2015 innovation day_connected business models - inventing smart earnings models_verhaert_alexander frimout

Connected business models: inventing smart earnings models

Template Innovation Day presentationCONFIDENTIAL

CONNECTED BUSINESS MODELS:INVENTING SMART EARNINGS MODELS

Alexander FrimoutInnovation [email protected]

CONNECT: INTERNET OF THINGS


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CONTENT

Challenge to change business models

Connected business - What is the Internet of Things

IoT business inspiration

Getting organized

Conclusion


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ALEXANDER FRIMOUT

Alexander is an innovation consultant specializing in user insights, data processing and Internet of Things applications.

He has worked on a wide variety of projects ranging from consumer goods to industrial manufacturing and space applications.

His combined economic and scientific background give him a unique perspective into many business problems.


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CHALLENGE TO CHANGE BUSINESS MODELS

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APPROACH TO BUSINESS MODELS

• Optimization

• Efficiency

• Incremental

• Cost plus pricing

Finance Creative• Disrupt

• Breakthrough

• Turn the model upside-down

• Service models


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• Who has at least someone busy with optimizing the finances?

• Who has turned their business or revenue model upside down?

• Who has thrown all industry standards overboard?

SO … ?


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GETTING IN THE GAME

• How can I participate in the IoT without throwing all my assets overboard?

• How can I implement the IoT incrementally?


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VERHAERT APPROACH

Product

IoTextension

Finance Creative

IoT extension modelallows to tap into additional revenue streams without disrupting the company


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WHAT IS THE INTERNET OF THINGS?

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Image: http://www.wordstream.com/blog/ws/2015/01/09/the-internet-of-things


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Web 3.0Internet of Things

Web 1.0Web as a business

infrastructure

Web 2.0Web as social media,

user contribution

• Digitalization• E-commerce• Freemium

• Crowdsourcing• Crowdfunding• User designed

?


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Product

IoT extension

Web 3.0Internet of Things

PHYSICAL

DIGITAL

Sensors+

Connect • Process • Communicate


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WHAT IS IT GOOD FOR?

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So what? Why should I care?


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1. Because people are telling you to

WHY SHOULD YOU GET INTO THE INTERNET OF THINGS?

“69% of consumers plan to purchase a connected smart device at some time during the next five years.”

Acquity group consumer survey

“83% Of IoT experts agree that the Internet of Things will have widespread and beneficial effects on our everyday lives by 2025.”

Forbes IoT expert canvas

“The IoT offers a potential economic impact of $4 trillion to $11 trillion a year in 2025.”

McKinsey Global Institute Report


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2. Because the Internet of Things allows you to create extra value in your products

WHY SHOULD YOU GET INTO THE INTERNET OF THINGS?

Nest Thermostat

7x More expensive8% Market share25% Profit share

Apple iPhone

3x More expensive12% Market share70% Profit share

Products and their business models don’t have to be completely reinvented.

If you create extra value by making your product a little smarter, you can get a large profit share!


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YOUR PRODUCT AS THE BASIS FOR VALUE CREATION

Product

IoT extension

PHYSICAL

DIGITAL

Connectivity

Analytics

Digital service

TECHNOLOGY

Sensor/Actor

CUST

OM

ER V

ALU

E


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IOT BUSINESS INSPIRATION

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UX BASED MODEL WITH FLAT RATE SALES

• Often simplest solution for traditional product companies

• Requires good knowledge of all potential future costs

• Defining the right services & value based pricing is important


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CREATE A DIGITAL ADD-ON

• Product must be able to function without the service

• Service is sold separately during or after product purchase

• Different service options possible for different consumer segments

• Bait & hook/Razor blade models options

18

Optional


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SMART EARNINGS WITH A PAY-PER-USE

• Pure pay-per-use model becomes easier to maintain and possible for products where it was traditionally not

• Need an efficient delivery mechanism and some up-front capital investment

• Dependency on high transaction volumes makes the model less appropriate for start-ups


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VALUE ADD SERVICE ON CRITICALITIES

• Products can self-diagnose when its status changes or maintenance is required

• Products can take action independently, eliminating the need for a third party

• Allows companies to become a solution provider


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MONETISE SENSOR DATA IN SERVICES

• Connected product provided (potentially free of charge) to user

• Data that is deemed valuable and relevant

• Data can be valuable for multiple parties and/or the company itself

• Relies on wide adoption

• Additional revenue streams possible


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GETTING ORGANIZED

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WHAT CHANGES?

How can we build this Internet of Things Extension around our product?

Product

IoT extension

PHYSICAL

DIGITAL

ROIRevenue streams

Data

ConnectivityUX

PartnershipsCRM


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GET YOUR IOT BUSINESS CONCEPT TOGETHER

Start with the product1Value added services2Strategic partners – establish your ecosystem3

4 Expand from your one trick pony

5 Monetize your IoT extension

6 Implementation


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© Verhaert - Outsmart model, variant on Osterwalder

Product

1. START WITH PRODUCT

The product is the central offering that creates value, not the business model.The question is not how can I generate revenue in a different way, but how can I make more money with my product.


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Start from your product and think

‘How can I add more value for my customers?’

2. UNLOCKING VALUE THROUGH SERVICES

And important:

Involve users in the process!


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SECURE SUPPLY


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IOT IS ABOUT BEATING COMMODITIES

PersonalizationDistributed productionPremiumizingExtend moments of useBig data

Cost reductionReliabilityUser experienceFreedom to operate

Product validationConcept designBusiness consultingDigital designConnectivity

TRENDS CHALLENGES TACKLED KEY EXPERTISES


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HOW - CONNECTIVITY MATRIX

The connectivity matrix is a toolbox that unlocks the IOT extension to build additional value with a digital component for physical products.


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3. STRATEGIC PARTNERS - ESTABLISH YOUR ECOSYSTEM

What does your ecosystem of the future look like?

Who are the main players?

What devices will we need to connect to?

What partnerships will we need?


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AN ECOSYSTEM IS BONDED BY A MUTUAL VISION OR BELIEF

LifeBEAM Smart Sports headband

Under ArmourArmour39 shirt

Glagla wind connected shoe

Fitbit Activity tracker

Quantified Self


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4. EXPAND FROM YOUR “ONE TRICK PONY”

IoT extension

PHYSICAL

DIGITAL

Uncertainty of market / organization complexity

Tech

nica

l com

plex

ity &

pot

entia

l ret

urns

• Take a breakthrough product

• To an products system

• To a system of systems


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5. MONETIZE YOUR IOT EXTENSION: 3 WAYS

Earning models for capturing extra

value

2 31Use data as a

currency

DATA

HEALTH SECTOR

REALTORSACADEMIC INSTITUTES

R&D ORGANIZATIONS

GOVERNMENTAL ORGANIZATIONS

LOCAL COMMUNITIES

MARKETING AGENCIES

INSURANCE COMPANIES

INFRASTRUCTURE PROVIDERS

Use knowledge to manage better

MEASURE

CUSTOMER SEGMENTATION

STOCK

INVENTORY MANAGEMENT

SUPPLIER DATA

PRODUCTION DATA

NEW FEATURES DEVELOPMENT

SHELF MANAGEMENT

SALES DATA

PRODUCT TRACKING

MANAGE

JIT MANUFACTURING


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DevelopmentSTEP 5

Selecting, prototyping &

testing

STEP 4

Designing alternative bus. mod.

STEP 3

Idea generationSTEP 2

6. IMPLEMENTING A CREATIVE BUSINESS MODEL PROCES

Take a product development approach towards business models!

• Be aware of your assumptions and guesses in a newly developed model, and make sure you test them with users.

• Iteration is very important. You likely won’t get it right the first time, but the business model can be adapted until it works.

• Be patient and invest effort in business modeling – develop alternative scenarios (products & services, roles, finance, organization).

• Validate your model after each iteration, with internal and external stakeholders.

• Design your business model implementation scenarios.

• Make sure you have the necessary competences for not only implementing the plan but executing it as well.

Assessment and analysis

STEP 1


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A CREATIVE PROCESS REQUIRES MAKING TRADE OFF’s

Product

PHYSICAL

DIGITAL

ROIRevenue streams

Data

ConnectivityUX

PartnershipsCRM

Financial appeal

User desirability

Time and ease of

execution

Endorsed by negative selection →Weak ones out

Risk

IoT extensionmodels

Selection of models: use a framework based on trade-offs

IoT extension


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CONCLUSIONS

It’s not just a financial exercise nor just a creative one!• Think service, but start with the existing product

• Developing the IoT Extension requires creativity

• Validate you Extension and involve users

• Expanding competences is a requirement

• The bottom line is still creating financial and business profit!

It’s about a multidisciplinary integrated approach


KruibekeBelgiumVerhaert New Products & Services Hogenakkerhoekstraat 21B-9150 KruibekeT +32 3 250 19 00E [email protected]

www.verhaert.com

NivellesBelgium

NoordwijkNetherlands

Lambda-XAvenue Robert Schuman 102B-1400 NivellesT +32 67 47 57 10E [email protected]

www.lambda-x.com

Verhaert NetherlandsKapteynstraat 12201 BB NoordwijkT +31 71 760 05 50E [email protected]

connect.verhaert.com

INDUSTRYFMCGCONNECT

MEDICAL TECHXFER

MEDICALAEROSPACE

TECHXFER

FMCGCONNECT

TECHXFER

AveiroPortugalLoad InteractiveAv. Dr. Lourenço Peixinho 153800-159 AveiroT +351 234 604 088E [email protected]

www.load-interactive.com

CONNECT

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Innovation Day is an initiative of Verhaert Masters in Innovation.