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How sexy is your business model? Use the following toolkit to organize your research and design process, evaluate the effectiveness and guide your re-design efforts.
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TOOLKIT© Daniel Pandza, NOV 2013 · Www.danielpandza.com
INNOVATIONEFFECTIVENESS
THE 9 STAGES OF SUCCESSFUL INNOVATIONS
HOW TO DESIGN COMPETITIVE BUSINESS MODELS?
CHANGE
We live in an age of short-lived competitive advantages. Managers all over the world are exploring the discipline of innovation in order to learn how to successfully create competitive solutions that differentiate their company from the competition. Nevertheless, the competitive advantage period of innovative products is relatively short and will not provide the competitive edge that is expected by the top management. !Over the recent years, the field of business model innovation has provided new questions and answers to a company´s innovation challenge. Thought leaders such as Alex Osterwalder (2004), Gary Hamel (2005), the team at IDEO (2009), Mark Johnson (2010) and Eric Ries (2011) and Ash Maurya (2012) have all provided useful frameworks for understanding the key elements of business models. Nevertheless, the tools lack a systematic approach to successfully and effectively design profitable business models that create, communicate, deliver and capture significant value for customers, stakeholders and shareholders, because they fail to explicitly link their key elements to the life cycle stages of successful innovations (see image below). !In this short toolkit we will present a model that is guided by the life cycle stages of successful innovations and can be used to effectively design competitive business models. In addition, we will provide a tool for systematically evaluating the 5 key elements of successful innovations. The assessment will provide guidance for further research of the environment and re-design of the business model.
The following tool can be used to guide the innovation team through the 9-stage innovation process and document the key assumptions, hypotheses, and insights in a systematic framework. First, you start with the problems, innovation challenges or opportunities that you are facing (1). From there you identify the key stakeholders and try to discover the key value drivers (2). Based on your insights, you can start designing the value proposition (3) and figure out how you will build the relationships (5) which channels you have to use (5) and how you will generate revenues (5). Once your have defined your go to market strategy and validated the key assumptions, you have to translate the strategy into concrete activities, resources and partners in order to identify the investment size and operating expenses (6). Finally, you must explore opportunities for increasing the scale (7) and efficiency (8) of BusinessDesign.
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STEP 1 - Describe your business model
IS YOUR INNOVATIONSIGNIFICANT?
STEP 2 - Evaluate Significance of you Business model
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CLIENT
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5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
PROJECT:IDEA:EVALUATOR: DATE:
SCORE: /125 VERSION:
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
PROJECT:IDEA:EVALUATOR: DATE:
SCORE: /125 VERSION:
1. SEXYNESS With this concept we invite you to reflect about the levels of attractiveness of…
a). your current product, service or current business model on the one hand, b). and the innovation´s capacity to satisfy the needs of our customers and investors.
!If the current design of our BusinessDesign scores low on the “sexyness” scale, we should ask ourselves:
For which customer segment, channel partner, etc. might it be more sexy? How can we increase the “sexyness” of our innovation? When / where might it be perceived as more “sexy”?
TARGET CUSTOMER SUPPLY CHAIN PARTNERS
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5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
1. SEXYNESS
PROJECT:IDEA:EVALUATOR: DATE:
SCORE: /25 VERSION:
OUR COMPANYSOCIETY
DEFINE CRITERIA
OUR COMPANYTARGET CUSTOMER SUPPLY CHAIN PARTNERS
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RELATIVE ADVANTAGE
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REDUCE COSTS
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
INCREASE VOLUME
REDUCE COSTS
REDUCE RISK
POSITION BRAND
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REDUCE COST
REDUCE RISK
POSITION BRAND
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ECOLOGICAL
ECONOMIC
SOCIAL
POLITICAL
TECHNOLOGICAL
ATTRACT NEW CUSTOMERS
DRIVE NEW REVENUES
REDUCE COSTS
STRENGTHEN PORTFOLIO
INCREASE BONDING
1. SEXYNESS
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SCORE: /25 VERSION:
EXAMPLE!
EVALUATION
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
PROJECT:IDEA:EVALUATOR: DATE:
SCORE: /125 VERSION:
2. SIMPLICITY The concept of “Simplicity” invites us to reflect about the level of complexity that our innovation contains and the implications this has for our clients, allies and company. For example, it could be that you have designed a “sexy” product, but the client does not perceive it, doesn´t understand it, is not capable of taking advantage of it, or does not possess the competencies to leverage the innovation. !In case we identify the activities that are highly complex and therefor require lots of effort, time or money we can as ourselves: Are there other customer segments that do not find it complex? · Who can help us to decrease the complexity for our clients? · How could we re-design the innovation, service or business model in order to eliminate the complexity barriers?
TARGET CUSTOMER SUPPLY CHAIN PARTNERS
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5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
2. SIMPLICITY
PROJECT:IDEA:EVALUATOR: DATE:
SCORE: /25 VERSION:
OUR COMPANYSOCIETY
DEFINE CRITERIA
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
PROJECT:IDEA:EVALUATOR: DATE:
SCORE: /125 VERSION:
3. SYNERGY With the concept of synergy we invite your team to reflect about the levels of synergy that our innovation possesses with respect to resource allocation, market trends, distribution channel goals, possible partners, the current behaviour of the user, etc. !If we identify no or low levers of synergy we might require more resources, time, etc. because we might have to first educate the market to perceive the value of our innovation. Hence, we might have to re-consider the key performance indicators that we have set and the time frame that we have defined to measure our progress.
TARGET CUSTOMER SUPPLY CHAIN PARTNERS
DISTRIBUTION CHANNEL PARTNERS
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5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
3. SYNERGY
PROJECT:IDEA:EVALUATOR: DATE:
SCORE: /25 VERSION:
OUR COMPANYSOCIETY
DEFINE CRITERIA
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
PROJECT:IDEA:EVALUATOR: DATE:
SCORE: /125 VERSION:
4. SCALABiLITY With this concept we invite you to reflect about the growth potential and growth speed of our business design. The growth will depend on 1st market size, 2nd the scalability of the product, 3rd the scalability of the service (whole product), 4th the scalability of the business model, 5th the stage of the category maturity life cycle, and 6th the power and resources our company possesses to gain market share from our competitors. !If we discover that the scalability of our business design is limited and the profit potential doesn´t compensate for the lack of volume we have to ask ourselves: How can we modifiy the design of our product, service or business model (incl. decisions about distribution channels, market segments, key partners, etc.) in order to maximize the profitability and growth? In which of the different innovation projects should I invest my resources? etc.
TARGET CUSTOMER SUPPLY CHAIN PARTNERS
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5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
4. SCALABILITY
PROJECT:IDEA:EVALUATOR: DATE:
SCORE: /25 VERSION:
OUR COMPANYSOCIETY
DEFINE CRITERIA
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
PROJECT:IDEA:EVALUATOR: DATE:
SCORE: /125 VERSION:
5. SUSTAINABILITY Finally, the concept of sustainability invites us to reflect about the relevance of the innovation project in the long term. !If we pursue this project, will we have the opportunity to leverage the new experiences, resources, channels, credibility, image, etc. in order to create the next-generation of our business that will assure our growth target in the long run? · Is is a project with short term potential that will have limited potential to create future business opportunities? !If you have not considered the long-term implications of your innovation efforts, this evaluation criteria should inspire you to imagine the long term potential of your innovation efforts.
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5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza ([email protected])
INNOVATIONEFFECTIVENESSASSESSMENT5S
5. SUSTAINABILITY
PROJECT:IDEA:EVALUATOR: DATE:
SCORE: /25 VERSION:
OUR COMPANYSOCIETY
DEFINE CRITERIA
STEP 3 - RE-DESIGN YOUR BUSINESS MODEL
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