V.camp: Business Model Development & Innovation ( P)Re-Think Your Business Model Introduction...

v.camp: Business Model Development & Innovation (P)Re-Think Your Business ModelIntroductionTrainingOct 21st/22nd , Rot

Relevance & Objectives

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Business Model Development & Innovation

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The Business Model Development & Innovation ApproachWhat is it Built Upon?

Our Research

6 years of research 20+ scientific publications 10 finalized / on-going PhD theses

Other’s Research & Shared Experience

Thought Leaders on Business Model Innovation (e.g. O. Gassmann, H. Chesborogh, A. Osterwalder, M. Johnson)

Thought Leaders on Lean Start-Up, Customer Development (e.g. S. Blank, E. Ries, B. Cooper, A. Maurya)

Collaboration with SAP’s Communities

Our Coaching Experience

Various internal coaching projects (e.g. SAP Store, Supplier Info Net, HANA Cloud, CityApp)

Some external coaching projects (e.g. Roche, T-Systems)

4 years of coaching Trainings (‘v camp’)

Design Thinking Business Model Innovation /

Generation Lean / Agile

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The Business Model Development & Innovation Approach When and Why to be Used?

New product (or service)

Existing product (with limited

success)

New business model (BM)

Improved BM

Adapted BM

Ensure / optimize economical viability ….

… for all kinds of products …

… based on the appropriate BM

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BMDI Complements Existing Innovation Approaches with a Focus on Economic Viability for the Optimal Solution

Design Thinking

Business Model Development & Innovation (BMDI)

(Lean) Software Engineering

Business Models:Definition & Description

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Business Model Definition

The business model abstracts the complexity of a company (or business unit) by reducing it to its core elements and their interrelations. Thus, it specifies the core business logic, in particular aspects relevant for its competitive advantage.

The business model describes how value is created, delivered and captured.

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Business Model DescriptionNetwork View

My Company My Customers My Partners My Competition

Partner Network Customer Network Competition

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Business Model Description Enterprise View


Value Capture

Value CreationCompetition

Why?

How? What? Who?


Enterprise View = Osterwalder Canvas

Sources: www.businessmodelgeneration.conm (A. Osterwalder / Y. Pigneur)

http://www.businessmodelgeneration.conm/


A Well-Known Example: McDonald’sNetwork View


Partner Network Customer Network Competition

Fast food

Coffee culture (Mc Café)

Revenue

Revenue

Services

Brand awareness

Revenue

Sandwiches

Revenue

Fast food

Revenue

Revenue Coffee culture

Revenue

Brand / Licence

Products/Equipment

Concept

Revenue

Spreading the brand

Consumers

Fast food

Coffee culture (Mc Café)

Revenue

Branded Suppliers

Service Providers

Branded Products

Quality food products

Pizza restaurant

Revenue

Local Suppliers

Franchisees


A Well-Known Example: McDonald’sEnterprise View

Consumers: ONE global customer experience

Fast Food / Coffee Culture

Experience

Franchisees: Global Brand & Marketing

Equipment, Recipes, Furniture, Layout, Support provided

Standardized processes

Efficient supply chain & logistics

Brand-focused marketing

Direct revenue from consumers

Brand allows for price premium

Revenue from Franchise Restaurants (Profit Share, Fees)

High efficiency and stability

Economies of scale

Low-wages


Brand

Franchising concept

Stable quality

Low -wages

Consumers: Brand, Loyalty Programs, Family Attractions

Franchisees: (Long-term) contracts

Consumers: Shops, Advertising, Coupons

Franchisees: Direct Cannel

Branded Suppliers

Service Providers

Local Suppliers

Consumers

Franchisees


Extensions of the Network ViewSpecifics of Complex Business Models


Business models with network effects: These models only work, if it’s understood where and why network effects occur and how they have to be leveraged to build and sustain critical mass.

Multi-sided business models: These models only work, if it’s ensured that each entity in the customer network receives sufficient value as an incentive for participation.

Alliances: These models only work, if the joint business model as well as all the individual ones make sense from the stakeholders point of view.


Me

Competitor Group

CustomerSegment

Behind the Value Proposition is Your ProductWhat You Want to Accomplish with Your Value Proposition

Your Unique Value

Proposition

Your Product or Service should be developed in a way that you:

Address the customer needs to the largest possible extend

Maximize your unique value proposition (by leveraging your unfair advantages)

Minimize the competitors’ unique value proposition (by circumventing their unfair advantages)

This has to be done per customer segment (and competitor group, if necessary)

Common Value

Proposition

Your Competitors’ Unique Value Proposition


Your Overall Value

Proposition




Analyzing All Influencing FactorsBuilding a Value Proposition That Fits

Problem / Task

Job(s) to be done

Gains & Pains

Overall Value Proposition

Alternative Solutions

Key Features

Solution

Gain Creators / Pain Relievers

Unfair Advantages

Unique Value Proposition

Unique Value Proposition

Unfair Advantages

Key Features

Customer Segment: ABC Competitor Group: XYZ

Problem / Solution

Fit

Market / Solution

Fit








Business Model Development & Innovation:

Approach, Process & Methods

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Business Model Development & Innovation Our Definition and Approach

An iterative process resulting in a suitable business model adding economic value to the company.

Execution & ScalingAnalysis

Design

Verification

Piloting

Current Business Model or Baseline Influencing Factors

FutureBusiness Model

Innovation / Transformation


Business Model Development & Innovation An Iterative Approach – Not A Sequential Process

Analyze & Improve

Evaluate & Decide

Challenge & Change

Test & Verify

Iterations can be done in the sequence and to the extend that is required by the individual project.


Business Model Development & Innovation It’s Not Just a Process. It’s a Mindset.

When you aim for business model innovation, the right mindset is as important as the right process and methodology.

Mindset

Visionary

Customer-centric

OpenAdventurous

Analytical


Business Model Development & Innovation It’s Not Just a Mindset. It’s a Team Effort.

First of all you need a core team, representing all key functions and competencies. Diversity matters!

In addition, make sure you can access all relevant experts internally and externally, you know your stakeholders, and you have sufficient backing by promoters.

Core Team

Sponsors

Stakeholders

Experts

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Business Model Development & Innovation For Success All Elements Have to Come Together

TeamProcess

Mindset

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Level of Uncertainty & Need for AssumptionsHow to Use the BMDI Approach

Solution

Ma

rke

t

Close to Core Far from Core

Clo

se

to

Co

reF

ar

fro

m C

ore

Level of uncertainty / Need for assumptions

Number of iterations

Role of existing business models

Degree of innovative-ness

High High Inspiration Low - High

Low Low Guideline Low - High

The usage of the BMDI approach is significantly influenced by the level of uncertainty both on the solution and on the market side. Even established companies have to act rather like start-ups, if they operate under a high level of uncertainty. In this case they have to make a lot of assumptions to build a business models and will need many iterations to reduce uncertainty throughout the process. Nevertheless, the desired (or required) degree of innovativeness is independent from the level of uncertainty.

Sources: R. Stacey, 2002; B. Nagji and G. Tuff 2012


When and Where to Start?How to Use the BMDI Approach

Type of solution Typical triggers Business model

New solution Ensure economical viability, outperform competition, opportunities in the market

Needs to be developed; First ideas and assumptions are used as a starting point

Existing solution Limited economical success, inappropriate business model (e.g. acquired) , changes in market environment

Needs to be improved; Current business model is used as a starting point

The BMDI approach can be utilized both for new (to be developed) solutions and for existing ones. In the first scenario, even though there is no business model in place, mostly the project team has a lot of ideas and assumptions regarding the different elements, that should be documented and used as a base line for the BMI project. In the latter case the current business model needs to documented as a starting point.


Don‘t Re-Invent the Wheel How to Use the BMDI Approach

Findings from the literature: 90% of all new business model innovations are

re-combinations of existing business models. Companies can adopt business models

pioneered in one space into another.

Many re-usable business models are described in literature and by commercial providers.

No matter if you act under low or high uncertainty and no matter if you go for rather incremental or rather disruptive innovations: Existing business models should always be leveraged – be it as a guideline or just as an inspiration.

Learn from others. However, understand and adapt, do not just copy.

Sources: Gassmann et al., 2012; Johnson, 2010; Chatterjee, 2013; Teece, 2010; McGrath, 2010; Breuer , Ketabdar , 2012; Zott, Amit, Massa, 2010 (referring to: Timmers, 1998; Tapscott et al. 2000 ; Applegate, 2001; Rappa, 2001; Weill & Vitale, 2001 )

Thank You!

Contact information:

[email protected]

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V.camp: Business Model Development & Innovation ( P)Re-Think Your Business Model Introduction...

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