Reinventing Your Business

Why What How

is it important to you

Source: Christoph Zott, Raphael Amit and Lorenzo Massa: The Business Model: Recent Developments and Future Research Journal of Management 2011 37:

“Get the business model wrong, and there is almost no chance of success...”

Prof. David Teece

University of California, Berkley.

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

Source: IBM Global CEO Study 2006

„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

Source: Businessweek / BCG Innovation Survey 2008

Source: Moore, GA 2004, Darwin and the Demon: Innovating Within Established Enterprises. Harvard Business Review, 82

Stagnating or

declining

revenues

Source: Moore, GA 2004, Darwin and the Demon: Innovating Within Established Enterprises. Harvard Business Review, 82

Increase profit

Find new growth areas

Create new markets

Commercializing a new

product or technology Increased competition

Adapt to changing

environments

Adapt to new / emerging

markets

Seize emerging trends

$ 1.600.000,-

Free Download

Business Model

Innovation

„There‘s no good just being better,

...you got to be different.“

Charles Handy

“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.)

Source: The Boston Consulting Group

Source: Innosight

Source: businessmodelgeneration.com

Source: Accenture

Source: IDEO

is your customer?

do you offer your customers?

do you do this?

WHAT HOW

Products & Services

Solutions

Experiences

Create Value

Deliver Value

Capture Value

Markets

Customer Segments

Individual Needs

Traditional Approach Business Model Innovation

Who • Everybody • Everybody

What • Usually full treatment • Services covered by health

insurance • Special treatment for additional cost

• Focus on basic treatments • Quick • Convenient • Affordable

How • A range of specialists • Special facilities • One central location • “Solution shops”

• Generalists • Located in shopping malls / inside

CVS pharmacies • Multiple locations • “Retail model”

Who • (Rich and middle class) people who are reliable to pay back the credits or have enough assets as security.

• “Low income clients” • Poor people who would not get any

loans from traditional banks (especially women)

What • Classic loans, usually for larger sums to buy assets.

• Small loans to “unbanked people”

How • Strong risk management • The returns from the interests belong

to the bank/ shareholders • Profit focus

• About 97% make their payments. • The borrowers are the owners of

the bank. • The profit of the bank goes back to

the owners. • There is no collateral. No lawyers. • Social business focus

Who • People who want a quick bite to eat • Get in, order, get served quickly, get

out quickly again

• People who want to sit down and remain seated for a while

• Create a “3rd place” à la Starbucks

What • Pre-made food prepared constantly according to demand

• Standard menus • Some variations allowed

• Coffee and cake • Made to order (coffee) • Pre-produced (cakes) • No menus

How • 1 counter • Standardized processes • Central locations with high

frequencies • The key is to serve a maximum

number of people during a given time

• 2 counters • Separate seating area • Key is to increase share of wallet of

the customer and keep him for a longer period of time in the restaurant

• Innovative use of existing assets, new capabilities needed

Who • Kids • Hard Core Gamers

• Everybody from 4-99 • The whole family • Casual Gamers

What • High Tech – High Performance Console

• High tech, high end processors for speed and graphics, connect over the internet, additional features (DVD, internet,...) high cost high sales price (250-300.- €)

• Family Console • Low tech, lower power processors,

no additional features • Focus on fun rather than technical

performance • New movement technology lower cost lower sales price (190.- €)

How • n/a • n/a

New Markets

New Customers

New Value

Propositions

New Ways of

Doing Business

Division 3

Division 2

Division 1

Division 4

The Future Space

Workshop

Group Mgmt Meeting

Division Mgmt Meetings

• Introduction to Business Model Innovation

• Introduction Future Space

•Process •Preparation •Handbook

•Presentation of Business Models

•Preparation of GMM

Business Model Description by Division Mgmt and their teams.

Research on innovative Business Models and Trends.

BU Mgmt

Division Mgmt

Group 2010

Group 2011 +

May 6-7

April 15 March 10

Draft until March 29 to SIO Coaching Sessions with SIO Final Version until April 7 to SIO

Final version until April 29 to SIO

BU Mgmt

Division Mgmt

Group 2010

Group 2011 +

March 10

BU Mgmt

Division Mgmt

Group 2010

Group 2011 +

March 10

BU Mgmt

Division Mgmt

Group 2010

Group 2011 +

March 10

Workshop Division Mgmt Meetings

BU Mgmt

Division Mgmt

Group 2010

Group 2011 +

April 15 March 10

Workshop Division Mgmt Meetings

BU Mgmt

Division Mgmt

Group 2010

Group 2011 +

April 15 March 10

Workshop

Group Mgmt Meeting

BU Mgmt

Division Mgmt

Group 2010

Group 2011 +

May 6-7

April 15 March 10

The Future Space 3 steps

1. Description

2. Inspiration

3. Creation © Marc Sniukas - Doujak Corporate

Development

#1 Challenge industry assumptions

#2 Offer complementary products and services

#3 Offer solutions and experiences

#4 Offer bundles

#5 Switch your appeal: functional versus emotional

#6 Focus on the job to be done

#7 Selectively eliminate, reduce, raise and create

#8 Look at subsitutes

#9 Expand the use of your assets and capabilities

#10 Look at the customer experience

#18 Reinvent the customer interface (channels)

#19 Reinvent your customer relationships

#20 Invent new revenue streams

#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

#11 Target non-customers

#12 Target less profitable customers

#13 Target the least satisfied customers

#14 Target the chain of buyers

#15 Segment according to commonalities

#16 Segment according to circumstances

#17 Desegment the customer based

So what...?

Setting the Stage

A Discovery-Driven Approach

Setting the stage Discovery Development Conversion Commercialization

Description Project set up. Define and describe project. Formal GO.

Discovery of opportunities Gain insights

Development of business model concepts Develop business model idea portfolio and evaluate ideas

Conversion of concepts into real-life Testing concepts and receiving market feedback

Implementation and launch Launch new business model

Input BMI Idea Project Brief

Insights from discovery phase First ideas

Business concepts approved for test

Finished and tested Business Model

Tasks 1. Define and build team 2. Define purpose, scope

and focus 3. Define goals and

metrics 4. Define process and

project plan

1. Company Assessment 2. Market Assessment 3. Industry Assessment 4. Future Trends

1. Develop BM portfolio 2. Evaluate BM portfolio

1. Strategy & Business Planning

2. Customer tests 3. Technical feasibility 4. Implementation

Strategy 5. Organisational gap

analysis

1. Implementation 2. Start-Up / Incubation 3. Acceleration 4. Transition

Output • Project Brief • Project plan • Team is established • Common

understanding about the project has been created

• Description AS IS • Description of

opportunities • Description of first

ideas • Update project

planning

• BM idea / option portfolio

• Evaluation of ideas • List of assumptions to

be tested • Business case for each

business model

• Final Business Model Evaluation

• Strategy is developed • Organisational

structure is defined • Partners/Network are

defined • Tested Business Model

is profitable

Gates • Team established • Resources have been

committed

• Idea Screening • Stop/Go Decision • Is the idea still

interesting? • Is it worth spending

the resources for the next phase?

• Go to testing • Stop/Go Decision • Justified to start

conversion/testing/experimentation phase?

• Budget decision

• Launch decision • Budget approval • Business model is

profitable

Launch review (12 months) Business model review Business model optimization Integration into holding

Strategic Innovation Office

Cross Division Project Teams

Strategic Innovation Core Team

Within Division Project Teams Cross Division

Project Teams Cross Division Project Teams Cross Division

Project Teams Cross Division Project Teams

Within Division Project Teams Within Division

Project Teams Within Division Project Teams Within Division

Project Teams

Steering Committee

Nov 2010

Dez Q1 2011

Q2 Q3 Q4 2012

Core Team Core Team

Meeting Kick Off

Core Team Meeting

Board Update

Division 1 Division 2

Project 1 Setting the

stage Discovery Development Conversion

Project 2 Team Kick Off Setting the

Commer-cialization

Project 3 Hire Project

Manager Project

Manager Setting the

Manager Project

Manager Setting the

Manager Project

Manager Setting the

Process Overview

Workshop I

Workshop II

Workshop III

Workshop IV

Preparation 1

Home Work

Strategic Experiments

Preparation 2

Setting the Stage

Activate participants

Phone Call

Information Package

Chapters 1-4

• Participants are well prepared. • They have a good theoretical background. • The know the process and its objectives.

Define target. Describe AS IS.

• Target is defined. (Strategic Intent) • Need for action is clear / common understanding. • Current business, including markets, value proposition and

business model is described.

Approach

Where are we now? Where are we heading towards?

current path

aspiration

Define target. Describe AS IS.

• Target is defined. (Strategic Intent) • Need for action is clear / common understanding. • Current business, including markets, value proposition and

business model is described.

Where are we now? Where are we heading towards?

Value Curve

“Strategic Experiments” Portfolio

Business Model

Customer Profile Strategic Intent Path of Life

Inspiration.

Activate (new) participants. Be inspired.

Phone call

Information Package

• Keeping the energy high. • First ideas are developed (even before workshop)

Toolbox

Examples of Innovators

Discovering and describing

opportunities.

New value propositions New business models

Sensing Opportunities.

New customers

• Opportunities have been identified. • First ideas on how to seize them have been developed.

Toolbox

Organize inputs. Get feedback. Further

develop first ideas.

Customer talks

…everything necessary…

If necessary

Data analysis

• Information for workshop III is organized. • Ideas have further been described.

Desk Research

Developing options.

Value Propositions Business Models

Seizing Opportunities

Customers

• Strategic options have been developed. • Ideas for new customer segments, value propositions and business models

have been described.

Evaluating options. Making decisions.

Decision making

• Strategic options have been evaluated. • Strategic experiments have been defined and can be implemented. • High engagement of senior management leads to high motivation for the

implementation.

“Strategic Experiments” Portfolio

Area Rating Description What we

know...

What we assume...

Strategy How well does the idea fit with our current strategy?

0 5 10

What is the strategic purpose of the idea?

expanding or defending a current business

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

Financial Implications

Revenue potential

(Qty x Price)

Cost (fix + variable)

Unit Margin Target

Strategic Innovation Profile

Strategic Innovation Scorecard

Formal

Informal

Revolutionary Evolutionary

Inside

Outside

CoreCo

Focused

Holistic

Closed

Innovation tensions

is your customer?

do you offer your customers?

do you do this?

WHAT HOW

Who is your

customer?

What is your value

proposition?

How are you

creating and delivering your offer?

Source: The Boston Consulting Group

Source: Innosight

Source: Accenture

Source: IDEO

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 (of customers and products)

↔ focus on circumstances (needs and the job done)

focus on existing assets ↔ start anew, or use existing assets in a new way

single product or service ↔ total solution, bundling

functional appeal ↔ emotional appeal and experiences

focus on product ↔ focus on function fulfilled and the job-to-be-done

build new features ↔ raise, reduced, create, eliminate selectively

conventional customer interface ↔ (co-creating) experiences easy to do business with

conventional pricing (either to cover cost or benchmarked against

competitors)

↔ strategic pricing of the masses (benchmarked against substitutes and alternative industries)

cost-plus thinking ↔ price-minus thinking; target costs

integrate activities ↔ network (with customers, suppliers, partners, alliances)

low fit of activities (internally and externally)

↔ high fit of activities (internally and externally)

WHAT HOW

• Questioning attitude

• Rewards success and failure, punishes inaction

• Tolerates mistakes

• Slack is welcomed

• Supports risk taking and change

• Supports teamwork and collaboration

Are you ready for Business Model

Innovation?

Leadership

Structure

Culture

Systems

People

Processes

• Set the context

• Guide the process in a participative and fair way

• Clearly communicate reasons, and expectations

• Educate employees

• Shield creative teams from distractions and pressure

• Appreciate distinctiveness in people and their thinking

• Welcome change

• Ask itself what it does to promote or inhibit innovation and how to get rid of these obstacles.

• Fast and flat

• Small units

• Encourages collaboration

• Autonomous teams at the front line

• Fast and unbureaucratic

• Decentralized decision making

• Support idea generation, experimentation and execution

• Variety (internal and external)

• Collaboration

• Educated in regard to the strategy and skills needed

• Support the process of strategic innovation

• Enable collaboration

• Enable the use and creation of knowledge

• Reward risk taking and action

• Used to create relationships with customers

• Metrics & rewards support innovation

Who„s got a question?

Want more?

www.doujak.eu

www.sniukas.com

Dynamic Capabilities (i.e. activities, processes and routines) leading to Business Model Innovation.

Managerial capabilities for creating, developing and leading these capabilities.

“The difficulty lies not in the new ideas,... …but in escaping from

the old ones.”

John Maynard Keynes

Thanks for your attention!

Get in touch! Marc Sniukas

Doujak Corporate Development

Lainzer Strasse 80 A-1130 Vienna

Mobile: +43 699 122 333 marc.sniukas@doujak.eu

Reinventing Your Business

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