Business Models do fail 10 examples - 5 reasons

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Business Models do fail 10 examples - 5 reasons by Elton-Pickford.com

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  • 1. Business Models Do Fail10 examples - 5 reasonswww.elton-pickford.com

2. IntroductionPart 110 Business Models that FailedPart 25 Reasons of FailureWhy do Business Models Fail ?Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 3. Business Models do Fail10 examples - 5 reasonsINTRODUCTIONElton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 4. Why this paper ?This document aims at identifying the root causes of Business Model failures. This analysis issupported by several real cases and constitutes a practical ground to explore the utilization of theBusiness Canvas (Alexander Osterwalder) and the Effervescence Framework (Yannick Mriguet -Elton-Pickford).Elton-Pickford is striving to provide organizations with efcient ways to explore new Business Modelsand publishes regularly case studies on Innovative Business Models. This document counter-balancesthe regular publications on successful Business Models by exposing failures as business reality too.We are proud to offer you this study which we invite you to share and comment with passion.Achievement: January 2013Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 5. PublicationThis document is provided under the terms of Creative Common License BY-NC-SA. Themodication and the distribution of this copyrighted work for noncommercial use only are authorizedunder the reference: BUSINESS MODELS DO FAIL - 10 EXAMPLES - 5 REASONS. Attribution - Licensees may copy, distribute, display and perform the work and make derivative works based on it only if they give the author (Antoine Dumont and Elton-Pickford) or licensor the credits in the manner specied by these . Noncommercial - Licensees may copy, distribute, display, and perform the work and make derivative works based on it only for noncommercial purposes. Share Alike - Licensees may distribute derivative works only under a license identical to the license that governs the original work.Achievement: January 2013Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 6. Understand the BUSINESS MODELElton-Pickford Framework What are the fundamental characteristics ofCopyright Elton-Pickford the targeted Business Model? How well doEffervescence Frameworkthey t the context and scenario specicityCreated by Yannick Meriguet, Associated at Elton-Pickford & uniqueness? How do they optimize the company strategy?SCENARIOWhat are the specicorganization objectivesBUSINESS MODELCONTEXT(Growth, Performance,Positioning, Differentiation,The context highlights theetc.). What is the internalcritical elements to take intocontext of the company account in the external context(Specic competencies, of the company. What are theSCENARIOTension, M&A, Start Up)?OF THE ORGANIZATIONCONTEXTkey market characteristics,These elements dene the socio-economic environment,foundation of the targeted consumer habits, etc. ? Andstrategy.how can it inuence the Go To Market Strategy of the organization.Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 7. KPKAVPCR CSUnderstand theBusiness Model Canvas KR CHCreated by Alexander Osterwalder, Business Model Generationwww.businessmodelgeneration.comCustomer Segments (CS)The Customer Segmentsbuilding blockdenes the differentC Rgroups of people or organization an enterprise aims to www.businessmodelgeneration.comreach and serve. Different types of customer SegmentsCustomer Relationships (CR)exist: mass market, niche market, segmented, etc.The Customer Relationshipsbuilding blockdescribes the type of relationships a companyValue Proposition (VP) establishes with specic customer segments.The Value Propositionbuilding blockdescribes the bundleCustomer Relationships may be driven by differentof products and services that create value for a specic motivations: customer acquisition, customerCustomer Segment. It solves a customer problem orretention and boosting sales. We can distinguishsatises a customer need. The Value Proposition can be between several categories of Customercharacterized by its newness, performance, price, etc. Relationships: personnal assistance, self-service, co- creation, etc.Channels (CH)The Channelsbuilding blockdescribes how a company Revenue Streams (R)reaches its Customer Segments to deliver a ValueThe Revenue Streamsbuilding blockrepresents theProposition. Channels can be direct or indirect: internet cash a company generates from each Customerplatform, sales forces, store, retailers, etc.Segment. There are several way to generate RevenueStreams: asset sale, subscription, usage fee, etc. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 8. KPKAVPCR CSUnderstand theBusiness Model Canvas KR CHCreated by Alexander Osterwalder, Business Model Generationwww.businessmodelgeneration.com C RKey Ressources (KR)The Key Resourcesbuilding blockdescribes the mostwww.businessmodelgeneration.comimportant assets required to make a business model work.Key Resources can be characterized as physical, intellectual,nancial, human, etc.Cost Structure (C)The Cost Structure describes all costs incurred to Key Activities (KA)operate a business model. They can be cost or value The Key Activities building block describes the mostdriven and be classied as xed or variable costs. important things a company must do to make its business model work (development, maintenance, production, etc.) Key Partners (KP) The Key Partners building block describes the network of suppliers and partners that make the business model work. Reasons behind partnering may be diverse: Optimization and economy of scale, acquisition of particular resources and activities, reduction of risk and uncertainty, etc. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 9. Part 110 Business Modelsthat FailedElton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 10. IridiumCopainsdavant.comTelecomInternet 1998 Vogica Blockbuster Video2009SpanairMovie rentalsHousehold furnishing2xmoinscher.com Airlines 2010 2010Internet20122012 Bic Encarta Kodak Moulinex PublishingChemistry, digitalPerfume Consumer Electronics 200920121991 2009 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 11. 1copainsdavant.comElton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 12. copainsdavant.comIndustryInternet - Social webScenario Highlights First mover advantageDate of creation Search of protability2001CorporationContext HighlightsBenchmark Group Growing internet usageCountry of OriginNationwide efcient broad band infrastructureFrance Social web growing interest New competitorsCases periodBusiness Model Highlights2001 - 2012Social networkMarket typeConnect with past friends on internetMass marketFreemium / premiumRevenues(2009) Group : 17 M / Website : 3,5 M Reasons of Failure Customer segment not buying a paid serviceNumber of EmployeesLikelihood of protability(Group) 150 Emerging competitionElton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 13. copainsdavant.comInitial value propositionDeployed strategy New pivotCreated in 2001, "Copains davant" is theAfter 3 years of existence, with a full free access,In 2007, the company acknowledges the failureFacebook made in France, and enable to re- the company is searching a path to protability. In of its business model, and re-open the fullconnect with past classmates, publish school 2004, the decision is made to monetize the site,service for free. Revenues will be nowpromotion pictures and communicate via and the internal mailing system along withgenerated by advertising. Additional servicesinternal mailing system. The company is quicklyadditional functionalities are now provided as aare created, and in 2010 the management ofbecoming the social web leader in France.paid service. Facing these new constraints, sitethe company is changed and re-think its entire frequentation is declining and the brand image of positioning and image. the company is hurt. If the value proposition is still attractive for users, they are not ready to pay for such services. The internal mailing system is the cornerstone of the interaction between schoolmates, and if too much constraints (price) exist, they stop to use it, loosing the benets of the entire value proposition. Things get worst : the growing Facebook platform is penetrating the European market with a modern design, increased functionalities and at no cost for the user. Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 14. copainsdavant.com BUSINESS MODELSOCIAL NETWORK RE-CONNECT WITH PASTCLASSMATES ON INTERNET FREEMIUM / PREMIUM BROAD BAND CONNECTION INTERNET USAGE PENETRATION NATION WIDE EFFICIENT INTERNET FIRST MOVER ADVANTAGE INFRASTRUCTURE DEPLOYEDSCENARIO CONTEXT SEARCH FOR PROFITBILITYEMERGING SOCIAL WEB NEW ENTRANTS FACEBOOKSince 2004 Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013 15. copainsdavant.comKP KA VP CRCS EMAIL :MAINTENANCE1 MILLION PER DAY MASS MARKET +PLATFORM PROMOTION MASS PERSONALIZATION SOCIAL NETWORK OLD USERS 30 - 40 YEARSKR RE-CONNECT WITHCH 13 MILLIONS OF UNIQUEFORMER CLASSMATES VISITORS / MONTHCOPAINSDAVANT.COMEFFICIENT ADVERTISINGSALES FORCESSPACEADVERTISINGADVERTISING CAMPAIGN CPLATFORMINFRASTRUCTURE R ADVERTISING* HUMAN RESOURCES FREE SERVICEPAID SERVICEwww.businessmodelgener