Hand Book Streamer

Accelerator Workshop 1
Create innovative opportunities
Workbook
Version 8.0, December 2008
Help our customers to be more successful

Version 8.0
Accelerator Workshop 1 content is

taught along the Value Innovation
Approach
Title Time
ACCELERATOR WORKSHOP 1 AGENDA (Method)
90 240 240
1) Introduction 6) Market Exploration cont. 10) Visual communication preparation
• Path 3: Across the industry value chain • Work on Impact Group project
• Path 4: Across complementary offering • Preparation of Visual communication
• Path 5: Across functional or emotional
45 appeal
2) The Blue Ocean
• Value innovation • Path 6: Across time & trends
• BASF success story
30
3) Jamming
• John Kao on innovation
120
4) Visual Awakening
• Strategy Canvas 90 90
7) To-be Value Curve 11) Challenge session
• ERRC • Development of To-be Value Curve • Presentation of Impact Group project
• Innovation activity • Preparation of Visual Fair
• As-is Value Curve
135
5) Market Exploration 90 12) Transfer & Workshop Feedback
60
• 6 Path overview 8) Visual Fair
• Path 1: Across alternative industries • Presentation of ideas
• Path 2: Across strategic groups
60
9) Business Case & Visual
IDEO 45 Communication
• One company's secret weapon for • Elements of a business case
innovation • BASF PhaseGate
AW 1 – Create innovative opportunities - Workbook 2
Version 8.0
BASF 2015 seeks to achieve superior

growth above the industry curve
KEY CHALLENGES IN BASF’S PAST & FUTURE
Innovation & People

The winning combination is
Growth innovation driven by the best
team in the industry
BASF 2015
Processes
Lean processes are a “need to
Potential BASF
play” criterion Growth Curve
Products
Industry
Differentiation at the product level is Growth Curve
insufficient to win
Time
Version 8.0
BASF Leadership Compass
Clarity and a Sense of Reality
Strategic &
Performance
Operational
and Speed
Leadership
Enthusiasm and Inspiration

Version 8.0
Strategic guidelines
INSTRUCTIONS EXERCISE
Earn a Help our

premium on customer to
our cost of be more
capital successful
Form the best Ensure

team in sustainable
industry development
• Get together in 4 groups – one for each strategic guideline
• Briefly discuss in your group:
• Have you seen this guideline applied in your BU?
– What are you doing in respect of the guideline?
Discuss the specifics of
– What challenges are you facing? „your“ guideline and how it
– What changes resulted from this pillar? What are further interacts with the others
possible changes?
– How does your guideline interact with the others? Do
you see synergies or challenges?
• Select a spokesperson to present your findings
10 min
Version 8.0
“Helping our customers to be more

successful” means improved customer
interaction
Earn a Help
Helpour
our • Learning organization: know-how
premium on customers
customer to
to transfer and best-practice exchange
our cost of be
bemore
more • Culture change: bottom-up action across
regional and unit boundaries
capital successful
successful
• Business impact: scout and implement
innovative business opportunities
• Common language: BASF-wide M&S
concepts, standards and tools
• Customer intimacy: promote M&S
excellence, customer focus and value
Form the best Ensure
team in sustainable
industry development
Improved Customer Interaction

Version 8.0
Two Initiatives - One Goal:

Value Based Management (VBM) and
Help our Customers ... (perspectives)
VBM translates customer

Back-End- requirements
Enablers Back-End
Business Model
to the BASF back-end
BASF Model
VBM and
CIM-
General
Value
Driver
Specific
Value
Driver
Specific
Value
Driver KPIs
perspectives
generate
Sales Price Spot Sales
Contribution
Margin 1 Monthly Contract Price
EBIT Volume Transfers + Sales

-
Variable Cost Merchandise Material Styrene Purchases
Freight
Commission
(dependant on C2 and C6)
Swaps + Offers
Contract Closure
value
-
Budget
Customer
EBIT after
Capital Cost
Fixed Cost Sellig Cost
Îcosts
Administration
-
Interaction
Interest Rate
Dunning
Fixed
Accounts Receivable
Assets
Capital Invoice Creation
Cost
Model (CIM) x
Capital Base +
Volume Planning
Îprofit
Sales Forecast
Current Inventories Customer Ordering Pattern

Assets
Customer perspectives targets the

interaction with the customer

Version 8.0
You have successfully finished the BU

Dialogue...
...and now the work starts!
PROCESS OVERVIEW
With perspectives… …to a well connected organization
BU Dialogue3 Impact Groups BU Impact
Supporting tools:
• Accelerator Workshops
• Coaching
• perspectives Intranet

Version 8.0
As a Change Agent you will encounter

different levels of commitment
CHANGE COMMITMENT CURVE I publicly support the
new processes and
provide help and
I support the guidance to
changes the colleagues, to enable
project brings and their adoption of the
I am willing to am committed to new working practices
begin working in doing what it takes
new ways and to make it a
I understand adopt new success
what the project Advocacy
processes and
will mean for systems and
business, our make them work
Commitment Level
product/output Commitment
I know that and me
the Project personally
is happening
Change Aborted
Acceptance
after Implementation*
Decision not to
Understanding Attempt/ Support
Negative Implementation*
Awareness
Perception*
Confusion* *Change Risks
Time
Version 8.0
Managing change to a successful

conclusion involves different aspects
Achieving the right balance between supply for change and demand for change
Taking action at a macro level (the organization) and a micro level (the individual)
Placing emphasis on the different quadrants at the right time
Macro
Planning and managing the Setting and communicating the

move from the “As-Is” vision of the “To-be” state; directing
organization to the desired the organization to get there
“To-be” state NAVIGATION EXECUTIVE
LEADERSHIP
Supply Demand
ENABLEMENT BUSINESS
OWNERSHIP
Providing the organization with

the competence, structure and Creating demand for the
environment to make the change in the business
change and realize the benefits
Micro 10
AW 1 – Create innovative opportunities - Workbook
Version 8.0
Focus and importance of the Change

Management quadrants and related
activities vary during the change lifecycle
Managing all 4 quadrants ensures commitment to the change, increasing the ability to sustain it.
Sponsors Change Agents End Users
Advocacy
Support for Change
Commitment
Acceptance
Understanding
Awareness
Navigation Leadership Enablement Ownership Time

Version 8.0
Accelerator Workshops 1 to 3 cover the

entire marketing & sales process
OVERVIEW OF ACCELERATOR WORKSHOPS 1 TO 3
"Create innovative
"Design winning offers" "Capture maximum value"
opportunities"
Value Innovation Approach Customer Interaction Models The sales process
Implement
Deliver the
solution/
solution/
use the
product
product
Negotiate Negotiate and

contract and sign
close deal
Search for suppliers,

Offer value request and
compare offers
Assess customer Realize problems and

needs search for solutions
Understand customer Plan business analyze gaps

business and structure and define actions
Sales process Purchasing process
Needs-based segmentation
6 Paths 1
Across alternative
Customer analysis & power mapping
industries
Convenience
Future customer attractiveness
Process
6 2
buyer
Across time & trends Eliminate Across strategic
partner Ratifier
Secretary of State (MoI); name
groups Image
buyer Department heads
IT and
Infrastructure
other
Strategy and
Federal and Border Telecommunications
planning;
To-be Police; name and Radio; name
name
Create value curve
Reduce Multiplier Gatekeeper Gatekeeper
Immigration and Central procurement;
5 3 Price Border Control; name

Data centers; name
name
Quality Decision maker Multiplier Multiplier

Across functional or Across the industry buyer IT applications and Interagency manag-
emotional appeal value chain buyer Operations; name
policies; name ement; name
Raise Multiplier Expert Expert
Crisis management; IT infrastructure and

name networks; name
Coach Expert Supportive

4 Civil security; IT Security and data Coach
name privacy; name
Across complemen- Not known
tary offerings Expert Multiplier Negative
BASF's current position with the customer
Create a To-be Value Curve "BASF" model for needs assessment

Pricing layers
Question
Market pricing B ackground
questions
A nalyze-issue
Product/ Market Pricing
questions
Product pricing
S trengthen-case
questions
Transactional
transactional pricing
pricing F inalize-requirements
questions

Version 8.0
Participation in perspectives –
Continued growth of participation
CUMULATIVE NUMBER OF PARTICIPANTS*
7.000 6,500
170 Deep Dive
6.000
5.000
4,140 perspectives
4,200 Key Concepts
4.000 50
3.000 2,290
2.290
2.000 1,800 Business

550 Model Lab
350 450
400
1.000 Impact Group
1.350
1,350 1,580
1.030
1,030
0
2005+2006 2007 Target 2008
cum cum cum
For more information please visit
http://perspectives.internal.basf.com
* as of 30th June 2008 13

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Value innovation approach
Visual Market Visual fair Business case Visual

awakening exploration communication
6 Paths To-be Value Curve
As-Is Value Curve Business case Final presentation
Exploration & interview Idea presentation

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Framework steps in detail
Visual Market Visual fair Business case Visual

awakening exploration communication
• Interactive
presentation of
• Gather information potential ideas to • Concept paper &
• Interviews with customers & other business case will
through research to
customers & other BASF challengers be developed for
find out about
people along the selected ideas
potential factors and
industry value chain • Assessment &
as-is situation • If business case is • Final prioritization,
rating of ideas by
• Show current • Develop ideas and To- negative, the idea alignment of ideas
all participants
situation by setting be Value Curves will not be pursued and decision on next
up As-is Value • Voting on most steps by BU
• Prepare visual fair promising business • Preparation of leadership
Curve using the (including prototypes, ideas positive business
Strategy Canvas drawings, case(s) for final
• Develop questions presentations etc.) • Decision by project leadership
according to 6-paths manager on which presentation
ideas to pursue
further

Version 8.0
Key questions of this session
What are key elements in finding

profitable customers and markets?
What enables companies to clearly
differentiate from competitors and to
create new markets?
What is innovation? What is value?

Version 8.0
When searching for value innovation,

you need to dive into the Blue Ocean
BLUE VS. RED OCEAN
Blue Ocean – Red Ocean –

Untapped market space Existing competitive arena
• Market boundaries not set • Market boundaries given and

not challenged
• Focus on market/ industry/
customers • Focus on competition
(outperform)
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What is Red Ocean? What is Blue

Ocean?
• Get together in groups

• Discuss the characteristics of Red or Blue
Ocean and document them on a flipchart Get to know the
characteristics of
• Be creative: You may draw pictures, write Red and Blue Ocean
down points or even act a short scene…
• Be prepared to present your results
5 mins
Version 8.0
Blue Ocean and Red Ocean strategy are

characterized by different features
OVERVIEW
Blue Ocean Strategy Red Ocean Strategy

Create uncontested market space Compete in the existing market
space
Make the competition irrelevant Beat the competition
Create and capture new demand Exploit existing demand
Break the increase value-reduce Make trade-offs between increase

cost trade-off value and reduce cost
Align the whole system of a firm’s Align the whole system of a firm’s
activities in pursuit of activities with its strategic choice
differentiation and reducing cost of differentiation or reducing cost
Source: Blue Ocean Strategy (W. Chan Kim, Reneé Mauborgne)

Version 8.0
Value innovation through differentiation

creates profitable growth
STRATEGY CANVAS AND VALUE CURVE EXAMPLE
Relative offering level

€35
High
2-star
hotel €60
1-star
€40
hotel
Low
Eating Archi- Lounges Room Furni- Access- Bed Hygiene Quiet- Price
(Hotel prices in
faci- tecture size ture ibility quality ness
Berlin, Germany)
lities
Principal factors
Version 8.0
To differentiate from competition it is

essential to define Principal factors from
the customer’s perspective
STRATEGY CANVAS AND VALUE CURVE FICTITIOUS BASF EXAMPLE
Relative offering level

High BASF To-be
1,90
Avg. of major
competitors
1,82
BASF As-is 1,80
Low
Dedicated
a
Technical Individual
b
Contracts Offer
c 100%
Backward- 24 hrs.
d on-
Expertise Delivery
e of A-
Supply Onef stop
Channel Price
in-house
service contract supply
integration line training products
chain shopping
manage- (EUR/kg)
technician design guarantee for for all within 36 hrs. ment
A-products operators world-wide
world-wide Principal factors
BASF perspective
Customer perspective
Version 8.0
Key messages
• Understanding customer requirements and differentiate

from competitors
• Identification and communication of Blue Ocean is a

continuous process to which everyone can contribute
• Offerings need to be reviewed regularly to ensure that

customer requirements are consistently met, so that BASF
gets a fair share of the value created.

Version 8.0
• How can “Jamming” help you to find

Blue Oceans?
• Why are structure and creativity

important for developing innovative
ideas? How do they play together?

Version 8.0
Blue Ocean is only achieved when you

combine both structure and creativity
GENERAL REQUIREMENTS FOR INNOVATION
BLUE
STRUCTURE + JAMMING
OCEAN

Version 8.0
Key messages
• Through the creative process of Jamming you

can find Blue Ocean ideas
• For Jamming you need both creativity and

structure. The structure provides you with the
general conditions.

Version 8.0
How can customer requirements be

translated into Principal (key buying)
factors?
How to visualize and assess to what
degree customer requirements are
currently met?

Version 8.0
Strategy Canvas and Value Curves

INTRODUCTION
Relative offering
level To-be
Industry
standard
As-is
Principal
tor1 torn factors
c c
Fa Fa
Eliminate / Reduce Raise / Create

Version 8.0
Possible definitions of Principal Factors

of the “As-is” Value Curve
BASF EXAMPLE
Consistent Product
Quality
to Specification
Ability to deliver consistent product quality from batch to batch
Reliability
Supply Reliability Ability to comply fully with supply agreement
Optimized Product
Capability to Support Relevant & broad product portfolio across different business units
Portfolio
Growth within BASF to improve offering to the customer
Flexible Payment
Process Ability Term Ease, speed and safety in application of product
Company reputation which also includes its code of conduct,

Company Image
financial strength and success in the market
Technical Service – Reliable technical problem solving ability, related to product/process
Relationship
Trouble Management
Shooting at customer site
Joint Application Proactive approach towards developing forward looking application
Customer Service
Development with the customer
Provision of Market Ability to share relevant market information (eg: market trends,
Product Stewardship
Intelligence new innovation & applications) with the customers

Version 8.0
Remember the ultimate reason for

innovation: Customers want to
improve their value drivers
CUSTOMERS VALUE DRIVER TREE
Lever to
Value interface influence
Contri- performance
bution Sales
Sales
margin
Revenue
EBIT Increase
Value
Fixed Variable
Variable driver
costs costs
costs
EBIT
Value BASF
after cost driver
of capital
Cost of Fixed
Fixed
capital assets
assets Value
percentage
Cost/ Risk driver
Cost
of capital Reduction
Operating Current
Current
assets assets
assets
Customer
Source: perspectives AW 1 – Create innovative opportunities - Workbook 29
Version 8.0
Value drivers
• Get together in your table groups

• Choose one example (BASF product/ service) from
your daily business
• Identify how this offering affected the customer’s
Identify value drivers and
their influence on the
value drivers
customer‘s value tree
• Discuss how these drivers influenced the
customer’s costs and revenue
• Briefly present where the offering hit the customer’s
value tree
10 min
Version 8.0
Improve a business by applying the

Value Innovation Approach
• Choose a business example to work with in

the next sessions
• Either work on your impact group topic or Redesign the selected
• Choose a BASF example from your own business into something
business background (another product or differentiated, that adds
offering) more value for your
customer!
• Get together in groups according to your topic
• Create your group's business working
environment

Version 8.0
What does the As-is Value Curve look

like?
• Split your group into two and define Principle factors for your
selected business taking into account the customer’s perspective:
• Brainstorm and create a list with all relevant factors that determine
the buying decision
• Narrow it down to the 6 - 8 most important factors
• Get together with the other half of your group again and consolidate Define the right
your findings: agree on 6-8 final Principal factors and phrase these Principle factors and
on an operational level draw your As-is
Value Curve
• Draw a strategy canvas on a flipchart, add your Principal factors
and rate the relative offering level (from the customer’s perspective!)
on a scale from 1 to 5, where 3 represents the industry standard
• Draw the As-is Value Curve for your selected business. Do the same
for one selected competitor 45 min
• Be prepared to present your findings
Version 8.0
Key messages
• As-is Value Curve is a visualization of our current offerings

based on inside out view of customer requirements
• The As-is analysis has to be robust because mistakes in the

early stage can bias the further process
• Customer requirements need to be translated into Principal

factors (factors have to be formulated in a precise and
differentiated way, taking the customer’s point of view into
account)

Version 8.0
How does the 6 path framework connect

As-is and To-be Value Curves?
What should be kept in mind when
identifying Principal factors to be
Eliminated, Reduced, Raised or Created?

Version 8.0
Use 6 Path framework to develop ideas

beyond common market boundaries
OVERVIEW 1
Across alternative
industries
6 2
Across time & trends Eliminate Across strategic
• Systematic exploration
along 6 main search groups
Paths
• Central question:
Which Principal
factors can be Create To-be Reduce
Value Curve
– Eliminated
– Reduced 5 3
– Raised Across functional or Across the industry
– Created emotional appeal value chain
Raise
4
Across complemen-
tary offerings
Version 8.0
Look across alternative industries

PATH 1
Value Curve for short haul travel

• Southwest High Car
Airlines did
not benchmark
Relative level of offering
with other
airlines
• Car was Existing

identified as airlines
the Next best
alternative
competitor
Low
Meals Lounges Seating Hub Friendly Speed Frequent
class connec- service departures
choice tivity Principal factors
Source: C. Kim and R. Maubourgne AW 1 – Create innovative opportunities - Workbook 36

Version 8.0
Guiding questions for looking across

alternative industries
PATH 1: POTENTIAL QUESTIONS TO ASK YOURSELVES
1. What industries / segments do I sell into?

2. What are the applications of my product at the customer?
3. What is the function of my product in my customer’s product?
4. Which alternatives / substitutes exist in my step in the value chain that fulfil the
same function or purpose?
Substitute technologies, substitute products, …
5. What are the differences between my products and the substitutes/ substitute
offerings?
What are the UVPs? What are the advantages and disadvantages?
6. What advantages or functions could my product / offering provide as well?
Would that be a value added for the customer or the value chain?
7. Which substitutes exist within the next steps of value creation?
What are the UVPs, advantages and disadvantages?
Could my offering provide these or similar functions and would that be a value add?

Version 8.0
Looking across alternative industries

PATH 1: POTENTIAL QUESTIONS TO ASK YOUR CUSTOMERS
What
Whatare
areand
andwhat
whatcould
couldbe
besubstitutes?
substitutes?
Would
Wouldyou
youthink
thinkofofaasubstitution
substitutionand
andwhy?
why?Why
Whynot?
not?
What
Whatfunctions
functionsdo
dothe
theother
othertechnologies
technologiesprovide
providethat
thatare
areadvantageous?
advantageous?What
Whatisistheir
theirUVP?
UVP?
Which
Whichfunctions
functionscould
couldyour
yourproduct
productprovide
provideas
aswell?
well?Would
Wouldthey
theyadd
addvalue?
value?
What
Whatare
arethe
thedisadvantages
disadvantagesofofthethesubstitutes?
substitutes?
Do
Doyou
yousee
seeany
anysubstitutes
substitutesfor
foryour
yourproduct
productororthe
theend
endproduct
producttoday
todayororininthe
thefuture?
future?For
For
which substitute do you see largest potentials?
which substitute do you see largest potentials?
How
Howdodoyou
yourate
rateyour
yourproduct
productcompared
comparedtotoeach
eachofofthe
thepossible
possiblesubstitutes?
substitutes?
How
Howcould
couldyou
youincrease
increaseyour
yourperformance
performanceininorder
ordernot
nottotobe
besubstituted?
substituted?How
Howcould
couldyour
your
product effect that development?
product effect that development?
Main
Maingoal:
goal:What
WhatcancanI Ilearn
learnabout
abouttechnologies
technologiesand
andproducts
productsthreatening
threateningmy
myposition
positionorormy
my
customer’s position? What can I learn from these substitutes to improve my offer?
customer’s position? What can I learn from these substitutes to improve my offer?

Version 8.0
Look across strategic groups

PATH 2
Value Curve for Curves Women Health Club

• Curves High Strategic group 1:
analyzed the Home Exercise
Programs
strengths of 2
typical strategic
groups in the
health club
industry
• Therefore
Curves built on Strategic group 2:
Traditional
the decisive Health Clubs
advantages of Low
the two groups Ameni- Workout Workout Avail- Environ- Same- Conven- Womanly
ability Sex
and eliminated ties equip- time ment en-
environ
ience atmos-
ment of in- couraging phere
or reduced struc- motivation -ment
everything else tors
Principal factors

Version 8.0
The process of defining strategic groups

PATH 2
How can strategic groups be defined?
• Choose two competitive dimensions that describe
technologies
bundle
the key strategic decisions companies can make in
bundle
Example
Example
the market, e.g.
Powder & other

– Price
• •BASF
Complete
BASF
Complete
– Specialization • •Inver
Inver • •DuPont
DuPont
coating
– … your suggestions? • •Frei
Frei • •PPG
PPG
• •Akzo
Akzo
• Plot firms into a matrix based on these two 11 22
dimensions 33 44
Only powder
powder
• •Teknos • •R+H
powder
• Repeat the process with different dimensions until Teknos R+H
differentiated patterns (i.e. different strategic groups) • •Jotun
coatings
Jotun
emerge
Only
Only
Local
Local Global
Global
==most
mostinteresting
interestingareas
areas

Version 8.0

strategic groups
PATH 2: POTENTIAL QUESTIONS TO ASK YOURSELVES
1. How do I cluster my competition into strategic groups?
2. What are the differences among the clusters? (Inside-out focus)
3. What advantages or functions could I also provide? Would that be added

value for the customer or for the value chain?

Version 8.0
Looking across strategic groups

IfIfyou
youthink
thinkofofall
allthe
thesuppliers
suppliersininyour
yourindustry,
industry,do
doyou
yourecognize
recognizeany
anyfundamental
fundamental
differences among
differences among them?them?
DoDoyou
youperceive
perceivethese
thesedifferent
differentplayers
playersasasgroups
groupsofofcompanies
companiesshowing
showingstrategically
strategically
similar patterns? Who is different from the
similar patterns? Who is different from the rest? rest?
Are
Arethere
thereother
otherdifferences
differencesamong
amongthese
thesestrategic
strategicgroups?
groups?
Do
Doyour
yourcustomers
customers(or
(ornon-customers)
non-customers)prefer
preferpurchasing
purchasingfrom
fromone
oneofofthese
thesegroups?
groups?Why?
Why?
Who
Whoisisyour
yourcustomers’
customers’favourite
favourite/ /best
bestsupplier?
supplier?What
Whatmakes
makeshim
himstand
standout
outfrom
fromthe
therest?
rest?
Services? Quality? Speed? Price?
Services? Quality? Speed? Price?
Why
Whydodoyour
yourcustomers
customersbuy
buyfrom
fromhim?
him?
What
Whatare
arethe
therequirements
requirementsthethesupplier
supplierhas
hastotomeet?
meet?What
Whatdoes
doesthe
theoffer
offerlook
looklike?
like?Who
Who
would be a serious alternative?
would be a serious alternative?
How
Howdo
dosuppliers
suppliersmeet
meetthese
thesecriteria
criteriaoverall
overalland
andwho
whodoes
doesthis
thisexceptionally
exceptionallywell
welland
andhow?
how?
How
Howdoes
doesBASF
BASFperform
performon
onthese
thesecriteria?
criteria?

Version 8.0
Develop ideas for your To-be Value Curve

• Get together in the working teams for your impact group topic or
your business example
• Brainstorm Alternative industries for exploring Path 1 and
possible dimensions for a strategic group analysis
After 10 minutes briefly present your findings in plenary Use the Paths in
order to develop
• Afterwards think of innovative ideas based on alternative industries
innovative offerings
• Conduct a strategic group analysis for your case and deduce
innovative ideas from this analysis
• Decide which principal factors you could ERRC in your case and
put them into the ERRC-grid
• Be prepared to share your findings 60 min
Version 8.0
Look across alternative industries to find

new ideas
PATH 1: ALTERNATIVE INDUSTRIES WORKING TEMPLATE
Alternative
Functions industries:
of substitutes:

Version 8.0
Looking across strategic groups

PATH 2: STRATEGIC GROUP ANALYSIS WORKING TEMPLATE
1. Choose two competitive dimensions: ...
Specialization
Price
Quality (needs to be further specified)
Vertical integration in value chain
Complexity of distribution channels
Product line breadth
Technological or R&D leadership
Brand identification
Capacity utilization
Sales, margin or EBIT
Local, regional or global setup
Ownership structure
2. Plot firms into the matrix based on these
...
two dimensions
3. Repeat step 1 & 2 with different
... ...
dimensions until differentiated patterns
(i.e. different strategic groups) emerge
Version 8.0
Focus on transfer
• Discuss in your table group:

• Which of today's concepts are applicable for
your daily work?
Discuss how to use
• How would you use them? today’s concepts in
your daily work
• Complete the notes you took during the day on
your transfer handout
• Regarding the topics covered today - think about
what it means for you to be a change agent
15 min
Version 8.0
EDG looked across the chain of buyers

PATH 3 BASF EXAMPLE
Super-absorbents
• EDG's main customer for super-absorbents used in diapers is the

Consumer Goods Industry (CGI)
• The players in this industry focused on developing diapers that
were as thin as possible, to save costs and presumably fulfill the
needs of end customers (mothers)
• EDG looked across the chain of buyers and asked the end
consumers (mothers) directly what they needed
• It turned out that the majority of mothers was not interested in
such thin diapers
• EDG used this information to create a more focused offering to
the CGI including value based prices

Version 8.0
4 steps are required to conduct a value

chain analysis (1/2)
PATH 3: STEPS IN A VALUE CHAIN ANALYSIS
1
Depict the "steps" Customer’s
of the value chain Step 1 Step 2 Step ...
customer
2 • Key Player a • Key Player m •. •. •.

Identify the key
• Key Player b • Key Player n • • •
players involved per
• Key Player ... • Key Player ... • • •
step
• • • • •
3 • Number of •. •. •. •.
Highlight key market players / • • • •
characteristics and concentration • • • •
customer needs • Growth • • • •
• Trends … • • • •
To validate your results you have to talk to people along the value chain.
Version 8.0
4 steps are required to conduct a value

chain analysis (2/2)
PATH 3: STEPS IN A VALUE CHAIN ANALYSIS EXAMPLE
1
Depict the "steps" Operating margin (in %) The profit pool depicts how
of the Value chain the overall industry revenue
25 is shared among the
different steps of the value
2
20 chain.
Identify the key
step 15
3 10
Highlight key market
characteristics and 5
customer needs
0 100%
Auto Used car Auto Auto Ser- After Auto
4 manufacturing dealers loans insurance vice mar- rental
re- ket
Identify "profit pools" New car Leas- War- Gas- pair parts
dealers ing ranty oline
per step
Share of industry revenue
(in %)
Version 8.0
Various parties are involved in the

construction industry value chain
VALUE CHAIN ANALYSIS – CNT BASF EXAMPLE
End customers
Architects
CM* wholesalers Construction Commercial constr.

Chemical raw Construction companies
materials materials producer Public construction
DIY* stores Craftsmen Residential constr.
Key • BASF • Maxit • OBI Construction: • N/A

players • … • Readymix • Praktiker • Hochtief
• HeidelbergCement • Hornbach • Holzmann
• … • Hagebau • Bilfinger+Berger
• Toom Craftsmen:
• … • Fragmented, local
market..
Key • Fragmentation • Fragmentation • DIY stores become Construction • Constantly
market • Cyclical business • Constant margin increasingly companies declining demand
characte- • "Commoditization"' pressure important • Few large and in all 3 sectors
ristics • Trends towards • Focus on selection several mid-sized
branded products and service recently companies
also increasingly on • Due to over
price capacities extremely
competitive (e.g.,
stagnating prices
* Construction materials; not further investigated here, Do it yourself since 1995)
Source: Industry Sector Management
Europe, perspectives AW 1 – Create innovative opportunities - Workbook 50
Version 8.0
Architects have been identified as key

decision makers and are now targeted
more explicitly
VALUE CHAIN ANALYSIS – CNT BASF EXAMPLE
Architects
CM* wholesalers Construction Commercial constr.

Chemical raw Construction companies
materials materials producer Public construction
DIY stores Craftsmen Residential constr.
Architects
• Architects are the key decision makers that plan and are
General involved in the whole construction process
responsibility • They are responsible for all technical, economic, and design- Due to their
oriented specifications in the planning of a building
central decision-
• Of high importance are optical/haptical and technical features maker and
Decision as well as brand/image
criteria* coordination
• Price and durability are also important criteria role, architects
Level of • High level of involvement in all phases of the construction are now being
involvement targeted more
in "life cycle" explicitly via e.g.,
• Central coordinators and decision makers
workshops and
• Most often hired directly by the customer/client
Coordination focus groups
• Make suggestions about construction system to the
w/other parties
customer/client
involved
• May select construction material producer and define exact
specifications for important construction systems
* For e.g., selection of/proposal for certain construction materials to be used

Version 8.0
Develop ideas by exploring the market

"Human Value Chain"
• Get together in the groups for impact group topic or your

business example
• Conduct the following 2 steps according to Path 3:
– Conduct a value chain analysis for your case and identify
potential ideas for a value offering along the industry value Use Path 3 in order to
chain develop innovative
– Based on your findings think of innovative ideas that you offerings
could ERRC for your case
• Add these ideas to the ERRC-grid
• Present your results using the "Human Value Chain"
60 min
Version 8.0
Four steps are required to conduct a

value chain analysis
PATH 3: VALUE CHAIN ANALYSIS WORKING TEMPLATE
1
Depict the "steps"
of the value chain
2 •. •. •. •. •.
Identify the key
• • • • •
• • • • •
step
• • • • •
3 • . •. •. •. •.
Highlight key market • • • • •
characteristics and • • • • •
customer needs • • • • •
• • • • •
4
Identify "profit pools" The profit pool depicts how the overall industry revenue is shared between the different
per step steps of the value chain.

Version 8.0
Guiding questions for a value chain

analysis
PATH 3: QUESTIONS TO ASK YOURSELVES
1. What are the steps of the value chain?
2. What are the key market characteristics and customer needs?
3. Who are the key players per step?
4. What are the profit pools per step?
5. Who are the influencers at the different steps of the value chain?

Version 8.0
Looking across the industry value chain

What
Whatexactly
exactlydoes
doesthe
thevalue
valuechain
chainlook
looklike?
like?
Who
Whodecides
decidesabout
aboutspecifications?
specifications?Who
Whodecides
decidesabout
aboutsupplemental
supplementaltechnologies?
technologies?
Buyers? Deciders? Influencers?
Buyers? Deciders? Influencers?
How
Howmuch
muchvalue
valueisiscreated
createdinineach
eachstep
stepofofthe
thevalue
valuechain?
chain?Are
Arethere
theresignificant
significant
differences
differences between the players at each step? What could be the reasonsfor
between the players at each step? What could be the reasons forthese
these
differences?
differences?
Are
Arethere
thereunmet
unmetneeds
needsthat
thatyou
youwould
wouldbe
beeager
eagertotosatisfy?
satisfy?
Do
Doyou
yousee
seefuture
futurechanges
changesininthe
theexisting
existingmarket
marketvalue-chain
value-chainfor
foryour
yourproduct?
product?
What
Whatare
arethe
thechallenges
challengesfor
forthe
theplayers
playersfurther
furtherdown
downthe
thevalue
valuechain?
chain?

Version
version 8.0
6.0
Look across complementary products &

services
PATH 4 EXAMPLE
Value Curve for Barnes & Noble

• Barnes & Noble
realized the lack of High
differentiating
factors in
bookstores
• As a result they
integrated café &
lounge areas into
their mega- Independent
bookstore, Bookstore
provided a wide
Low Mall Bookstore
book selection,
and extended the Knowledge- Selection Store Store Café &
store hours able staff of books ambience hours lounge
area
Principal factors

Version 8.0
Look across complementary activities &

products to identify customer needs
COMPLEMENTARY ANALYSIS CONSISTS OF FOUR STEPS BASF EXAMPLE
1. Key activities in the Use of Additional Quality

buying cycle Pre-Sales Purchasing Disposal
product service management
2a. Dream points Fast &

Where to Trained
easy repair
get lowest people
of spot
price? needed
damages
2b. Pain points Customer In-house
Inefficient
has no SAP training too
processes
system expensive
3. Possible solution/ E-shop “RATIO Body shop

Complementary provides repair check:
offering Call center shop": spot process
easy order
process repair set optimization
4. Potential partner for Lean Customer

this at customer / purchasing training
BASF? dept. center
Source: ECR AW 1 – Create innovative opportunities - Workbook 57
Version 8.0
Guiding questions for a complementary

analysis
1. Ask your customer to guide you through the touch points he

experiences with you or your product.
2. Find out what his dream or pain points are and discuss possible
solutions with him.
3. What are the key activities in the buying cycle?
4. What possible solution could we offer?
5. Who would be the right partners for this at customer/ BASF?

Version 8.0
Looking across complementary offerings

What
Whatisisthe
the“experience
“experiencecycle”
cycle”ofofyour
yourcustomers
customerswith withBASF
BASFand
andits
itsproducts?
products? Where
Whereinin
the
thevalue
valuechain
chainare
areyour
yourcustomers
customersinincontact
contactwith
withyou
youand
andyour
yourproducts?
products?
Go
Gothrough
throughthetheentire
entireprocess
processfrom
fromsales
salescall
calltotoproduct
productdisposal
disposalororclaims.
claims.What
Whatcould
could
BASF do to improve his process?
BASF do to improve his process?
Who
Whoare
arethe
thecontact
contactpersons
personson onboth
bothsides?
sides?
What
Whatare
areyour
yourdream
dreampoints
pointsand
andpain
painpoints
pointsininthis
thisexperience
experiencecycle?
cycle?
Which
Which points of interaction in particular work very smoothly andwhich
points of interaction in particular work very smoothly and whichones
onescreate
create
problems for you?
problems for you?
Dream
Dreampoints:
points:What
Whatcould
couldbe
bedone
doneeven
evenbetter?
better?
Pain
Painpoints:
points:Serious
Seriousproblems,
problems,e.g.
e.g.handling,
handling,quality
qualityetc.
etc.(Here
(Hereyou
youcan
canfind
findout
outabout
about
opportunities for improvement.)?
opportunities for improvement.)?
To
Togain
gaininsight
insightinto
intohow
howtotoimprove
improveyour
youroffer,
offer,talk
talktotoyour
yourcustomer
customerabout
aboutany
anyproblems
problems
connected with his every day job
connected with his every day job
Which
Whichcomplementary
complementaryoffering
offeringcould
couldsolve
solvethe
theissues
issuesthat
thatyou
youdiscovered
discoveredabove?
above?

Version 8.0
Look across complementary activities &

products to identify customer needs
PATH 4: COMPLEMENTARY ANALYSIS WORKING TEMPLATE
1. Key activities in the

buying cycle
2a. Dream points
2b. Pain points
3. Possible solution/
Complementary
offering
4. Potential partner for

this at customer /
BASF?

Version 8.0
Look across functional or emotional

appeal
PATH 5 EXAMPLE
Value Curve for Swatch
• Swatch transformed
High
the functionally driven
budget watch industry
into an emotionally
driven fashion
statement.
• At the same time,
Swatch dramatically
reduced
manufacturing
costs, so it became Asian
unattractive for competitors
competitors to copy Low
their innovation. Manu- Product Reliability Fashion New Brand
facturing quality & design collect- image
costs ions
Principal factors

Version 8.0
Guiding questions: looking across

functional or emotional appeal
PATH 5: QUESTIONS TO ASK YOURSELVES : FOCUS ON PRODUCT
1. What elements that you are currently offering to your customers are
functional? (e.g. product specification, terms of delivery)
2. What elements are emotional? (e.g. branding, loyalty programs, packaging)
3. Which functional elements can be turned into emotional elements? (e.g. co-
branding)
4. What new emotional elements could you add to your current offering?

Version 8.0
Guiding questions: looking across

functional or emotional appeal
PATH 5: QUESTIONS TO ASK YOURSELVES : FOCUS ON BUYING CYCLE
1. Identify all relevant buying cycle stages (e.g. pre-sales, purchase, delivery,
use, supplements, maintenance and disposal) of your market and think
about the following questions:
2. At which stage are the biggest blocks to...
...fun and image?
...convenience?
...environmental friendliness?
...risks?
3. After locating the biggest blocks go one step further: What innovative
ideas can you derive from these insights?

Version 8.0
Looking across functional or emotional

appeal
What
Whatare
arethe
thefunctional
functionalelements
elementsofofyour
yourcurrent
currentoffering
offeringtotoyour
yourcustomers:
customers:
Product/service
Product/servicespecifications
specifications
Terms
Termsofofdelivery
delivery
etc.
etc.
What
Whatare
arethe
theemotional
emotionalelements?
elements?
Branding
Branding
Loyalty
Loyaltyprograms
programs
Location
Locationofofproduction
production
etc.
etc.
Which
Whichfunctional
functionalelements
elementscan
canbe
beturned
turnedinto
intoemotional
emotionalelements?
elements?
What
Whatnew
newemotional
emotionalelements
elementscould
couldyou
youadd
addtotoyour
yourcurrent
currentoffering?
offering?

Version 8.0
Look across functional or emotional

appeal
PATH 5 WORKING TEMPLATE
1. Key activities in the

buying cycle (copy
from previous
exercise)
2. At which stage are the
biggest blocks to...
- fun and image
- convenience
- environmental
friendliness
- risks?
(please check)
3. After locating the

biggest blocks
go one step
further: What
innovative ideas
can you derive
from these
insights?

Version 8.0

• Get together in the working teams for your impact group topic or
your business example
• Conduct the following 2 steps according to the Paths 4 and 5:
- Find out the key activities in the buying cycle, your customers’
dream & pain points, as well as solutions for them or Use the Path to
- Based on functional and emotional appeal, search for develop innovative
innovative ideas along the buying cycle steps you identified offerings
• Based on your findings think of innovative ideas that you could
ERRC for your case
• Add these ideas to the ERRC-grid and be prepared to share
your findings
70 min
Version 8.0
The four elements of a PEST Analysis

help to look across time and trends
PATH 6: ELEMENTS OF A PEST ANALYSIS
Political Economical
What are political drivers of What are economical

governments and regulation drivers impacting
authorities impacting the purchasing power and
project‘s task? habits making this Answering these
project necessary? questions helps to
identify the drivers
for a project and
Technological Social related motivation
for change
In how far do What are social trends such as
technological factors demographic and cultural
impact your business in aspects impacting your
terms of entry barriers, business?
efficiency and productivity?

Version 8.0

Political
… +
… 0
… -
• Get together in 4 working teams

• For your selected factor discuss in your group potential
elements or aspects of this factor that might be
influencing your business
Have a look at
• Collect these aspects on the flipchart and indicate how political, economic,
they could influence your business/ IG project (positive/
sociocultural and
neutral negative)
technological factors
• Be prepared to briefly present your findings and explain in your market
how the different aspects could influence your work
(In the Business case session later this day you will have
the chance to use the PEST analysis for your IG topic) 10 min
Version 8.0

time and trends
1. Discuss the trends you identified with your customer or other

players (see target group)
2. How does your customer see these trends? What other trends does
he see?
3. Working jointly with your customer, identify trends and how to

capitalize on (or overcome) them.

Version 8.0
Looking across time and trends

Before
Beforetalking
talkingtotoyour
yourcustomer,
customer,identify
identifytrends
trendsyou
yousee
seethat
thatyou
youwant
wanttotodiscuss
discusswith
withhim.
him.
What
Whatcould
couldbe
bemajor
majortrends
trendsrelated
relatedtoto
Demand
Demand
Technology
Technology
Regulation
Regulation
Competitive
Competitivesituation
situation/ /industry
industrysituation
situation
What
Whatmajor
majorbusiness
businessand
andmarket
markettrends
trendsare
arechallenges
challengesfor
foryour
yourcompany
companyright
rightnow?
now?
What do these trends mean for you?
What do these trends mean for you?
How
Howdoes
doesyour
yourcustomer
customerintend
intendtotorespond
respondtotothese
thesetrends?
trends?
How
Howwill
willthey
theyimpact
impactyour
yourcustomer’s
customer’sbusiness?
business?
More
Moreimportant,
important,how
howcould
couldyou
youhelp
helpyour
yourcustomer
customertotosucceed
succeedininthis
thisdeveloping
developingmarket?
market?
Goal:
Goal:Search
Searchfor
foropportunities
opportunitiestotowork
workjointly
jointlywith
withyour
yourcustomer
customertotoidentify
identifytrends
trendsand
and
capitalize on them or overcome them.
capitalize on them or overcome them.

Version 8.0
Validate your hypotheses with your

customers
• Get together in the working teams

for your impact group topic or your
business example Collect approaches
to validate your
• Brainstorm different approaches to findings
validate the hypotheses regarding
your customer needs that you
developed
15 min
Version 8.0
Various tools can be used for validating

your hypotheses with your customers
SOLUTION HANDOUT
Target Process steps perspectives Potential methods

offering
IDEA - Develop new -6 Paths
Generation principal factors -I2I
- Identify which AWs IGs BML
-Ideo
-Delphi
factors to ERRC -Expert polls
-Customer Workshops
-Trend scouting
IDEA - Test the -Focus Groups/ Target Groups
Testing hypotheses you -Mixed questionnaires (qualitative/
quantitative)
generated using
-Customer Workshops
the 6 paths -Crowd sourcing
IDEA - Validate your -Customer surveys
Validation hypothetical To-be -Conjoint Analysis
Value Curve with -Customer Interviews
-Customer Workshops
your customer -Prototyping
Version 8.0
The BASF Business Model Lab
Business Model Lab (BML) is the structured

support for the definition and execution of
innovation and growth projects.
BML: focuses on stimulation of innovation in the
area of business models (esp. Customer
Interaction Approach)
BML: accelerates the successful launch of growth
ideas into business impact.
Business Model Lab vs. Impact Group
BMLs are special Impact Groups. The BML

structure and methodology is used by teams that
work on:
larger scale innovation and growth projects
Therefore the Impact Groups receive
comprehensive project coaching, workshop
moderation and project guidance.
Version 8.0
The BASF Business Model Lab –

helps you along the journey from red
into blue ocean

Version 8.0
Process of the market exploration and

supporting tools
PROCESS ACCORDING TO BUSINESS MODEL LAB
Next steps: Supporting tools:
Step 1: Interview preparation
– Develop interview questions – Interview guide

– Practice interviews – External interview trainer
– Schedule Interviews – Interview tracker
Step 2: Conduct interview – Weekly conference call (optional)
Step 3: Document interview – Templates for interview notes & golden nuggets
Step 4: Meeting of each Path team
– Discuss findings from market exploration

– Structure business ideas – ERRC Grid
Step 5: All-team meeting
– Exchange findings
– Structure business ideas – ERRC Grid
– Prepare presentation for workshop II – Templates for value innovation Ideas
Version 8.0
IdeaCreation Tool I2I – Ideas to Impact
SELECTED TOOLS 1/3: I2I
Source: BrainStore – Biehl, Switzerland AW 1 – Create innovative opportunities - Workbook 76

Version 8.0
Key Learnings for conducting customer

workshops
SELECTED TOOLS 2/3: CUSTOMER WORKSHOPS
Do not underestimate the lead time needed to get the

customer to agree to a date.
Customer Workshops should last minimum 2,5 hrs
Involve project lead in all customer workshops (cross-

regionally)
The more cross-functional participants on customer side,

the more reliable the output of the customer workshops
Develop thorough storyline, before sales approach

customers for workshop

Version 8.0
Conjoint Studies represent a solid base

for identifying customer needs and
willingness-to-pay
SELECTED TOOLS 3/3: CONJOINT ANALYSIS
• What do customers really want?
Objectives of Conjoint Study: • What are the most important/decisive

needs of the market?
To understand how choices are made
by customers/ non-customers • Is there a willingness to pay for certain
service/product offers?
To define key To-be characteristics • Do all customers have the same

of product/ services (Value Curves) requirements?
To identify opportunities for • How is BASF positioned compared to

differentiation from competitors competition?
• Where are the strength/weaknesses of

BASF/most important competitors?

Version 8.0
Key messages
• The 6 path framework helps to identify Blue Ocean

opportunities from different and unusual perspectives.
• Different methods can be applied in the 6 path

• Identified opportunities allow us to apply the ERRC
• It is important to keep in mind cost-to-serve for Raising
or Creating Principal factors as well as identify internal
and external barriers when Eliminating or Reducing
factors.

Version 8.0
What are the major challenges to develop

a To-be Value Curve?
What are the major advantages of a
sound To-be Value Curve?
What are important steps to implement a
To-be Value Curve?

Version 8.0
A UVP is a specific promise of the

benefits provided to target customers that
differ from competitors at an explicit price
INGREDIENTS OF A GOOD UVP
Characteristics of a good
Why should these UVP
• "Unique" What will
customers buy it from
• "Value" customers get?
you? • Addresses the full array
of customers' needs –
beyond product features
alone
• Provides an easy means

for the customer to
• "Propo- How much is it?
Which customers will distinguish the company
sition" get it and how? from its competitors
• Gives the customer a

clear idea of the price that
they are paying for the
UVP = a specific promise of the benefits provided to target benefits
customers that differ from competitors at an explicit price

Version 8.0
Develop a Unique Value Proposition for

your offering
INSTRUCTIONS Group # EXERCISE
Unique Value Proposition
• Get together in your table group

• Develop a To-be Value Curve for your selected offering: Additional information
– derive up to 8 principal factors from the ideas you posted to
the ERRC grid and
– adjust their relative offering level on your strategy canvas:
keep in mind customer needs and willingness to pay, cost-to- Create an innovative
serve and reluctance to change, and strategic targets presentation of your
• Phrase the UVP of your offering. Refer to the value your offering To-be Value Curve
level of the Principle factors creates for the customer
• Develop a flipchart with your To-be Value Curve and your UVP:
reorder your Principle factors to create an S-shaped To-be curve
(start on the left with the factors you plan to eliminate/ reduce
and sort to the right the factors you are going to raise or create)
30 min
• Be prepared to present your findings
Version 8.0
Key messages
• The To-be Value Curve is a representation of a targeted

offering that meets identified customer needs.
• It is essential to validate the defined Principal factors and

respective offering levels with the customer/non-customers and
other value chain players and identify the willingness-to-pay
• The relation between willingness-to-pay and cost-to-serve has

to be balanced for targeted offering levels. Furthermore, we
have to identify whether we have the capabilities to fulfill our
customer needs.
• Necessary changes to implement the To-be offering have to be

discussed and business rules as well as a standardized
information and communication policy has to be implemented.

Version 8.0
How could a To-be Value Curve be

validated with the customers?
How can you ensure that customers
appreciate the value of attending your
Visual fair?
How do you incorporate the feedback of
your customers in your final offering?

Version 8.0
Visual fair of potential To-be Value

Curves – An effective way to get your
customer’s attention
MAJOR STEPS OF VISUAL FAIR
Based on
economic
evaluation &
Ideas developed Participants (e.g. Participants vote feasibility
customers, non- End of
through market for their favorite management
exploration are customers,
ideas and give Visual fair
colleagues from other decides which
presented on BUs, project team feedback ideas to pursue
posters members)
further
challenge and
discuss ideas

Version 8.0
How would you ensure a customer

attends the visual fair?
• Get together in your group and discuss how to conduct a visual

fair for your offering (target group, invitation process, scope, …)
• How can you get the attention of customers/ noncustomers?
• What can you do to ensure that (potential) customers attend the
visual fair? Consider the following questions: Make sure that the
– Whom from the customer side would you invite? customer sees value
in attending your
– How would you invite the customer? visual fair
– How would you ensure that the customer perceives the value
add of participating in your customer event?
– What possible objections might they have and how could you
overcome them?
10 min
• Present your findings (max. 5 mins)
Version 8.0
Visual fair preparation

Relativ
e
offerin
g level
To-be
As-is
Princip
al
factors
Relativ
• Get together in your group and prepare the visual fair e

offerin
g level
To-be
• Define how you would assess the outcome of the visual fair and As-is
include your customers’ feedback in your final To-be Value Curve Princip
al
• Select one presenter to introduce your potential To-be Value Curve factors
and UVP (5 mins)

• In a next step define a certain customer segment within your market Conduct the
and draft a specific, execution focused Value Curve for this target
group (e.g. specify factors if necessary, change their weighting and
visual fair
offering level, consider the costs to serve for these adjustments)
• Pick one factor you would E or R and another you would R or C and
devise Business rules for each of these
• Have a second presenter introduce this VC and the respective
Business rules (5 mins) 30 min

Version 8.0
Key messages
• Plan your visual fair carefully and take enough time to

prepare the event.
• Communicate the value add for the participants to

ensure their attendance.
• Find the right balance between presenting your ideas

and asking open questions to discover unmet needs.
• Make sure to consider any feedback you receive in the

future design of your offering and customer interaction
process.

Version 8.0
• What is the role of analysis tools and a

Business case?
• What are the main elements of a

business case?
• How is the value innovation approach

linked to the BASF PhaseGate process?

Version 8.0
The Business Case for innovation

projects needs to cover four basic
elements
ELEMENTS OF BUSINESS CASE
General Market Technology Profitability

• Goal • Main Customers • Technical Feasibility • NPV
• Strategic Fit • Market Segment • Production Cost • Probability of
• Team • Market Growth • Investment Success
• Gates • BASF Market Share • Patent/ Licensing
• Timing • BASF Volume • Raw Material
• BASF Prices • Safety/Health/
• BASF Sales Environment
• Competitors • Registration/
• Customer Benefit Toxicology
• Business Model

Version 8.0
Business Context and Challenge:

Industry Environment – Porter’s Five
Forces
Barriers of Entry
To what extend does your
business experience the
threat of new competitors in
the market?
Supplier Power Customer Power

Degree of Rivalry
What is the pressure your
How do you evaluate
To what extend does the Overall industry
business faces from the power of your customers profitability is
the
supplier landscape and change and
how does this impact the
overall rivalry in the
what does that mean for
determined by the
specific business field? relative power of
project task? your business / project?
these five forces
Substitute Threats
To what extend do potential
substitution products and
services threaten the
business and what does that
mean for your project?

Version 8.0
Identifying internal Strength and

Weaknesses and external Opportunities
and Threats: SWOT – Analysis 1/2
Strengths Weaknesses
Strengths: attributes of the Weaknesses: attributes of
organization that are the organization that are
helpful to achieving the harmful to achieving the
objective. objective. The SWOT Analysis
displays strengths,
weaknesses,
opportunities and threats
Opportunities Threats collected in different
Opportunities: external Threats: external analyses
conditions that are helpful conditions which could do
to achieving the objective. damage to the business's
performance.

Version 8.0
Comparing Strength and Weaknesses

with Opportunities and Threats: SWOT –
Analysis 2/2
Strengths Weaknesses
Opportunities
How do I use these How do I overcome the

strengths to take weaknesses that prevent
advantage of these me taking advantage of The Enhanced SWOT
opportunities? these opportunities? Analysis helps to deduce
strategies from different
combinations of
strengths, weaknesses,
opportunities and threats
How do I use these How do I address the
Threats
strengths to reduce the weaknesses that will make

likelihood and impact of these threats a reality?
these threats?

Version 8.0
Analyze the environment of your IG

project
• Get together in your group and take a closer look at your

business environment
• Use the provided working templates to either conduct a
• PEST-Analysis or a
• Porter’s Five Forces Analysis or a Analyze your
business context and
• SWOT-Analysis
challenges
for your Impact Group topic (take a few minutes to decide
which adds the most value to your project at this point in time)
• Identify potential influences, e.g.: impacts on your cost position,
anticipated gain in market share (topline impact) and likely
reactions from your competitors (substitution)
20 min
• Be prepared to briefly present your findings
Version 8.0

Macro Environment – PEST Analysis
WORKING TEMPLATE
Political drivers: Economical drivers:
Technological factors: Social trends:

Version 8.0

Forces
WORKING TEMPLATE
Supplier Power Barriers of Entry
Degree of Rivalry
Customer Power Substitute Threats

Version 8.0
Identifying internal Strength and

Weaknesses and external Opportunities
and Threats: SWOT – Analysis 1/2
WORKING TEMPLATE
Strengths: Weaknesses:
Opportunities: Threats:

Version 8.0
Deriving strategies from combining Strength

and Weaknesses with Opportunities and
Threats: SWOT – Analysis 2/2
WORKING TEMPLATE
Strengths & Opportunities: Weaknesses & Opportunities:
Strengths & Threats: Weaknesses & Threats:

Version 8.0
Business Model Lab business case

template: Business Case Framework.xls
BUSINESS CASE TEMPLATE
http://perspectives.internal.basf.com/portal/basf/
en/dt.jsp?setCursor=1_25352&login=true
Source: BML AW 1 – Create innovative opportunities - Workbook 99

Version 8.0
The team presents the project results to

the BU leadership
VISUAL COMMUNICATION
Content of presentation: Outcomes:
• Validated As-is Value Curve • Final prioritization

• Business ideas including • Alignment of ideas
-To-be Value Curve • Decision on next steps
by BU leadership
-Business case
-Targeted customer
segments
-Concept paper
Source: BML AW 1 – Create innovative opportunities - Workbook 100

Version 8.0
After the visual communication the idea

would be suitable to submit into phase 2
of the PhaseGate process
VALUE INNOVATION APPROACH LINKS TO PHASEGATE
The business format you

work on in the
Accelerator Workshops
is the actual Business
Case you submit in the
PhaseGate process
Phase 1
Opportunity
Phase 2
Business
Phase 3 Phase 4 Phase 5 $€
Fields
Case
Lab Phase Pilot Phase Launch ¥£
Gate 6
Gate 4
Gate 5
Gate 3
Gate 2
Gate 1

Version 8.0
Where you can find more information

about PhaseGate and perspectives
BASF INTRANET LINKS
BASF Innovation Chains perspectives Intranet

http://www.innovationsketten.basf-ag.de http://perspectives.internal.basf.com

Version 8.0
Key messages
• In depth analyses of your business environment provide the

basis to develop a sound business case
• The business case helps you to screen your ideas through

quantitative evaluation
• In the visual communication workshop you present your ideas

to management
• The PhaseGate process assesses the ideas found with the

Value Innovation Approach

Version 8.0
Focus on transfer
• Discuss in your table group:

• Which of today's concepts are applicable for
your daily work?
Discuss how to use
• How would you use them? today’s concepts in
your daily work
• Complete the notes you took during the day on
your transfer handout
• Regarding the topics covered today - think about
what it means for you to be a change agent
15 min
Version 8.0
Present your Impact Group project to get

the approval from your sponsor
INSTRUCTIONS PROJECT WORK
• Prepare with your Impact Group for your visual communication

• Recap all the information you collected during the last two days
using the different perspectives tools (e.g. Value Curves, 6 paths,
business environment analyses)
• Plan your information gathering and types of analyses that you
Prepare your visual
will conduct for your IG project including: analysis of the market,
communication
exploration of industry dynamics, customer needs and derive a
hypothesis of the unique value proposition (UVP)
• Use the time to work in your group on the most important aspects
before going into the visual communication session
• Prepare a 10 minute presentation outlining target and scope of
your project, timeframe and estimate potential financial impact, 210 min
your approach as well as the anticipated customer benefits
Version 8.0
Based on your customers’ needs – define

which principal factors to ERRC
Eliminate Reduce
Raise Create

Version 8.0

Macro Environment – PEST Analysis
WORKING TEMPLATE
Political drivers: Economical drivers:
Technological factors: Social trends:

Version 8.0

Forces
WORKING TEMPLATE
Supplier Power Barriers of Entry
Degree of Rivalry
Customer Power Substitute Threats

Version 8.0
SWOT – Analysis 1/2 – Identify internal

Strength and Weaknesses and external
Opportunities and Threats
WORKING TEMPLATE
Strengths: Weaknesses:
Opportunities: Threats:

Version 8.0
SWOT – Analysis 2/2 – Derive strategies

from combining Strength and Weaknesses
with Opportunities and Threats
WORKING TEMPLATE
Strengths & Opportunities: Weaknesses & Opportunities:
Strengths & Threats: Weaknesses & Threats:

Version 8.0
Project Plan – Document and discuss

your approach to achieve the desired
project results
Headline: Description of impact group task

...
1 Business challenge/context 4 Deliverables • Specific

... • Measurable
…
• Attainable
• Relevant
5 Process/milestones/team • Time-limited
...
2 Scope of solution space and
constraints 6 Tools/frameworks
... ...
7
Support needed/ information sources
3 Targets to be achieved and criteria for ...
(financial) success/KPIs
... 8
Other stakeholders
...
Source: perspectives AW 1 – Create innovative opportunities - Workbook 111

Version 8.0
Sample Workplan – Define working

packages, timelines and responsibilities
EXAMPLE

Version 8.0
Let’s see whose project approach gets

approved…
PRESENTATION
IG
project:
• After lunch you will have 10 minutes to introduce your project 9 Go
• 2 members of your group – randomly selected – will present your No go

approach in plenary Refine
• Decide in advance “who you are going to present to” and tell the
audience who they are representing
• The audience will evaluate your presentation according to
predefined criteria. Afterwards the audience will challenge your
presentation and vote whether your approach would be given a
• Go/ No go/ Refine decision and
• Recommend further To dos
• Use this session as actively as possible to practice your
presentation and gather valuable feedback for your project!

Version 8.0
Present your Impact Group project

INSTRUCTIONS PRESENTATION
Evaluation
Evaluation criteria:
criteria:
Passion
Passion and
and enthusiasm
enthusiasm
Project
Project target
target and
and scope
scope
Outline
Outline of
of project
project approach
approach
Timeframe
Timeframe
• Present your IG project outlining target and scope of Financial
Financial impact
impact
your project, timeframe and financial impact, your Anticipated
Anticipated customer
customer
approach as well as the customer benefits (UVP) benefits
benefits
• Sell your project and your approach as well as

possible to get the approval from your IG sponsor Practice your visual
communication
• After your presentation use the chance to question the
audience on what they liked about your presentation
and what recommendations they would give
• Those who are not presenting – take notes of the
feedback to incorporate later into your presentation
10 min

Version 8.0
Connecting the dots…
Customer Needs Customer Interaction Models

Relative
? offering
level To-be
Trader/transactional
supplier
! As-is
Industry
standard
Lean/reliable
basics supplier
Principal
1 n
tor tor factors
F ac F ac
Standard
package provider
Willingness to pay
Product/process
Why should these
• "Unique" What will
customers buy it from
innovator
• "Value" customers get?
you?
Customized solution
provider
• "Propo
How much is it?
Which customers will
-sition" get it and how?
Value chain
integrator

Version 8.0
Share your key learnings and ideas

INSTRUCTION EXERCISE
• Complete the „Take-away“ templates you received on the last

two days
• In your groups reflect your key learnings and ideas that you
collected during the sessions Reflect on this
• Afterwards share your findings in plenary Accelerator Workshop
and share your
• Take the following questions into consideration: learnings and ideas
– How will I be a change agent in my BU? with the audience
– How will I execute the concepts I learned in this workshop?
– Which elements can I use to strengthen/ help my Impact
Group topic? 20 min
Version 8.0
CIM(s) in your BU –
How would you know?
HOMEWORK
CIM (%) Alignment of your BU with the CIMs (refer to the preread you receive for AW 2)
Recent visible changes in your BU (business rules, organizational changes, …)

Version 8.0
What’s next?!
perspectives is…
Global! Continuously growing! Focusing on customer

orientation …
So how is my BU involved?
You will see the work on the topics in your daily working life!
It‘s a continuing change process …
So what does it have to do with me?
It is the responsibility of everybody to identify optimization

potential and communicate it to help our customers be more
successful!

Version 8.0
Get more information about perspectives
¾ Marketing & Sales Glossary
¾ perspectives brochure
¾ Intranet: http://perspectives.internal.basf.com

Version 8.0
Get more information about perspectives
X Marketing & Sales

Glossary
X perspectives brochure
X Intranet:
http://perspectives.
internal.basf.com
Version 8.0
Complete checklist tasks to capture

maximum value out of perspectives
RECOMMENDED TO-DOS
Gather further information Boost Impact Group work Deepen Network
Download AW material Download Marketing & Access Impact Group

from perspectives Intranet Sales Glossary working profiles on perspectives
templates for your Impact Intranet to find topic-related
Download Marketing &
Group work Impact Groups
Sales Glossary (incl.
templates) from Schedule first coaching Foster knowledge
perspectives Intranet session exchange with other
Impact Groups
Check perspectives
newsletter for updates on Define actions to build and
working materials, news maintain your Impact
and networking Group Network

Version 8.0
Closing thoughts
• Look for opportunities to apply skills you have

learned and to develop new business ideas
• Build on the relationships you have developed
during the last three days and continue to grow your
network
• Stretch outside your comfort zone
• Become an expert and share your learnings with
your colleagues
THANKS - have a good trip home!

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Accelerator Workshop 1

Create innovative opportunities

Help our customers to be more successful

Accelerator Workshop 1 content is

BASF 2015 seeks to achieve superior

Innovation & People

BASF Leadership Compass

Clarity and a Sense of Reality

Enthusiasm and Inspiration

Earn a Help our

Form the best Ensure

“Helping our customers to be more

AW 1 – Create innovative opportunities - Workbook 6

Two Initiatives - One Goal:

VBM translates customer

EBIT Volume Transfers + Sales

Current Inventories Customer Ordering Pattern

Customer perspectives targets the

AW 1 – Create innovative opportunities - Workbook 7

You have successfully finished the BU

With perspectives… …to a well connected organization

BU Dialogue3 Impact Groups BU Impact

AW 1 – Create innovative opportunities - Workbook 8

As a Change Agent you will encounter

Managing change to a successful

Planning and managing the Setting and communicating the

Providing the organization with

Focus and importance of the Change

Sponsors Change Agents End Users

Navigation Leadership Enablement Ownership Time

AW 1 – Create innovative opportunities - Workbook 11

Accelerator Workshops 1 to 3 cover the

Negotiate Negotiate and

Search for suppliers,

Assess customer Realize problems and

Understand customer Plan business analyze gaps

Sales process Purchasing process

Immigration and Central procurement;

5 3 Price Border Control; name

Quality Decision maker Multiplier Multiplier

Raise Multiplier Expert Expert

Crisis management; IT infrastructure and

Coach Expert Supportive

tary offerings Expert Multiplier Negative

BASF's current position with the customer

Create a To-be Value Curve "BASF" model for needs assessment

AW 1 – Create innovative opportunities - Workbook 12

2.000 1,800 Business

* as of 30th June 2008 13

Value innovation approach

Visual Market Visual fair Business case Visual

6 Paths To-be Value Curve

As-Is Value Curve Business case Final presentation

Exploration & interview Idea presentation

AW 1 – Create innovative opportunities - Workbook 14

Framework steps in detail

Visual Market Visual fair Business case Visual

AW 1 – Create innovative opportunities - Workbook 15