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Book Review
Book Review
Rana Tata, empathize the scooter rider families and base of there need invented the low cost affordable cars.
Profit formula: It defines how the company will create value for itself and shareholder. Profit formula has four variables: Revenue model Cost structure Target unit margin Resource velocity
Revenue =price*quantity. It tells us how much money can be made. Price is basically the cost of resources needed to deliver CVP. Quantity can be thought in term of market share, ancillary sale etc. Cost structure includes direct cost and overhead costs. TUM is the operating profit per unit required to cover overhead costs and achieve the desire profit level at target volume. Resource velocity defines how quickly resources consume to support target volume. Each element in a profit formula profoundly influences the others. Key resources: These are the combination of technology, personnel, product, facilities that are needed to support CVP. Key process: These are tasks like manufacturing, sales, trainings, development etc. they should be consistent. Process as well as business rules, norms and success matrices make the profitable delivery of the CVP. Once he has defined the business model and its components, Johnson takes us on a geography lesson. Mark Johnson identifies three locations to seek white space:
1. The white space within 2. The White space beyond 3. The White space between The white space within: It is basically transforming existing markets. It is about examining opportunities that have been ignored or overlooked in existing markets. Here mark pointed out challenges faced by Dow Corning in 2001.how Anderson the CEO found out new eye? And to nurture that opportunity they launched Xiameter. He also indicates that opportunities in white space within relates to shifts in industry basis competition. This is performance, reliability, convenience or cost base Johnson also quoted how Hilti senses the commoditization as dreaded enemy and changes the industry competition on convenience and customization. White space beyond: It is developing new business model in support of CVP aimed at potential customer who are currently non consumers. It is entirely new untapped markets (think geographies, countries or continents). He explained it with Hindustan unilever initiative. They focused on villages, for which they trained strength mothers, for direct distribution of their product to customers. The White Space between: It focus on innovating business model from less predictable , to more revolutionary forces whose root often lie outside the market. The attack of 9/11, advancement in technology or acute episodic events like tsunami, cyclone etc. it open up uncharted territory for companies between what was and what is to, in the white space between. Shifts are of several types Transformative market shifts Technologically driven shifts Shift in government policy and regulation
Once he has established that "white space" exists and that a business model can be manipulated, he turns his attention to the really important stuff in the book - how to innovate a business model. Business model innovation process depend on two initial steps,
1. Identifying job to be done
2. Creating a powerful CVP to drafting a blueprint of your new business and comparing it with your existing model Marks describe job to be done with the example of dentist clinic, i.e. how Dentco corporation asked dental practitioners, what attributes do you seek in dental product? this is called need based or voice of customer approach. To further support the concept of job to be done, He illustrate example of Fast Food Company from the book of Clayton Christensen, The Innovator solution. After identifying job to be done he mention the need to devise an offering. This can be achieved by profit formula; one approach that is used to work for the business projection is a Reverse income Statement. Most important part of white space is Implementation. It should be followed in three stages Incubation Acceleration And transition.
In last chapter Johnson mark explore the unique management challenges that occurs while building new business model or reinventing the existing one. He also identified where the white space exists and given us a recommendation on how to change the model. What mark does well is establish, that innovation is closely linked with strategy. The key element of this book is the components of business model and their interrelativity. The book seizing the white space: Business model innovation for growth and renewal is helpful to anyone who is seeking a fresh and dynamic model to innovate and change the organizational structure. In short, it is a great addition to the literature around innovation. By fatima naz