Slides from the CEDIM Innovation Series presentation. Includes a new business model framework, the business model as strategy cube and a design thinking oriented approach to business model innovation. @cedim
„Innovation is front and center on thecorporate agenda, according to aglobal survey. Executives are addingmore breakthrough innovations andbusiness model changes to theirportfolio to fuel the growth engine.“ Business Week, November 16, 2009
Source: Bernd W. Wirtz: Business Model Management: Design – Instruments – Success Factors. Gabler 2011
Stagnating or declining revenuesSource: Moore, GA 2004, Darwin and the Demon: Innovating Within Established Enterprises. Harvard Business Review, 82
Source: Moore, GA 2004, Darwin and the Demon: Innovating Within Established Enterprises. Harvard Business Review, 82
Why is Business Model Innovation important? (1) Major element of differentiation and sustainable competitive advantage. (2) Fundamental to performance. (3) Means to adapt to the rapidly changing environment and seize opportunities. (4) Key to the commercialization of new technologies.Source: Sniukas (2012).
Business Model Innovation as a StrategicChoice. Traditional Strategic Choices. New Products Existing Markets
Business Model Innovation as a Strategic Choice. The Strategy Cube. New Products Services New Existing Business Models Existing Markets Customer SegmentsSource: Sniukas (2012).
Business Model Innovation as a Strategic Choice. The Strategy Cube. New Products Services Adjacent New Existing Business Models Existing Markets Customer SegmentsSource: Sniukas (2012).
Business Model Innovation… …is the invention of new ways of doing business, with the aim to provide new and/or increased value for the customers, the company itself and its stakeholders.Source: Sniukas (2012).
Customer Value Proposition Ecosystem Value Proposition What is your value proposition? Firm Value PropositionSource: Sniukas (2012).
Customer Value Proposition Who is your customer? What is his need? What is the solution you offer? Offering Customer Segment Need Product + Service + Business ModelSource: Sniukas (2012).
Ecosystem Value Proposition Who are your partners? What is their need? What is your offer? Stakeholders Needs OfferingSource: Sniukas (2012).
Firm Value Proposition Strategic Organizational Financial • Competitive • Efficiencies • Revenues streams Advantage • Use of assets • Cost structure • Innovation • … • Working capital • Lock In • ... • Image • …Source: Sniukas (2012).
Customer Value Proposition Ecosystem Value Proposition Your business model Enables this value creation. Firm Value PropositionSource: Sniukas (2012).
Customer Value Proposition Ecosystem Value Proposition How do you organize to Enable this value creation? Firm Value PropositionSource: Sniukas (2012).
Customer Value Proposition Ecosystem Value Proposition Which activities and Who provides processes need to be these? performed? Which assets and How do you govern capabilities are the operations? necessary? Firm Value PropositionSource: Sniukas (2012).
“New business model innovation continues to represent a significant challenge for largeincumbent firms despite their access to resources, market knowledge, and key technologies.” (Koen et al. 2010 50)
Major challenges and barriers.(1) Business Model Innovation Challenges Different type of innovation High risk and uncertainty(2) Organizational Challenges Lack of capabilities New organization required: Yes/No?(3) Individual Challenges Mental models/cognitive maps Change in behavior
The Business Model Innovation Loop. Ideation 4 Experimentation 5 3 Interpretation 7 6 Launch 2 Evolution Discovery 1 StartSource: Sniukas (2012).
The Business Model Innovation Loop. Define your Goal 4 • What are your objectives? • Why are you embarking on this journey? 5 3 • What is the problem you have to solve? • Assess your current growth initiatives. 7 • Create awareness for the 6 need for Business Model Innovation. 2 • Establish the team. • Develop a common 1 understanding of the purpose, the concepts used. StartSource: Sniukas (2012).
The Business Model Innovation Loop. Find Facts & Inspiration 4 • Who are your customers? • Why are they buying? • Who are Non-Customers? 5 3 • Why are they not buying? • Who are your competitors? • What is the current offering? • What are the dominant 7 business models? • 6 What is your current business model? SWOT? 2 • Which trends are impacting Discovery your industry? 1 • What is your company really good at? • What assets could you use?Source: Sniukas (2012).
The Business Model Innovation Loop. Seek Understanding 4 • Make sense of the data. • Find opportunities for new growth and business model 5 innovation. 3 Interpretation • What is the customers’ job-to- be-done (really)? • Which are the barriers to 7 consumption: Affordability, access, skills, time,…? 6 • Develop assumptions of what 2 is really going on. • Which opportunities do you see? 1Source: Sniukas (2012).
The Business Model Innovation Loop. Generate and Refine Ideas Ideation 4 • How do you want to seize the opportunities? • How can you overcome the 5 barriers to consumption? 3 • Brainstorming • Concept development • Document your assumptions 7 on why you think a particular idea is a good solution. 6 2 1Source: Sniukas (2012).
25 strategies for reinventing your Business Model. WORKS ACROSS THE BUSINESS VALUE PROPOSITION #10 Offer complementary products and services #1 Challenge industry assumptions #11 Offer solutions and experiences #2 Look at completely different industries #12 Offer bundles #13 Switch your appeal: functional versus emotional #14 Focus on the job to be done CUSTOMERS #14 Selectively eliminate, reduce, raise and create #3 Target non-customers #15 Look at subsitutes #4 Target less profitable customers #16 Expand the use of your assets and capabilities #5 Target the least satisfied customers #18 Look at the customer experience #6 Target the chain of buyers #7 Segment according to commonalities HOW YOU DO BUSINESS #8 Segment according to circumstances #19 Reinvent the customer interface (channels) #9 Desegment the customer based #20 Reinvent your customer relationships #21 Invent new revenue streams #22 Price differently #23 Reinvent you cost base #24 Re-assess your key activities #25 Collaborate with suppliers, partners, the network and ecosystemSource: Sniukas (2010).
The Business Model Innovation Loop. Test your Ideas 4 • Make something real • Test assumptions discussing Experimentation 5 with your customers 3 • Test assumptions with strategic experiments • Get feedback • Create knowledge about the 7 potential of your ideas • 6 Learn what works and what does not 2 1Source: Sniukas (2012).
The Business Model Innovation Loop. Learn & Adapt 4 • What are the insights gained from experimentation? • Which of your assumptions 5 are correct, which not? 3 • How do you need to adapt your business model? 7 6 2 Evolution 1Source: Sniukas (2012).
The Business Model Innovation Loop. Go Large Scale 4 • Plan for action • Prepare the organization and the market for the launch 5 • Organizational Transformation: 3 Structures, processes, systems, skills, assets,… • Training 7 • Marketing • Financing 6 Launch • Scaling up 2 1Source: Sniukas (2012).