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Slides from the CEDIM Innovation Series presentation on November 28 2012. Include a new business model framework, the business model as strategy cube and a design thinking oriented approach to business model innovation. @cedim
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New Growth through
Business Model
Innovation.
www.sniukas.com
Innovation Series™
What Why How
Why
is Business Model
Innovation important?
History of the concept.
Source: Bernd W. Wirtz: Business Model Management: Design – Instruments – Success Factors. Gabler 2011.
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
Source: IBM Global CEO Study 2006
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 2009
Source: Bernd W. Wirtz: Business Model Management: Design – Instruments – Success Factors. Gabler 2011
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
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 Strategic Choice. Traditional Strategic Choices.
Markets
Products
Existing
New
Business Model Innovation as a Strategic Choice. The Strategy Cube.
Existing
New
Existing
New
Source: Sniukas (2012).
Markets Customer Segments
Products Services
Business Models
Business Model Innovation as a Strategic Choice. The Strategy Cube.
Source: Sniukas (2012).
Markets Customer Segments
Products Services
Existing
New
Existing
New Adjacent
Business Models
What
is Business Model
Innovation?
© Marc Sniukas - Doujak Corporate Development
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).
What is your
value proposition?
Customer Value Proposition Ecosystem Value Proposition
Firm Value Proposition
Source: Sniukas (2012).
Customer Value Proposition
Customer Segment Need
Offering
Product + Service +
Business Model
Who is your customer? What is his need? What is the solution you offer?
Source: Sniukas (2012).
Ecosystem Value Proposition
Stakeholders Needs Offering
Who are your partners? What is their need? What is your offer?
Source: Sniukas (2012).
Firm Value Proposition
Financial Strategic
• Revenues streams • Cost structure • Working capital • ...
• Competitive Advantage
• Innovation • Lock In • Image • …
Organizational
• Efficiencies • Use of assets • …
Source: Sniukas (2012).
Your business model
Enables this value creation.
Customer Value Proposition Ecosystem Value Proposition
Firm Value Proposition
Source: Sniukas (2012).
How do you organize to
Enable this value creation?
Customer Value Proposition Ecosystem Value Proposition
Firm Value Proposition
Source: Sniukas (2012).
Customer Value Proposition Ecosystem Value Proposition
Firm Value Proposition
Which activities and
processes need to be
performed?
Which assets and
capabilities are
necessary?
Who provides
these?
How do you govern
the operations?
Source: Sniukas (2012).
How
to innovate your business
model?
“New business model innovation continues to represent a significant challenge for large
incumbent 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.
Discovery
Interpretation
Ideation
Experimentation
Evolution 2
3
4
5
6
1
7
Start
Launch
Source: Sniukas (2012).
The Business Model Innovation Loop.
2
3
4
5
6
1
7
Start
Define your Goal
• What are your objectives?
• Why are you embarking on
this journey?
• What is the problem you have
to solve?
• Assess your current growth
initiatives.
• Create awareness for the
need for Business Model
Innovation.
• Establish the team.
• Develop a common
understanding of the purpose,
the concepts used.
Source: Sniukas (2012).
The Business Model Innovation Loop.
Discovery
2
3
4
5
6
1
7
Source: Sniukas (2012).
Find Facts & Inspiration
• Who are your customers?
• Why are they buying?
• Who are Non-Customers?
• Why are they not buying?
• Who are your competitors?
• What is the current offering?
• What are the dominant
business models?
• What is your current business
model? SWOT?
• Which trends are impacting
your industry?
• What is your company really
good at?
• What assets could you use?
The Business Model Innovation Loop.
Interpretation
2
3
4
5
6
1
7
Source: Sniukas (2012).
Seek Understanding
• Make sense of the data.
• Find opportunities for new
growth and business model
innovation.
• What is the customers’ job-to-
be-done (really)?
• Which are the barriers to
consumption: Affordability,
access, skills, time,…?
• Develop assumptions of what
is really going on.
• Which opportunities do you
see?
The Business Model Innovation Loop.
Ideation
2
3
4
5
6
1
7
Source: Sniukas (2012).
Generate and Refine Ideas
• How do you want to seize the
opportunities?
• How can you overcome the
barriers to consumption?
• Brainstorming
• Concept development
• Document your assumptions
on why you think a particular
idea is a good solution.
25 strategies for reinventing your Business Model. WORKS ACROSS THE BUSINESS
#1 Challenge industry assumptions
#2 Look at completely different industries
VALUE PROPOSITION
#10 Offer complementary products and services
#11 Offer solutions and experiences
#12 Offer bundles
#13 Switch your appeal: functional versus
emotional
#14 Focus on the job to be done
#14 Selectively eliminate, reduce, raise and create
#15 Look at subsitutes
#16 Expand the use of your assets and capabilities
#18 Look at the customer experience
HOW YOU DO BUSINESS
#19 Reinvent the customer interface (channels)
#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 ecosystem
CUSTOMERS
#3 Target non-customers
#4 Target less profitable customers
#5 Target the least satisfied customers
#6 Target the chain of buyers
#7 Segment according to commonalities
#8 Segment according to circumstances
#9 Desegment the customer based
Source: Sniukas (2010).
The Business Model Innovation Loop.
Experimentation
2
3
4
5
6
1
7
Source: Sniukas (2012).
Test your Ideas
• Make something real
• Test assumptions discussing
with your customers
• Test assumptions with
strategic experiments
• Get feedback
• Create knowledge about the
potential of your ideas
• Learn what works and what
does not
The Business Model Innovation Loop.
Evolution 2
3
4
5
6
1
7
Source: Sniukas (2012).
Learn & Adapt
• What are the insights gained
from experimentation?
• Which of your assumptions
are correct, which not?
• How do you need to adapt
your business model?
The Business Model Innovation Loop.
2
3
4
5
6
1
7
Launch
Source: Sniukas (2012).
Go Large Scale
• Plan for action
• Prepare the organization and
the market for the launch
• Organizational Transformation:
Structures, processes,
systems, skills, assets,…
• Training
• Marketing
• Financing
• Scaling up
Want more?
www.sniukas.com
“The difficulty lies not in the new ideas,... …but in escaping from the
old ones.”
John Maynard Keynes
Get in touch! Marc Sniukas
marc@sniukas.com www.sniukas.com
Thank you for your attention!
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