Knowledge Innovation &

Management

Sesi 11

Executing Innovative
Business Model

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 Syllabus

04 06
02
CREATING GREAT EXECUTING
INNOVATIVE TEAM &
VALUE INNOVATION
PROPOSISITION BUSINESS MODEL

03
ASSESSING 05 07
INDUSTRY TREND MANAGING PLANNING &
& CREATING INNOVATION EVALUATION
WINNING
PRODUCT

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The Learning Objectives
Define the business model of a
company and its components.
Design an innovative business model
using the business model canvas
framework.
Develop an understanding of
contemporary business models

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 Executing Innovative Business Models

How Do Innovative Business

Models Help Companies ?

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Plans with innovative products
are not enough; they need to
be complemented with an
appropriate business model.

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 Business Model : Why and How ?
A business model, for a company,
represents a better way of doing
business than existing alternatives at
accomplishing their strategy.

The motivations of all parties must

be understood to develop a coherent
business model.

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 Business Model Defined
A cohesive business system that
reflects the economic logic of the
firm -- how the company can use
its capabilities in order to create
value for its customers and
capture value back from
customers.

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 A business model can help
new businesses; it can identify
innovative opportunities of
doing business

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Traveler’s Check From American Express

Consumers

American
Merchants
Express

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Dinner Club Credit Card

Consumers

American
Merchants
Express

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Apple iPod

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Songs Downloaded On iTunes

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 Making Things Selling Things Making Things
Source and Distribute, Sell and Source and
manufacture Service manufacture

Company-Side Customer-Side

Source : Magretta, Joan (2002) “Why Business Model Matter”. Harvard Business Review

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 Selling Things
Distribute, Sell and
Service

HP IBM Apple Consumer

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Dell Gateway Consumer

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Improve/ Tweak Existing Model to Offer Better
Value/ Revenue Sources

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 AMAZON
Launched in 1995

Consumers

$ 8.5 billion sales Low Operating margin

Merchants Amazon

Source : Alexander Osterwalder and Yves Pigneur, Business Model Generation: A Handbook for Visionaries, Game
Changers, and Challengers, 2010, John Wiley and Sons, NJ.

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 AMAZON

Consumers

Fulfillmen
t Services

Merchants Amazon

Source : Alexander Osterwalder and Yves Pigneur, Business Model Generation: A Handbook for Visionaries, Game
Changers, and Challengers, 2010, John Wiley and Sons, NJ.

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A business model is not
the same as strategy.
It is a self-contained
system that does not
involve competition

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 A strategy is a broad plan to differentiate the
enterprise either through low-cost leadership or
value differentiation and thereby derive a
competitive advantage
The object of strategy is a business model

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 Business Tactics
Strategy
Model (Execution)

Source : Casadesus-Masanell, Ramon, and Joan Enric Ricart. “From Strategy onto Business Models and Tactics.“ Special
Issue on Business Models Long Range Planning 43, no. 2 (April 2010).

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 IKEA embarked on a low-
cost, convenience-oriented
strategy. Built a business
model around that strategy
and executed it to perfection

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IKEA - Side
Customer-Side

Design Quality
Modular furniture Stylist Products
Volumes & Scale Convenience

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 Stylist Quality Customer Enhanced
Strategy Products Loyalty Revenues

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 Lower Cost savings
Modular Long-term
supply-side for
Design suppliers
costs consumers

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 Cross-Selling Enhanced
Modular Product
Opportunitie sales &
Design Variety
s revenues

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 Enhanced
Easy Immediate Impulse
sales &
Assembly Gratification buying
revenues

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 Immediate Enhanced
Easy Impulse Supply-Side
Gratificatio sales &
Assembly buying Scale
n revenues

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Virtuous Cycles Strengthen The Business
Model

Supply- Demand-
Side Side

Modular
Customer
Furniture
DesignValue

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 Quiz
1. The introduction of traveler’s checks by American Express was an innovative business
model because:
1. The cost incurred on traveler’s checks was larger than the revenues generated
from them.
2. Cash payments received by American Express from customers in advance for
traveler’s checks were equivalent to interest-free loans.
3. Merchants did not accept traveler’s checks.
4. All of the above
2. A business model of a company essentially outlines:
1. Creating value for its customers
2. Capturing value from its products and services
3. Utilizing capabilities to create unique value and differentiate a company from
competition
4. All of the above
3. T/F A business model defines how a company differentiates itself from competitors
through value-based or cost-based strategy.

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 Executing Innovative Business Models

Element of Business Model and

a Business Model Canvas

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 Components od a Business Model

Customer Value
Proposition

Resources &
Process
Capabilities

Revenue & Cost

Source : Johnson, Christensen, and Hagermann, 2008, Reinventing Business Model, Harvard Business Review.

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 Customer Value Proposition (CVP)

What value does the offering

deliver ?

CVP

How are we reaching the

Who is the target segment?
segments ?

What is the BASIS of competition that the company is catering to?

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 Physical

Human
Financial Resources Talent

Intangible

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Processes

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 Components od a Business Model

Customer Value
Proposition
What, Who and
How ?

Resources
Physical, Talent,
Financial,
Processes
Intangible

Revenue and
Cost

Source : Johnson, Christensen, and Hagermann, 2008, Reinventing Business Model, Harvard Business Review.

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Synergies among The Components Lead
to Virtuous Cycles

Value
creation

Capabilities

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 Executing Innovative Business Models

Designing Innovative Business

Model

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Business Model Canvas

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Business Model Canvas – Value Creation

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 What Is The Value Proposition ?

What are the bundle of

benefits?
What Value does the
Offering Deliver ? What are the pain points?
What are the points of
difference?

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 Mass

Multi-
Who are the SEGMENT segmen
Segments t

Platfor
Niche
m

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How Will We Reach Segments Through The
Channels

Mass
Multi-
Niche Segment

Platform

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 Long-
Touch
engagem
ent

Social
SEGMENT Communi
ties

High
touch Co-
engagem Creation
ent

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Business Model Canvas – Capabilities

Capabilities

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What Resources Should We Use ?

Physical Financial

Human Intangible

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 What Are The Partnerships ?

Buyer/ Seller Co-Opetition

Alliance Joint Venture

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What are the Activities ?

The things that a

Company Should Do !

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Business Model Canvas – Value Capture

Value Capture

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What Are the Revenue and Costs ?

Revenue
How will we make money ?

Costs
What does it cost to make our
products ?

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Business Model Canvas

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 Designing Innovative Business Model

Assess Question Reframe Design

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Assess What Is The Current State ?

• Outline the current business models

in the industry. What are the
assumptions on creating value?

• Evaluate the context. What are the

key trends that may impact the
business in the future?

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 Question : What If ?
• Question the assumptions.

• Question conventional wisdom.

• Engage in thought experiments to

break the mold.
• Look outside for inspiration.

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Pay – as – You - Go Subscription Model

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Terima Kasih

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