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Business Models Designing and value mapping successful business models for commercializing an innovation

Business Models Designing and value mapping successful business models for commercializing an innovation

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Page 1: Business Models Designing and value mapping successful business models for commercializing an innovation

Business Models

Designing and value mapping successful business models for commercializing an innovation

Page 2: Business Models Designing and value mapping successful business models for commercializing an innovation

PaxilCommercialization of an Old Invention

Commercialization – Opportunity Register Analysis

Page 3: Business Models Designing and value mapping successful business models for commercializing an innovation

Paxil (paroxetine) antidepressant

Feature Set

1. Anti-depressant2. No chance of overdose (a serious problem for tricyclics)3. Is a form of ‘Software’ (Leschly's perspective on drugs

offered by SmithKline)4. ‘Selective serotonin reuptake inhibitor' – i.e., it is 'selective'

connoting a sort of 'cleanliness‘ ‘Off-label’ treatment features (prohibited by FDA)

1. Anti- 'panic disorder' (treating panic attacks)2. Anti- ‘obsessive-compulsive disorder’ (including sub-disorders like

bulimia and anorexia)3. Anti- 'social phobia disorder' i.e., lack of social confidence that

led its sufferers to lives of isolation, loneliness, and inability to perform many of the simplest tasks of everyday life

Page 4: Business Models Designing and value mapping successful business models for commercializing an innovation

Paxil

The ‘Story’ for DTC In the 1960s and 70s, all drugs were prescribed under the advice of

physicians; patients were carefully guarded from knowing anything that might possibly hurt

them (or help them; or be the basis for lawsuits) This fit well with the physicians' own view of their position;

as counselors, and gatekeepers for the tools and techniques for patients to obtain and maintain health.

Direct-to-consumer advertising has been legal since the 1980s – allowed by the Food and Drug Administration

Leschly used DTC to tell "The Story" a new-age parable, often illustrated with brightly colored diagrams and cartoon

characters, unfolded like this Paxil worked on a different brain chemical system than did older drugs.

The name of this "natural" brain chemical was serotonin In some depressed patients, this chemical was lowered in volume because

a certain brain synapse was "overactive" Paxil, by "naturally" blocking reuptake of serotonin led to relief from

depression.

Page 5: Business Models Designing and value mapping successful business models for commercializing an innovation

Attribute Map

Basic Discriminator Energizer

PositiveAnti-depressantNonnegotiable

Anti- 'social phobia disorder' Anti- ‘obsessive-compulsive disorder’Anti- 'panic disorder' SSRI‘Software’ Differentiator

No chance of overdose Exciter

Negative Tolerable

Price?Dissatisfier

(Hey, it’s an antidepressant)

Enrager

Neutral So What? Parallel

Page 6: Business Models Designing and value mapping successful business models for commercializing an innovation

Consumption Chain

Us e

P s y c h o lo g ic a l /p h y s ic a l ad d ic tio n

P u r c h as e

D o c to r 's v is it

Aw ar en es s

Three customer groups: (1) Anxiety; (2) Magazine Ad (DTC); (3) Articles suggesting off-label use

Page 7: Business Models Designing and value mapping successful business models for commercializing an innovation

Awareness Three customer groups: (1) Anxiety; (2) Magazine Ad (DTC); (3) Articles suggesting

off-label use Managing Awareness

a) Find ways to link discomfort of anxiety with the promise of relief through Paxilb) Magazine ads should emphasize (a)c) Minimize the dissatisfaction from Ad clutter in magazines by making ads attractive, fun and

informatived) Commission ‘independent’ research and articles to promote off-label use of Paxil

Basic Discriminator Energizer

Positive Nonnegotiable2.Magazine AdDifferentiator

Off-label useExciter

Negative Tolerable

1.Anxiety2. Clutter from AdDissatisfier

1.AnxietyEnrager

Neutral So What? Parallel

Page 8: Business Models Designing and value mapping successful business models for commercializing an innovation

Doctor’s Visit

Managing Doctor’s Visita) Magazine Ad (DTC) links discomfort of anxiety with the promise of relief through Paxilb) Magazine Ad (DTC) emphasizes that the best solution is Paxilc) Best means ‘safest’ (cite tricyclics)d) Best means ‘clean and selective’e) Best means ‘cleaning your brain’s software’f) Make sure Dr. has lots of free Paxil samplesg) Suggest Dr. experiment with off-label prescription

Basic Discriminator Energizer

Positive NonnegotiableFree SamplesDifferentiator Exciter

Negative Tolerable DissatisfierWaiting, cost for Dr.Enrager

Neutral So What? Parallel

Page 9: Business Models Designing and value mapping successful business models for commercializing an innovation

Purchase

Managing Purchasea) Purchase at pharmacy with prescription; assure in-stock

b) Make sure price is covered by most health care

Basic Discriminator Energizer

Positive NonnegotiableCovered by health cardDifferentiator Exciter

Negative TolerableCan’t buy OTCDissatisfier Enrager

Neutral So What? Parallel

Page 10: Business Models Designing and value mapping successful business models for commercializing an innovation

Use Managing Usage

a) Assure dose large enough for effect

b) Refills easy

c) Off-label application easy

d) Available through mail without prescription

Basic Discriminator Energizer

Positive

Refills easyAvailable through

mail w.o. Prescription Off-label apps easy

DifferentiatorHigh doseExciter

Negative Tolerable Dissatisfier1.AnxietyEnrager

Neutral So What? Parallel

Page 11: Business Models Designing and value mapping successful business models for commercializing an innovation

Addiction

Managing Addictiona) Dose should be adequate for psychological addiction

Key to repeat purchase

b) Promote this as ‘lifestyle’ drug that assures healthy brain software

Basic Discriminator Energizer

Positive Nonnegotiable DifferentiatorAddictionExciter

Negative Tolerable Dissatisfier Enrager

Neutral So What? Parallel

Page 12: Business Models Designing and value mapping successful business models for commercializing an innovation

Moving Off-label to On-Label SmithKline’s ‘Social phobia’ launch for Paxil

Leschly's marketing department commissioned a huge publicity campaign to raise awareness of the disease

one that set the pattern for many to follow both at SmithKline and in the industry The first step involved the hiring of a public relations agency to produce a free

video on the disease And distribute it widely for use by network affiliates and independent TV stations Because health stories of any sort guaranteed a minimal audience

The second step was to underwrite studies by experts in the field, who would conclude that the disorder is debilitating and probably afflicts many more

than originally suspected Finally, while awaiting for FDA approval for a new use, underwrite a few small-

scale studies off-label (i.e., where the drug is used for other than its approved purpose, which in Paxil's case

was adult depression) Through these, SmithKline became aware of even more promising new markets in

child and adolescent depression (Adaptive Execution)

Page 13: Business Models Designing and value mapping successful business models for commercializing an innovation

Why Business Models Matter

“During the dot-com boom, ‘Business Model’ was a buzzword routinely invoked to glorify all manner of half-baked plans”

-- Michael Lewis

Page 14: Business Models Designing and value mapping successful business models for commercializing an innovation

Why Business Models Matter

Telling a good story Part of selling your strategy / investment

Tying Narrative to Numbers Strategy becomes less philosophy More performance and outcome

When business models don’t work It’s because the fail either

The ‘Narrative’ test Or the ‘Story’ test

Page 15: Business Models Designing and value mapping successful business models for commercializing an innovation

A business model is not strategy

It doesn’t describe external forces: Competition Environment Scaling

It only depicts the systems that will be put into place to achieve a strategic objective

A good model is not enough The boxes on the value map need to be

understood in depth In order to develop a good strategy

R & D

C u s to m erR elat io n s h ipM an ag em en t

L ab o r C u s to m er s

F act o ry

W o r k

Production

Page 16: Business Models Designing and value mapping successful business models for commercializing an innovation

Graphing the Value Map

External competitive environment (supply & demand curves)

Internal strategies, competencies, knowledge, assets ‘owned’

Value flows between owners and/or the external environment

E n v ir o n m en t

S tr a teg y - O w n er

Page 17: Business Models Designing and value mapping successful business models for commercializing an innovation

Mad Catz is an example of A Network Business Models

Ag o r a Allian c e

Ag g r eg a tio n Valu e C h ain

D is tr ib u tiv eN etw o r k

Hier ar c h ic a l

S e lf -O r g an iz in g

C o n tr o l

v a lu e in teg r a tio nL o w Hig h

Taxonomy of Network Business Models

Page 18: Business Models Designing and value mapping successful business models for commercializing an innovation

Some Network Business Models

Ag o r a Allian c e

Ag g r eg a tio n Valu e C h ain

D is tr ib u tiv eN etw o r k

Hier ar c h ic a l

S e lf -O r g an iz in g

C o n tr o l

v a lu e in teg r a tio nL o w Hig h

Page 19: Business Models Designing and value mapping successful business models for commercializing an innovation

The Value Chain Integrator for Electronic and Logistic Networks

Ag o r a Allian c e

Ag g r eg a tio n Valu e C h ain

D is tr ib u tiv eN etw o r k

Hier ar c h ic a l

S e lf -O r g an iz in g

C o n tr o l

v a lu e in teg r a tio nL o w Hig h

C o m p o n en tS o u r c es

C o m p o n en tS o u r c es

C o m p o n en tS o u r c es

C o m p o n en tS o u r c es

C o m p o n en tS o u r c es

Valu eC h ain

I n teg r a to r

C u s to m er s

C u s to m er s

C u s to m er s

Page 20: Business Models Designing and value mapping successful business models for commercializing an innovation

Other Network Business Models

Aggregator (e-Tailor)

Ag o r a Allian c e

Ag g r eg a tio n Valu e C h ain

D is tr ib u tiv eN etw o r k

Hier ar c h ic a l

S e lf -O r g an iz in g

C o n tr o l

v a lu e in teg r a tio nL o w Hig h

S o u r c es

S o u r c es

S o u r c es

Ag g r eg a to r

C u s to m er s

C u s to m er s

C u s to m er s

Page 21: Business Models Designing and value mapping successful business models for commercializing an innovation

Distributive Net

Ag o r a Allian c e

Ag g r eg a tio n Valu e C h ain

D is tr ib u tiv eN etw o r k

Hier ar c h ic a l

S e lf -O r g an iz in g

C o n tr o l

v a lu e in teg r a tio nL o w Hig h

S o u r c es

S o u r c es

S o u r c es

C u s to m er s

C u s to m er s

C u s to m er sD is tr ib u tiv e

N etw o r k

Page 22: Business Models Designing and value mapping successful business models for commercializing an innovation

AgoraPrice and Other Information Discovery

Ag o r a Allian c e

Ag g r eg a tio n Valu e C h ain

D is tr ib u tiv eN etw o r k

Hier ar c h ic a l

S e lf -O r g an iz in g

C o n tr o l

v a lu e in teg r a tio nL o w Hig h

S o u r c es

S o u r c es

S o u r c es

Ag o r a( M ar k e t)

C u s to m er s

C u s to m er s

C u s to m er s

In fo rma tio

n

I n f o r m atio n

In fo rm a tio n

I n f o r m atio n

In fo rm a tio n

In fo rma tio

n

Page 23: Business Models Designing and value mapping successful business models for commercializing an innovation

AllianceBasis for the ‘Contribution Economy’

Concept: people from

around the world can contribute energy, ideas, and knowledge to joint projects.

Examples: blogs, open-

source software, podcasts, and online encyclopedia Wikipedia.

Ag o r a Allian c e

Ag g r eg a tio n Valu e C h ain

D is tr ib u tiv eN etw o r k

Hier ar c h ic a l

S e lf -O r g an iz in g

C o n tr o l

v a lu e in teg r a tio nL o w Hig h

P r o s u m er s

P r o s u m er s

P r o s u m er s

P r o s u m er s

V a lu e S p a c e( I n du s try S ta n da rd o r V irtu a l Ne two rk )

Page 24: Business Models Designing and value mapping successful business models for commercializing an innovation

Disruptive Innovation:The Disk Drive Industry

Disruptive Innovation, The Innovator’s Dilemma & Forced Reconfigurations of Markets

Page 25: Business Models Designing and value mapping successful business models for commercializing an innovation

Change in the Data Storage Industry Storage Pre-1950: IBM M80 Sorter and M77 Collator

Page 26: Business Models Designing and value mapping successful business models for commercializing an innovation

Storage

5 MB in 1952

Page 27: Business Models Designing and value mapping successful business models for commercializing an innovation

5-10 Megabytes in 1973 (14”)

Page 28: Business Models Designing and value mapping successful business models for commercializing an innovation

Shrink …shrink …shrink

20MB Seagate (5.25”) c. 1986

100MB Conner (3.5”) c. 1990

1000MB IBM (1”) c. 2000

Page 29: Business Models Designing and value mapping successful business models for commercializing an innovation

Darwin Rules Between 1976 and 1995

129 Disk drive manufacturers entered the market 109 Disk drive manufacturers existed

1970s (after DL/1) Plug Compatible and OEM IBM,Diablo, CDC, DEC, Storage Tech, Ampex 2/3rds never introduced 8” drives

1980s (8” Winchester) Shugart Assoc., Micropolis, Priam, Quantum

1985+ (5.25” Winchester) Seagate, Miniscribe, Computer Memories, Intl. Memories

1987+ (3.5” Winchester) Conner, etc.

1989+ (2.5” Winchester) Prarietek, etc.

1992+ (1.8” Winchester) … and so forth

Page 30: Business Models Designing and value mapping successful business models for commercializing an innovation

Tech Trajectories Disk Capacity Demanded vs. Capacity Supplied

Page 31: Business Models Designing and value mapping successful business models for commercializing an innovation

The Industry Dynamics of ‘Attack from Below’

1. Technology Cost-to-Performance accelerates 1. At an exponential rate

2. With a constant year-on-year growth

2. Substitute products accelerate on new performance parameters1. Creating a sneak attack

2. At the low profitability end of an established firm’s market

3. As substitute technologies accelerate, they consume all of the market of established firms1. Driving previously successful firms out of business

Page 32: Business Models Designing and value mapping successful business models for commercializing an innovation

Technologies that ‘Shrink’?

Page 33: Business Models Designing and value mapping successful business models for commercializing an innovation

Cost-to-performance acceleration

Page 34: Business Models Designing and value mapping successful business models for commercializing an innovation

Successful Strategy?

Page 35: Business Models Designing and value mapping successful business models for commercializing an innovation

Defeated firms were not stupid

They were held captive by their customers While new entrants tooled for new markets And in the process consumed old markets

The only way to manage this successfully … … is Darwinian evolution

Page 36: Business Models Designing and value mapping successful business models for commercializing an innovation

Successful Transition through Creative Disruption

Control Data 60% of 14” market from 1965-82 Missed the 8” market Set up 8” production in Oklahoma city, for successful entry

Conner for 5.25” Spin-off from Seagate and Miniscribe Compaq pushed their market

Quantum retains 80% of spin-off Plus Development Corp (for 3.5” drives) Plus consumes Quantum

1994 largest producer in world Micropolis: Transition by Managerial Force

Founded in 1978 by Stuart Mabon for 8” drives 1982, Mabon read the trajectories, and retooled for 5.25” They walked away from existing customers and nearly broke the firm

Page 37: Business Models Designing and value mapping successful business models for commercializing an innovation

Disruptive Innovation the Excavator Industry

Incumbents fail to innovate Because they spend too much time listening to

their existing customers

Page 38: Business Models Designing and value mapping successful business models for commercializing an innovation

Caterpillar

and the Mechanical Excavator Industry

Page 39: Business Models Designing and value mapping successful business models for commercializing an innovation

Cable-driven Steam Shovel Mnfd by Osgood General

Page 40: Business Models Designing and value mapping successful business models for commercializing an innovation

The first upheaval

Steam shovels (mechanical excavators) were invented in the early 1800s

The first great upheaval occurred in the 1920s When gasoline replaced

steam as a power source 23 of the 25 largest makers of

steam shovels Successfully negotiated the

transition to gasoline power There were also around 20

new entrants And innovation continued with

diesel and electric power

Page 41: Business Models Designing and value mapping successful business models for commercializing an innovation

The second upheaval

Hydraulics developed for aircraft in WWII Percolated into industry throughout the 1950s-60s Replaced cables Only 4 of the top 30 excavator manufacturers in the 1950s survived this

transition into the 1970s The new diesel-hydraulic entrants included:

Caterpillar As well as John Deere, Drott, Ford, International Harvester, Hitachi, Komatsu, Case,

Bamford, Poclain

What happened? How did Cat get its start?

Page 42: Business Models Designing and value mapping successful business models for commercializing an innovation

Hydraulics

The first hydraulic excavator was developed in 1947 Limited by the power and strength of available hydraulic pumps’ seals, the capacity of early machines was minuscule And of no use in the major markets

Excavation Sewer contracting

Entrants like Cat developed new applications for their small capacity hydraulic excavator As attachments for the back of small industrial and farm tractors They called them ‘backhoes Useful to residential contractors, farmers, etc. to dig narrow ditches for sewer,

cable, etc. Jobs done by hand in the past and too small for the imprecise cable driven excavators

Page 43: Business Models Designing and value mapping successful business models for commercializing an innovation

Stealthy Cat

Entrants like Cat developed new metrics to advertise their products Rather than measuring the quantity of earth that could be

moved as the cable-driven manufacturers advertised

Their product literature emphasized Shovel width (narrow being better for contractors) Speed and maneuverability of the tractor

So the bigger companies like Link Belt Didn’t even perceive Caterpillar as a competitor

Because they spoke a different language To different customers

Page 44: Business Models Designing and value mapping successful business models for commercializing an innovation

Hydraulics and Performance Trajectories in the Mechanical Excavator Market

Page 45: Business Models Designing and value mapping successful business models for commercializing an innovation

Caterpillar’s Climb By 1974, the hydraulic excavators

Had the muscle to lift 10 cubic yards of dirt A rate of improvement that outstripped demand in any of the

excavator markets In contrast, the largest makers of cable-driven excavators

Bucyrus Erie and Northwest Engineering Built better cable-driven machines, for their most profitable customers Because to do otherwise was not profit-maximizing

They logged record profits until 1966 When hydraulic excavators rapidly took over all the excavation

markets

Page 46: Business Models Designing and value mapping successful business models for commercializing an innovation

Two Tragedies

(1) Not reaching your goal (2) Reaching your goal

Once a goal is reached Direction is lost Until another goal is set

Encore Problem: Once you’ve succeeded, How do you convince others that your success is

‘sustainable’ and not just luck

Page 47: Business Models Designing and value mapping successful business models for commercializing an innovation

New Entrants went HydraulicMajor companies never introduced a successful hydraulic excavator

Page 48: Business Models Designing and value mapping successful business models for commercializing an innovation

Why Cable went Bust Once both cable-driven and hydraulic-driven excavators could

satisfy all of the mainstream markets Excavation contractors no longer needed to base their choice of equipment

on which had longer reach and greater bucket capacity

Both were good enough, and cable vs. hydraulic became irrelevant

Contractors found that hydraulic machines were much less prone to breakdowns

than cable-driven excavators Not to mention the loss of life and limb resulting from a cable snapping

Cable’s demise was not due to poor knowledge or strategy

Page 49: Business Models Designing and value mapping successful business models for commercializing an innovation

How Japanese Manufacturers Sneaked up on Cat

Entrants like Komatsu developed new metrics to advertise their products Caterpillar measured

Amount of earth moved Shovel width (narrow being better for contractors) Speed and maneuverability of the tractor

Komatsu’s product literature emphasized That Komatsu equipment needed far less service Making them less dependent on their local dealer

Since Caterpillar’s strength was its dealer network Komatsu’s new and distinctive strategy Disrupted their customer reach Kept customers out of Cat’s showrooms And convinced customers that this was good

Caterpillar didn’t perceive Komatsu as a major competitor Because they spoke a different language To different customers

Page 50: Business Models Designing and value mapping successful business models for commercializing an innovation

Mad Catz Game ControllersCommercialization with Rapid Innovation

Page 51: Business Models Designing and value mapping successful business models for commercializing an innovation

Mad Catz’s Products

Controllers, Joysticks, memory chips, cables, power supplies, etc. Anything you could add onto a game console

Question: How do you make money on this market?

Page 52: Business Models Designing and value mapping successful business models for commercializing an innovation

Mad Catz’ Value Map

E lec tr o n ic P ar ts

R eta ile r s( T o y s 'R Us ;

W al- M ar t)

P las tic P ar ts

P ac k ag in g M tl

HW Ven d o r s S p ec s

E lec tr o n ic sBu ild

P la s t ic D e s ig n :M a in

c o mp o n e n t o fh u ma n in te rfa c e

E lec tr o n ic sD e s ig n( c y c le :

6 0 % o f C o s t , o u ts o u r c ed

P las tic sM o ld in g

P ac k ag eD es ig n ,

G r ap h ic s

As s em b ly ,P ac k ag in g an d

S h ip p in g1 0 % o f c o s ts , inh o u s e f o r q u a lity

c o n tr o l

2 0 % o f C o s ts , o u ts o u r c ed

1 0 % o f C o s ts , in h o u s e

1 0 % o f C o s ts

50% o f D

e mand V

alue

1 0 0% c o s t

2 5 % o f D e m an d V a lu e

25% o f Dem and V

a lu e

c y c le : 2 w eek s

c y c le : 4 - 6 m o n th s

c y c le : 3 :m o n th s

c y c le : 1 w eek

Page 53: Business Models Designing and value mapping successful business models for commercializing an innovation

Points to Noteabout Mad Catz’s Business Model

Sources of costs and revenues are different Cycle time influences revenue The product is 100% ‘human interface’

Visual Mental Tactile

Their market is driven by other vendors What does this imply about market and growth strategies

Many components of this case are typical of Pearl River Delta companies

Page 54: Business Models Designing and value mapping successful business models for commercializing an innovation

Product Feature Map

Basic Differentiator Exciter

+ Electronics Case Packaging, Case

- Electronics Case Packaging, Case

0 Electronics

Page 55: Business Models Designing and value mapping successful business models for commercializing an innovation

Controller Economics

Value Added Cost Added Lead Time

Electronics 0 - 20% 60% 4-6 months

Case 30-40% 20% 3 months

Packaging 40-70% 10% 2 weeks

Page 56: Business Models Designing and value mapping successful business models for commercializing an innovation

MadCatz Controller Consumption Chain

Us e

P u r c h as e

G am eC o n s o le

O w n er s h ip

Page 57: Business Models Designing and value mapping successful business models for commercializing an innovation

Game Ownership Managing: Game ownership is a given; MC’s problem is to find where the

owners are located, and how to reach them Two customer groups: (1) OEM (2) Aftermarket OEM must be reached through contract with game manufacturer

Basic Differentiator Exciter

+ Aftermarket

-

0

Page 58: Business Models Designing and value mapping successful business models for commercializing an innovation

PurchaseManaging: Controllers are inexpensive and thus aftermarket controllers may have

a hard time differentiating through advertisingLocation of sale is the main way of differentiating in the purchase decision.

Stocks should be located close to places that sell the consoles, as well as game software and other consumer electronics to which players would be attracted

Packaging is a second way of differentiatingCustom logos are a third way

Basic Differentiator Exciter

+ Location PackagingLogos

-

0

Page 59: Business Models Designing and value mapping successful business models for commercializing an innovation

Use

Managing UseReliability is essential for repeat purchases

Ergonomics are a differentiator

Basic Differentiator Exciter

+ Reliability Ergonomics

-

0

Page 60: Business Models Designing and value mapping successful business models for commercializing an innovation

Updates to the Case Statistics

Worldwide video game industryMad Catz’s Future Market Potential

Revenues of $25 billion last year overtook movie box-office receipts

Sales are expected to climb to $55 billion by 2008

While broadcast TV audiences dwindle and moviegoing stagnates, gaming is emerging as the newest and perhaps strongest pillar

of the media world.

Page 61: Business Models Designing and value mapping successful business models for commercializing an innovation

Videogame Economics Costs for developing games are going sky-high. Microsoft spent $40 million to create and market Halo 2;

around $160 million for Halo 3 Vs. $80 million average cost of a Hollywood movie,

but it prices most small and midsize game makers out of the top of the market. The top five game developers last year accounted for 56% of the industry's more

than $10.5 billion in U.S. sales (around $40 billion worldwide)

Only 5% of all games reaching the 1 million "hit" mark,

It's vital for game makers to build up a portfolio of winning franchises

EA has Madden and Sims, NASCAR, James Bond, and the Medal of Honor shooter series totaling 27 game titles last year that sold more than 1 million copies.

Page 62: Business Models Designing and value mapping successful business models for commercializing an innovation

Controller Innovation

Page 63: Business Models Designing and value mapping successful business models for commercializing an innovation

Outsourcing at Mad Catz

By outsourcing much of its production, and coordinating the entire production process Mad Catz Controlled its profitability by being a Value

Chain Integrator

It was looking for new opportunities to Control costs Speed up time to market Improve quality

By innovations in both logistics and information networks

Page 64: Business Models Designing and value mapping successful business models for commercializing an innovation

Mad Catz: Considerations Because the product is 100% ‘human interface’

Consider the costs and benefits of professional industrial design

Look for cost – revenue spreads in the Business Model Cut costs where revenues are small Spend more if you can influence revenues with small additional cost

Cycle time influences revenue Look for possibilities for ‘Geographical Scaling’ Through improvements in Information and Logistics networks

Market is driven by other vendors (not by your decisions) Bet that Sony, Nintendo and Microsoft will be leaders, and pander to

them Consider game specific software for powerful software companies like EA

E.g., branded controllers

Page 65: Business Models Designing and value mapping successful business models for commercializing an innovation

Innovation Workout

Use Morphological boxes to study the Commercialization of Video Game Consoles