Business - Model - Canvas - Training - SANITIZED by ICM

Business Model Innovation
Training
CITY, June 26th 2013
Page 1
STRATEGY…
has been the primary building block of
competitiveness over the past three
decades, but in the future the quest
for the sustainable advantage may well
begin with … INNOVATION Source: Ramon Casadesus-Masanell and Joan E. Ricart
Confidential – All Rights Reserved - BMI Training – 25th June 2013

WHAT IS
INNOVATION?
Def _ Innovation
Innovation is the
transformation of an idea or
invention into a product or
service that can be
commercialized successfully.
WHAT ARE THE
SOURCES OF
INNOVATION?
10 SOURCES OF INNOVATION – DOBLIN’S MODEL
Doblin research shows that

Less than 2% of projects produce more
than 90% of value Source: www.doblin.com

“Business model
innovation matters and it
is a top priority of CEOs”
Source: IBM, Global CEO Study 2006

NEARLY ALL CEOs ARE ADAPTING THEIR
BUSINESS MODELS – 2/3 ARE
IMPLEMENTING EXTENSIVE
INNOVATIONS.
MORE THAN 40% ARE CHANGING THEIR
ENTERPRISE MODELS TO BE MORE
COLLABORATIVE. Source: IBM, Global CEO Study 2006

‘We assume that 50% of
revenue in 5 years’ time
must come from sources
that do not exist today’
Source: Ernst & Young study Connecting Innovation to profit, 2010

BUSINESS DEVELOPMENT
What’s the difference between
strategy and business model?
Business model is related to but different than strategy
Strategy
• Strategy as a contingent plan of action as to what business model to use
Business • Strategy entails designing business models to allow an organization to reach its goals
Model
• Therefore business models are reflections of the realized strategy
<<<<< Operating Model
<<<<<Business Processes
<<<<<
Our understanding of strategy ... …and business models (BM)
<<<<<
1. Strategy is the creation of a unique and valuable position,
<<<<< involving a different set of activities Key
resources
Key
<<<<< 2.choose
Strategy requires you to make trade-offs in competing-to
what not to do
activities
Value
proposition
<<<< 3. Strategy involves creating “fit” among a company’s

activities
Customer Profit
segments Model
Strategic positioning attempts to achieve sustainable competitive A business model describes the logic, how a company creates,
advantage by providing a contingent plan for the company delivers, and captures value
Source: Ramon Casadesus-Masanell, Joan Enric Ricart

WHAT IS A
BUSINESS
MODEL?
CREATES,
DELIVERS,
CAPTURES,
VALUE
BUILDING
BLOCKS

CUSTOMER SEGMENTS
CUSTOMER
SEGMENTS
The Customer Segments building block defines the different groups of

people or organizations an enterprise aims to reach and serve
VALUE PROPOSITIONS
VALUE CUSTOMER
PROPOSITIONS SEGMENTS
The Value Propositions Building Block describes the bundle of products

and services that create value for a specific Customer Segment
CHANNELS
VALUE CUSTOMER
PROPOSITIONS SEGMENTS
CHANNELS
The Channels Building Block describes how a company communicates with

and reaches its Customer Segments to deliver a Value Proposition
CUSTOMER RELATIONSHIPS
VALUE CUSTOMER CUSTOMER

PROPOSITIONS RELATIONSHIPS SEGMENTS
CHANNELS
The Customer Relationships Building Block describes the types of

relationships a company establishes with specific Customer Segments
REVENUE STREAMS
VALUE CUSTOMER CUSTOMER

CHANNELS
REVENUE STREAMS
The Revenue Streams Building Block represents the cash a company

generates from each Customer Segment
KEY ACTIVITIES
KEY ACTIVITIES VALUE CUSTOMER CUSTOMER

CHANNELS
REVENUE STREAMS
The Key Activities Building Block describes the most important things a
company must do to make its business model work
KEY RESOURCES
KEY ACTIVITIES VALUE CUSTOMER CUSTOMER

KEY RESOURCES CHANNELS
REVENUE STREAMS
The Key Resources Building Block describes the most important assets
required to make a business model work
KEY PARTNERSHIPS
KEY KEY ACTIVITIES VALUE CUSTOMER CUSTOMER

PARTNERSHIPS PROPOSITIONS RELATIONSHIPS SEGMENTS
REVENUE STREAMS
The Key Partnerships Building Block describes the network of suppliers

and partners that make the business model work
COST STRUCTURE
KEY KEY ACTIVITIES VALUE CUSTOMER CUSTOMER

PARTNERSHIPS PROPOSITIONS RELATIONSHIPS SEGMENTS
COST STRUCTURE REVENUE STREAMS
The Cost Structure describes all costs incurred to operate a business

model
MARKETING
PRODUCT DEVELOPMENTSALES
PURCHASING
DISTRIBUTION
FINANCE
Adapted from Business Model Generation, Alexander Osterwalder

WHEN INNOVATE YOUR
BUSINESS MODEL?
DISRUPTING EXISTING MARKET
IMAGE DELTED

CREATING NEW MARKETS

CASE #1 - APPLE
IMAGE DELETED
DISRUPTING EXISTING MARKET

THE IPOD IS A IMAGE DELETED
BEAUTIFUL…
IMAGE DELETED
...PRODUCT
IMAGE DELETED
...AMONG OTHERS
...PRODUCT
ITS SUCCESS IS
BUILT ON A
CAREFULLY
DESIGNED…
IMAGE DELETED
...PRODUCT SYSTEM
A COMBINATION OF DEVICE,
SOFTWARE, AND ONLINE
STORE THAT OFFERS TO
USERS A SEAMLESS MUSIC
EXPERIENCE
BUT ALSO AN INNOVATIVE
BUSINESS MODEL THAT HAS
QUICKLY DISRUPTED
THE MUSIC INDUSTRY AND
GAVE APPLE A DOMINANT
MARKET POSITION.
HOW DOES IT
LOOK LIKE?
WHAT DOES WALL STREET THINK ABOUT THAT?
Confidential – All Rights Reserved - Innovation Event 09/2011

The combination of product
innovation and business model
innovation put Apple at the center
of a market approximately 30 times
larger than its original market.
Source: BCG study on business model innovation, 2009

SHARE PRICES x 14
IMAGE DELETED

HOW DOES
APPLE
MAINTAIN SUCH
DOMINANCE?
IMAGE DELETED
IMAGE DELETED
IMAGE DELETED
CASE #2 - NESPRESSO
CREATING NEW MARKETS

How much did the cost of
home coffee consumption
change for Swiss households
over the last couple of years?
600% to 800%
NESPRESSO
HAS CHANGED
THE BUSINESS
MODEL FOR
ESPRESSO
one of the fastest growing
businesses in the Nestlé
group

20 BILLION PODS
SINCE 2000

AVERAGE GROWTH OF
30% p.a. SINCE 2000

GLOBAL SALES OF
3+ BILLION CHF

but Nespresso almost failed in
1987 due to a nonperforming
business model

RICHARD PASCALE
HAS GIVEN AN
EFFECTIVE
ILLUSTRATION OF
NON-LINEAR CHANGE:
THE HISTORY OF HIGH-
JUMP EVENT AT THE
OLYMPICS
Source: http://cepollar.stu.cofc.edu/hjump.jpg
Source: HBR January 2011
More
theory &
examples
Other examples
of BMs
There
Price
might be
more than
one LOGOS
business DELETED
model in a
company
Operational Excellence Customer Intimacy Product Leadership
Number of features, complexity, number of stakeholders, etc.

LOGO
Marketing
Design Target
Brand
group Income:
Technical specific Upper Class
High End
Car Development & Porsche marketing
sports car
manufacturers Assembling Carrera Cup
Private
lifestyle Racers
IT Partner Power,
Freedom Prestige
driven buyers
Marketing
Engines Mainly Men
Partner Outstanding Retailers
Porsche driving
Brand experience
Supplier “Ex-works” Technique
People offer enthusiasts
Accessories
Marketing & Tuning
Research &
costs Services
Development Manufacturing Sales
HR Cost Leasing
Cost
Based on Business Model Generation – Copyright 2011 – Business Model Foundry

LOGO
Marketing
Marketing Brand
Partner Families
Design
Functionality Events
Technical
Development &
Assembling
IT Partner Low-Middle
class
Family car
Focused on
Supplier transportation
Appealing
Functional aesthetics
“Ex-works”
Design offer
Affordable Comfort
People
matters,
Car
Skoda Brand Retailers technique
manufacturers Reliability
doesn’t
Manufacturing Research &

Cost Development
HR Cost Sales Leasing
Marketing
costs

Evaluation of
business models
Evaluation Model for Business Models
example
Qualitative vs. Quantitative Gate specific KPIs

At the early stages, most KPIs are KPIs for the different attributes are
measured qualitatively also specific to each gate and
aligned with the overall
requirements of the final business
case
Dimension Description
Several dimensions (i.e. strate-gic A brief description is provided
fit) are included in the eva-luation for each attribute
model that cover Henkel specific
attributes (i.e. brand & image)

Evaluating Business Models
example
New Business Model Comparative Criteria Relevance BM 1 / Scenario 1 calculation relative BM 1 / Scenario 2
Evaluation Criteria [%] [Licensing] w eight [Franchise]
Strategic Fit 20% 100% 0,4 2,2 0,3

Brand & Image 40% 3: high 3 1,2 2: medium
Target Markets 40% 2: medium 2 0,8 2: medium
Know-How & Experience 20% 1: low 1 0,2 0: n/a

Economic Value 30% 0,4 1,4 0,7
…..
Risks 20% 0,3 1,5 0,2
…..
Complexity 10% 0,1 1,25 0,2
…..
Investment 20% 0,3 1,6 0,3
BM Evaluation Relative Weight 100% 1,6 1,7
Steps proposed to develop an BM evaluation model

1) Define relevant evaluation categories
2) Weight the relevance of each category [%]
3) Define evaluation indicators per category
4) Weight the relevance of each indicator per category

Deployment of
business models
BM in the EY practice
Customers &
Services
Customers &
Services
Customers &
Services
Customers &
Services
Vision &
Strategy
Vision &
Strategy
Vision &
Strategy
Vision &
Strategy
Culture &
Behaviour
Culture &
Behaviour
Culture &
Behaviour Business Plan Business Plan
Design Piloting Evaluation Implementation
Culture &
Behaviour To-be
As-is

From Business Model to Business Case
Business Model characteristics Business Case characteristics
Objectives ► Finding the answer to “what is what our ► Defining the implementation initiatives
business wants to be known for” based on the CANVAS results
► Defining and articulating how the flows of ► Identifying transformational, operational
products or services, payments, tasks and respective target KPIs
communications and resources look like ► Assigning initiatives to key sponsors
Characteristics ► High-level, first-step communication tool to ► Next level designs with specific operational
develop with various business views one or workstreams and initiatives
multiple business models ► Pretty “SMART” targets and activities per
► BMI as the initial step prior to the detailed workstream
transformation plan, but as the connector ► Drafting the transformational roadmap
to the next level designs
Target ► Executive boards ► Individual CxOs

group(s) ► Various CxOs ► Affected business units leaders
► Business unit leaders ► Initiative portfolio managers
► …and anyone with a specific business role
and responsibilty

Business Model Deployment
How to Implement a Business Model
Business Plan Business Plan
Piloting Implementation
Design Evaluation
To-be
As-is

Some more tools to support your work with
CANVAS
Sunshine Diagram
McKinsey Matrix
Balanced
Scorecard
Lean
Management 6 Sigma
Porter:
Value Chain
….

Real life
cases and
examples
Wrap-up
& Closing

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Business Model Innovation

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Doblin research shows that

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

<<<< 3. Strategy involves creating “fit” among a company’s

Source: Ramon Casadesus-Masanell, Joan Enric Ricart

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

The Customer Segments building block defines the different groups of

The Value Propositions Building Block describes the bundle of products

The Channels Building Block describes how a company communicates with

VALUE CUSTOMER CUSTOMER

The Customer Relationships Building Block describes the types of

VALUE CUSTOMER CUSTOMER

The Revenue Streams Building Block represents the cash a company

KEY ACTIVITIES VALUE CUSTOMER CUSTOMER

KEY ACTIVITIES VALUE CUSTOMER CUSTOMER

KEY RESOURCES CHANNELS

KEY KEY ACTIVITIES VALUE CUSTOMER CUSTOMER

KEY RESOURCES CHANNELS

The Key Partnerships Building Block describes the network of suppliers

KEY KEY ACTIVITIES VALUE CUSTOMER CUSTOMER

KEY RESOURCES CHANNELS

COST STRUCTURE REVENUE STREAMS

The Cost Structure describes all costs incurred to operate a business

Adapted from Business Model Generation, Alexander Osterwalder

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

DISRUPTING EXISTING MARKET

Confidential – All Rights Reserved - Innovation Event 09/2011

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

CREATING NEW MARKETS

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Manufacturing Research &

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Qualitative vs. Quantitative Gate specific KPIs

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Strategic Fit 20% 100% 0,4 2,2 0,3

Target Markets 40% 2: medium 2 0,8 2: medium

Know-How & Experience 20% 1: low 1 0,2 0: n/a

Steps proposed to develop an BM evaluation model

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Business Model characteristics Business Case characteristics

Target ► Executive boards ► Individual CxOs

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

Confidential – All Rights Reserved - BMI Training – 25th June 2013

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