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Business Model Innovation…
Alar KolkPresident, European Innovation Academy
Grow Fast or Die
ARE YOU SOLVING THE RIGHTPROBLEM?
“If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it,” Albert Einstein said.
Most firms are not and that undermines their innovation efforts…
Indeed, when developing new products, processes, or even businesses, most companies aren’t sufficiently rigorous in defining the problems they’re attempting to solve and articulating why those issues are important. Without that rigor, organizations miss opportunities, waste resources, and end up pursuing innovation initiatives that aren’t aligned with their strategies.
Traditional Value Chain vs. Modern Value Chain
Who?Which new customer segments will emerge in the next 5 years?
YUPPIES
YUFFIES
MOBY/DOBY
WOOFS
SKIPPIES
SANDWICHERS Adults caught between caring their children and their older parents
School Kids with Income + Purchaing Power
Well Off Older Folks
Mom/Dad Older – Baby Younger
Young Urban Failures
Youg Urban Professionals
Customer & Idea Discovery
Customer Discovery, Phase One:State Your Business Model
Customer Discovery, Phase Two: "Get Out of the Building" to Test the Problem: "Do Customers Care?"
Get your team "out of the building" to test the problem and to answer three key questions:•Do we really understand the customer's problem?•Do enough people really care enough about the problem for this to become a huge business?•And will they care enough to tell their friends?
Customer Discovery, Phase Three: "Get out of the Building" and Test the Product/Service Solution
Value proposition?
Value proposition?
What are value propositons for the products?
Business Model Determines Value of the Product or Service.
Business Model Innovation Transforms Technology into
Money
Business Model Functions:
1.Value Creation
2.Value Capture
Business Model
Focus in Business ModelA business model is a conceptual tool that contains a big set of elements and their
relationships and allows expressing the business logic of a specific firm. It is a description of the value a company offers to one or several segments of customers and of
the architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable
revenue streams. Osterwalder, Pigneur and Tucci (2005)
areas4
WHAT? WHO?HOW?
$? €?
building blocks 9
WHAT? WHO?HOW?
$? €?
CUSTOMERCUSTOMER
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
CLIENTSEGMENTS
OFFEROFFER
COST STRUCTURECOST STRUCTURE
CUSTOMERRELATIONSHIPS
CUSTOMERRELATIONSHIPS
CUSTOMERSEGMENTSCUSTOMERSEGMENTS
KEY RESOURCESKEY RESOURCES
CAPABILITIESCAPABILITIES
REVENUEFLOWS
REVENUEFLOWS
DISTRIBUTION CHANNELS
DISTRIBUTION CHANNELS
PARTNER NETWORKPARTNER NETWORK
how much did the coffee price change for Swiss
households over the last couple of years?
6-8 x more6-8 x more
Nespresso changed the business model for coffee
The business model systemTARGETED CUSTOMERSEGMENTS
PARTNERSHIPNETWORK
OFFER – VALUE PROPOSITION
Nespresso
coffee machines
households
distribution channels
marketingmachine
salescapsule
sales
REVENUE MODEL
espresso capsules retail outletsNespresso.c
om
DISTRIBUTION CHANNELS
call center
Nespresso stores
retail logistics
machine manufacturer
production
CAPABILITIES
distribution
KEYRESOURCES
marketing
Nespresso
club
CUSTOMER RELATIONSHIPS
COST STRUCTURE
businessproduction
facilities
patents
production
RESULTS
35% growth p.a. for the last 7 consecutive years
fastest-growing business in the Nestlé group
Nespresso has a 26.6 % global share in Espresso
machine sales
