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INNOVATIONDAY 2011
CONFIDENTIAL
How to give your business model a successful make-over
Using a new business model
can make your products and
services more successful. It
can help to escape the
endless competition trap by
approaching markets in a
surprisingly new way.
Innovation can be every part
of business model if you are
ready to change the
traditional practice.
Zane Smilga
Verhaert – Innovation Consultant
zane.smilga@verhaert.com
INNOVATIONDAY 2011
INNOVATIONDAY 2011
…What if voice calls were free?
INNOVATIONDAY 2011
…What if I could have less staff, but more service?
INNOVATIONDAY 2011
What is a business model?
VALUE PROPOSITION: what are we offering and to whom?1. Target segments: which customers do we
serve? Which of their needs do we address?2. Product and service offering: What are we
offering to customers to satisfy their needs?3. Revenue model: How are we compensated
for our offering?
OPERATING MODEL: how do we profitably deliver our offering? 4. Value chain: How are we configured to
deliver on customer demand? What do we do in-house? What do we outsource?
5. Cost model: How do we configure our assets and costs to deliver our value proposition profitably?
6. Organization: How do we deploy and develop our people to sustain and enhance our competitive advantage?
INNOVATIONDAY 2011 Slide 6
Business model innovationas an answer to business complexity
Today`s business environment – highly complex, uncertain and volatile
“78% of Benelux CEO`s anticipate even greater complexity in the next 5 years; only 57% believe they have ability to manage it” /IBM, research, 2010/
Incremental changes are no longer sufficient
Business model can offer a totally different innovation approach
Operating margin growth in excess of competitive peers (compound annual growth rate over five years)
INNOVATIONDAY 2011
Success of a business model change
INNOVATIONDAY 2011 Slide 8
Failure of a business model change
“Nokia stops free music service in 27 countries” /January, 2011/
2008
The whole system of business model is critical to succeed!
INNOVATIONDAY 2011
Ericsson, Nokia Siemens Networks, Alcatel-Lucent, and Huawei may end up
running three-quarters of the networks on this planet
Impact of business model changes on industry
Telecom outsourcing
INNOVATIONDAY 2011 Slide 10
businesscomplexity
challenge
INNOVATIONDAY 2011
10 rules
for successful
business makeover
INNOVATIONDAY 2011 Slide 12
rule 1
Think system!
INNOVATIONDAY 2011
Business model as a system
Osterwalder
INNOVATIONDAY 2011 Slide 14
rule 2
Consider your environment
INNOVATIONDAY 2011 Slide 15
Environmental analysis
COMPETITION
VALUE CHAIN & STAKEHOLDERS:
CUSTOMERS
MARKET DEVELOPMENT
INNOVATIONDAY 2011 Slide 16
rule 3
Challenge every cell of your business model!
INNOVATIONDAY 2011 Slide 17
Different entry points
INNOVATIONDAY 2011 Slide 18
rule 4
Use triggers & industry examples
INNOVATIONDAY 2011
search and explore genes, their personal characteristics, such as lactose intolerance, athletic ability, and food preferences;
compare their profiles to family and friends; and discover their genetic roots, as well as gain insights into their ancestry, genealogy, and inherited traits.
Business model example
INNOVATIONDAY 2011 Slide 20
Long tail Business
model
Open source
Business model
Freemium business
model
Multi sided business
model
OpenBusinessmodel
Bait & hookbusiness model
Emerging marketbusiness model
Experiencebasedbusiness model
Types of business models
Unfinished productsbusiness model
Mass Custom-ization business model
INNOVATIONDAY 2011
Patterns of a business modelBait & hook business model
Value proposition:1) Free or low cost
basic/platform2) Follow up items &
servicesResources:brand
Revenues:Repeated of follow up purchases compensate the initial free or low cost offer and generate profit
Activities: Delivery of follow up services and products
Osterwalder
INNOVATIONDAY 2011 Slide 22
rule 5
Generate multiple business model options …
for a better choice
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Many alternatives…generate a better base for choice
• What do you want to change in your current business model? What do you want to achieve with these changes?
• What different business models can you think of?
• What are their strengths and weaknesses of each of them?
• Which one to choose?
INNOVATIONDAY 2011 Slide 24
rule 6Envision the future scenarios
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Future scenario exploration
Imagine your customers in the future….
Imagine the trends and industry in
future…
Airbus, 2011
INNOVATIONDAY 2011 Slide 26
rule 7
Visualize!
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Business people need to become designers/Roger
Martin/
Business model visualization
INNOVATIONDAY 2011 Slide 28
rule 8Check & test your assumptions
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Guesses
Hypothesis & assumptions
TestingTest your hypothesis and assumptions together with customers, suppliers, industry etc.
Identify assumptions behind each idea of the new business model; formulate hypothesis and questions that need to be verified
Guessing, building hypothesis & testing
Make rough guesses based on logics and experience and build your first drafts of business models DRAFT BUSINESS
MODEL
HYPOTHESIS
TEST PLAN
Based on Osterwalder
INNOVATIONDAY 2011 Slide 30
rule 9
Consider your implementa-tion options
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Implementation planning
Business case: market data, cost and revenue calculations, PL, financial scenarios
Financial simulations: business finance calculations, alternative options
Organizational design1. Role design2. Product & service design3. Finance design4. Organizational design
INNOVATIONDAY 2011 Slide 32
rule 10Be ready for the change!
INNOVATIONDAY 2011 Slide 33
Innovative products might fail with traditional business models
….be aware what change you need to bring in the company….
?
INNOVATIONDAY 2011
Business model design & new product design process
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What are the key steps for designing a business model?
• Assessment & analysis
• Ideation
• Designing
• Selecting
• Prototyping
• Testing
• Development (detailed)
INNOVATIONDAY 2011
What architecture - platform & components - is necessary?
channels
partnershipsactivities
cost structure
resources
customers
Revenue structure
value proposition
Visual from Osterwalder
INNOVATIONDAY 2011
What are the key values / features that will make the company profitable?
social media
platform
crowdsourcing/ co-creation
diversified revenue streams: leasing, renting,
buying
new value proposition
Visual from Osterwalder
INNOVATIONDAY 2011
When the game is tough, change the game!!/BCG/
http://www.vasculitis.nl
INNOVATIONDAY 2011
Hogenakkerhoekstraat 219150 Kruibeke (B)
tel +32 (0)3 250 19 00fax +32 (0)3 254 10 08
info@verhaert.com
More at www.verhaert.com
helps companies and governments to innovate. We design products and systems for organizations looking for new ways to provide value for their customers. We are a leading integrated product innovation center; creating technology platforms, developing new products and business in parallel, hence facilitating new-growth strategies for our clients.
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