day 2 - business model innovation

8/2/2019 Day 2 - Business Model Innovation

1/29

Value Innovation = Innovation + Utility Position (Price & Cost)

= Differentiation + Low Cost Simultaneously

BUSINESS MODEL INNOVATION


2/29


Example:

Cirque de Soleil

= Fun + Thrills of the Circus + Intellectual Sophistication of Thetre


3/29


VALUE INNOVATION

I. Cost Savings = Removing or eliminating the factors that an

industry competes on.

II. Buyer Value = Raising or creating the elements that the

industry has never offered.


4/29


ANALYTICAL TOOLS

I. Strategy Canvass

A. Where is the competition investing?


5/29


ANALYTICAL TOOLS

I. Strategy Canvass

B. What are the factors that the industry currently competes

on?:

Price

Product

Service

Delivery

Relationships

Reputation

Brand

Expertise


6/29


ANALYTICAL TOOLS

I. Strategy Canvass

C. What do customers receive from what competitors are

offering?

D. Identify Alternatives & Non-Customers


7/29

Price Meals Lounges Seating class

choices

Hub

connectivity

Friendly

service

Speed Frequent

point-to-

point

departures

The Strategy Canvas of Southwest Airlines

High

Low

Average Airlines

Southwest

Car Transport


8/29


ANALYTICAL TOOLS

II. Four (4) Action Models

1. ELIMINATE

Which of the FACTORS do the customers do not

consider relevant & takes for granted


9/29


ANALYTICAL TOOLS


2. REDUCE

Which FACTORS are over-designed & raises costs


10/29


ANALYTICAL TOOLS


3. RAISE

Which FACTORS should be raised well-above the

industry standard


11/29


ANALYTICAL TOOLS


4. CREATE

Which FACTORS have to be created that the industry

has never offered


12/29


REDUCE

Which FACTORS are over-designed & raises costs

ELIMINATE

Which FACTORS do the

customers do not

consider relevant &

takes for granted

CREATE

Which FACTORS have to

be created that industry

has never offered

RAISE

Which FACTORS should

be raised well above

the industry

standards

A

NEW VALUE

CURVE


13/29


ELIMINATEStar Performers

Animal Shows

Aisle Concession Sales

Multiple Show Arenas

RAISE

Unique Venue

REDUCE

Fun & Horror

Thrill & Danger

CREATE

Theme

Refined Environment

Multiple Production

Artistic Music & Dance

CIRQUE DE SOLEIL


14/29


FORMULATING THE MODEL

I. Reconstruct Market Boundaries

A. Look Across Alternative Industries

Alternatives are broader than substitutes


15/29




B. Look Across Strategic Groups Within Industries

Strategic groups pursue similar strategies

e.g. Luxury Car Manufacturers


16/29




C. Look Across the Chain of Buyers

Direct or Indirect buyers

Influencer Actual User Purchaser


17/29




C. Look Across the Chain of Buyers

Example:

1. Novo Nordisk Single Application Diabetic Medication

2. Insulin to Diabetic Care


18/29




D. Look Across Complementary Product & Service Offerings

Define TotalSolution for your buyers


19/29




E. Look Across Functional or Emotional Appeal to Buyers

If you compete on emotional appeal, what elements

can you strip out to make it functional vice versa


20/29




F. Look Across Time

Will trend change value to customer? Ex: Internet

Finding insight on trends

Trends must be: Decisive + Irreversible & Clear Trajectory


21/29



II. Focus on the Big Picture Not the Numbers

A. Use the Strategy Canvass

1. Shows strategic profile of the industry & factors

2. Strategic profile of the current & potential

competitors

3. Identify which factors they invest in strategically


22/29




B. Four (4) Steps in Visualizing Strategy

1. VISUAL AWAKENING

Compare yourself with competition by drawing

your asis strategy canvass

See when your strategy needs to change


23/29





2. VISUAL EXPLORATION

Go to the field & check on the 6 paths to creating

blueoceans


24/29





2. VISUAL EXPLORATION

Observe the distinct advantage of alternative

See what factors you should ELIMINATE, REDUCE,

RAISE or CREATE


25/29





3. VISUAL STRATEGY FAIR

Draw your tobe strategy

Get feedback on alternative strategy

Use feedback to build on best tobe strategy


26/29





4. VISUAL COMMUNICATION

Distribute your before & after strategic profiles

on 1 page for easy communication


27/29





4. VISUAL COMMUNICATION

Support only those projects and operational

moves that allow your company to close the gaps

to actualize the new strategy


28/29



III. Reach Beyond Existing Demand

Look to non-customers

Build on powerful commonalities in what buyers value

rather than differences

Desegmentation before pursuing finer segmentation



29/29


IV.Get the Strategic Sequence RightBUYER UTILITY

Is there exceptional buyer

utility in your business idea

PRICEIs your price easily accessible

to the mass of your buyers

COSTCan you attain your cost target

to profit at your strategic price

ADOPTIONWhat are the adoption hurdles

in actualizing your business idea

Yes

Yes

Yes

NO Re-Think

Yes

A Commercially Viable

Business Entity or Model

NO Re-Think

NO Re-Think

NO Re-Think

day 2 - business model innovation

Documents