Strategy Location Planned – Unplanned Traditional – New

121. How is payment done? Form Price Cash – Financed Fixed – Variable Frequency Frequency Pay per item – Flat fee Once – Installment Timing Payer Up-front – Afterwards Single – Multiple

122. What is your value proposition? Low Cost Airline Average Airline Car Transport high low Price Meals Lounges Seating Class Hub Connectivity Friendly Service Frequent Point to Choice Point Departures Following Kim and Mauborgne “Blue Ocean Strategy” Harvard Business School Press, 2005

124. How to evaluate business models? 3 different types of experimentation

125. How to evaluate business models? ‚Paper‛ based approach Area Rating Description What we What we assume... know... Strategy How well does the idea fit with our current 0 5 10 strategy?  expanding or defending a What is the strategic current business purpose of the idea?  building a new one that has already been identified  laying the foundations for potential new businesses Organization Resources & Competencies Which do we need? Which do exist already? Which need to be build? Change need Change readiness Finance Revenue potential Financial (Qty x Price) Implications Cost (fix + variable) Unit Margin Target How innovative is the model? Does fit our organization? Can Does it have the potential for we implement it? Do we have competitive advantage the capabilities and through differentiation? resources?

126. How to evaluate business models? ‚Paper‛ based approach Strategy Organization Financials • How well does the idea fit with • Resources & Competencies Revenue potential our current strategy? • Which do we need? Cost • What is the strategic purpose of • Which do exist already? Unit Margin Target the idea? • Which need to be build? Cash Flow Payback expanding or defending a • Change need Net Present Value current business • Change readiness building a new one that has already been identified laying the foundations for potential new businesses Innovation Risks Success Factors • How innovative is the new • Competition • Strengths model? • Weaknesses • Opportunities Known to company and • Threats industry • Expected barriers Known to industry, new to company New for company and industry

128. How to (re)invent your Business Model? The Framework and Dimensions to consider Context Conditions Surrounding Business Model Innovation Activities Purpose Content Input to Result of Business Model Process Business Model Innovation Flow of Business Model Innovation Innovation Activities Activities Activities How to achieve business model innovation within your company? Apdated from De Wit and Meyer „Strategy: Process, Content, Context“ 3rd edition 2004 Thompson Learning

129. The process of business model innovation A discovery driven approach Setting the Stage A Discovery-Driven Approach Source: Marc Sniukas

130. Source: Marc Sniukas How to (re)invent your Business Model? The Process “ “ Define the purpose, scope and focus of innovation activities Align business and innovation strategies “ Build leadership alignment & commitment • Identifying “ Build a common language and understanding internal and “ Definition of governance structures and processes external opportunities • Sensing, seeking Setting the Stage and shaping opportunities “ Bringing successful ideas to market • Describe the “ Financial impact current business “ Incubation model “ Acceleration • Explore and “ Transition understand A Discovery-Driven consumer and customer needs, Approach motivations, behaviors • Understand emerging “ Turn ideas into market markets, industry ready concepts and socio- “ Road-test the idea portfolio ecological trends with key stakeholders, consumers, internal and external “ Design new business models “ Prototyping, Technical feasibility “ Develop and select ideas “ Experimentation & learning “ Develop an idea portfolio “ Customer & stakeholder feedback “ Idea Generation (In-house, cross-units, external) “ Business planning, venturing, secure founding “ Idea Evaluation “ Decide of organizational and governance structures “ Idea Selection “ Evolution & optimization “ Strategic decision making

131. Setting the stage Getting ready Description Project Set Up Input (Business Model Innovation idea) Tasks 1. Define purpose, scope and focus (Why) 2. Define and build team (Who) 3. Define goals and metrics 4. Define governance structure, process and project plan (How) 5. Build leadership commitment Output • Project Brief/Assignment • Project plan incl. milestones, tasks, responsibilities, 1st resource planning per phase • Team is established • Common understanding about the project has been created Gate • Stop/Go decision • Team established and resources have been committed Tools • Kick-off workshop • Business Model Handbook • Project Brief • Project Planning Source: Marc Sniukas

132. Discovery Gaining insights Description Identify internal and external opportunities Input Project Brief Tasks 1. Company Assessment 2. Market Assessment 3. Industry Assessment 4. Future Trends Assessments Output • Description AS IS of current business model, market, competition, industry • Description of opportunities • Description of first ideas • Update project planning incl. resources needed estimation for next phase Gate • Stop/Go Decision • Is the idea still interesting? • Is it worth spending the resources for the next phase? Tools • Desk and real life research • Who/What/How, Canvas, SWOT • Customer Profile, Value Curve, Buyer Experience Cycle • 5 Forces Source: Marc Sniukas

133. Discovery Gaining insights Source: Marc Sniukas

134. Who are your non-customers? Why are they not buying? “ 1st group: „soon-to-be“ non-customers: They minimally use the current offering, but are constantly searching for something better or different and ready to switch easily. They are closest to the existing customers. “ 2nd group: „refusing“ non-customers: They either do not use or cannot afford to use the current market offerings because they find the offerings unacceptable or beyond their means. These customers are willing to buy, but not at the current terms. “ 3rd group: „unexplored” non-customers: They are the farthest away from the existing market. Typically they are being ignored completely as potential customers by the industry, either because they have always been assumed to belong to another industry or are not being considered worth the effort.

135. Development Designing options Description • Development of business model concepts • Develop business model idea portfolio and evaluate ideas Input • Insights from discovery phase • First ideas Tasks 1. Develop Business model innovation idea portfolio 2. Evaluate BM portfolio 3. Develop list of assumptions to be tested Output • Idea / option portfolio • Evaluation of ideas • List of assumptions to be tested incl. resource requirements and how they will be tested • Business case for each business model Gate • Go to testing: Stop/Go Decision • Justified to start conversion/testing/experimentation phase? • Budget decision Tools • 25 ways • Who-What-How, Canvas • Value Curve • Spider, Scorecard, Hypotheses List, Business Case Source: Marc Sniukas

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