Emerging business models 5/25/17 at SparkPlus

1. Emerging Business Models and its
Implications for SMEs
Robin Joffe
Partner-President Japan/ Head of
Sales APAC

2. Frost & Sullivan is uniquely positioned to enable clients to
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3. We help our clients grow through the integration of three key value
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Solutions
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4. 4

5. 5

6. Business Model Innovation: An Introduction
6
What is a Business Model?
A business model describes the rationale of how an organization creates, delivers, and
captures value (economic, social, cultural, or other forms of value). The process of
business model construction is a part of business strategy.
What is Business Model Innovation (BMI)?
BMI involves ideas encompassing more than product, service or technology innovation,
BMI focuses more on a different way of creating value for a firm and customers by
reinventing different aspects of a firm’s business: product design customization, sales
strategies, target customers, distribution channels, research process innovation, etc. (Frost
& Sullivan, 2014)

7. Why We Need to Think Differently About Innovation?
7
Strategy Process Product Delivery
Business
model
Partnering
Enabling
process
Core
process
Product
performance
Product
system
Service Channel Brand
Customer
experience
Cumulative Value Creation
Last 10 Years
Volume of Innovation Efforts
Last 10 YearsHi
Lo
Hi
Lo
Source: Doblin analysis, Doblin Inc.

8. 8

9. Best-of-Breed Analysis: Top Strategic Findings
9
Connectivity is the key enabler
Product-as-a-service
Unbundling of value chains
Open innovation and collaboration / Platform
Software-oriented for future scalability
New revenue models are more volume-based than value
Key Consensus Points
Source: Frost & Sullivan Analysis
1
2
3
4
5
6

10. Product-as-a-Service
More than 70% of the fortune 500 companies have plans to offer their product as a service by 2020
10
of fortune 500 companies
will operate product-as-
a-service business
models by 2020
15%
13%
8%8%
8% 3%
Energy
Healthcare
Telecommunication
Aviation
Electronics
Automotive
>70%

11. Pay as you go
11
Rolls-Royce
E.g. Pay as you go Model
Michelin
E.g. Pay per km

12. Comparison of B2B & B2C Business Models
Parameters used here are connectivity, profitability impact, and customer outreach.
12
Degree of Connectivity
ImpacttoProfits
0 1 2 3 4 5 6 7 8 9 10
1
2
3
4
5
6
7
8
9
10
Low
High
Low High
Connected
Ecosystem
Product
as a
Service
Note:
The size of the bubble represents customer outreach.
These business models are not exclusive to each other. Some of these models represent B2B2C relationships.
The ratings for the business models are relative to each other.
Sharing
Model
Data as a
Service
Platform-
based
Model
Single
Product
Strategy
Mass
Customization
Localization
New
Market
Creation
Crowd-
sourcing
Digital Products,
Processes,
Commerce
Disaggregation
Servicization
Social
Enterprise
B2C Models
B2B Models
Private
Marketplace
Public
Marketplace
Comparative Analysis of B2B and B2C, Global
Single Firm
Independent
Model
Private
Network

13. 13
Personalization
Blockchain
Every Company is a
Big Data Company

14. 14
Innovating to
Zero

15. 15

16. Provocatively Challenging Ideas
16
Zero Traffic
Zero Impact from
Natural Disasters
Zero Cost for
Education, Healthcare
Zero Corruption Zero PollutionZero Crime

17. Business Model Innovations
SMEs across the world have adopted various BMIs to enhance their product offerings and/or to contain costs
Lease-a-Jeans
Pay-As-You-Drive Insurance
Co-creating Bikes
Sharing of Facilities
• Dutch denim brand that produces recyclable jeans made
from organic cotton
• Customers pay a monthly fee for as long as they use the
jeans and return them to the brand when they no longer
want to wear them
• Mudjeans, then either re-sells the jeans as vintage or
recycles them into a new pair
• Medium-sized Italian insurance company
• Insurance policy, SaraFree, allows customers to pay
according to the distance ran with their vehicle
• Provision of GPS device which automatically records
distance run
• Monthly price of insurance is adjusted accordingly
• NYC-based retailer which offers fully personalized bikes
designed and assembled together with customers in
store
• Strong collaboration with customers, provide
personalized unique experience and bike
• Provision of other related services such as organization
of cycling trips
• Vermont-based retailer offering natural household
products
• Based on the Sharing Economy concept, the company
has decided to do contract manufacturing, as well as use
a 3rd party logistics partner for its distribution networks
• Allows them to be more economically and
environmentally sustainable
Sources: Mud Jeans; 718 Cyclery; Sara Assicurazioni; Seventh Generation
Mud Jeans 718 Cyclery
Sara
Assicurazioni
Seventh
Generation

18. 4th Industrial Revolution–Digital Transformation
18
Industry 1.0
The Steam
Engine
Industry 2.0
Henry Ford’s
T-Model
Industry 3.0
IT-OT
Convergence
Industry 4.0
Digital
Transformation
1 2 3 41800 20201900 2000

19. Technologies that drive digital transformation
19
Augmented Reality
Autonomous Robots
3D Printing/Additive
Manufacturing
Cloud Computing

20. SMEs and the imperative for Digital Transformation
20
At every touchpoint, across
channels, customers expect
consistent experience for sales
& service
Customer journeys are
transforming as the
customers evolve
Drive CX innovations
along the customer
journey and lifecycle
Imperative For SMEs To Use
Digital Transformation:
SMEs not adopting digital will
widen the competitive gap
Larger competitors are
already digitally
transforming their
businesses
Level the playing field
with larger competitors
Organisations that are
advanced in digital journey are
more profitable than industry
competitors*
Digital transformation
drives profitability
Drive productivity and
efficiency gains to
drive margins
Larger organisations are too
large to move fast to either
adapt or adopt
Well-funded start-ups
are disrupting existing
business models and
ecosystems
Drive business model
innovations leveraging
their nimbleness
Source: Frost & Sullivan Analysis; * Sydney University

21. Business Model Innovation and Singapore SMEs
21
2014 national BMI study,
found that 71% of
Singapore companies
could not name "even" two
examples of BMI.
Source: Frost & Sullivan, Sipi

22. How many Companies are doing BMI in Singapore? `
5.6%
Non-BMI
Electronics
Precision Engineering
Printing
Others
Intense competition in PE & Electronics manufacturing have increased the need for
companies to innovate their business model to survive
Source: Frost & Sullivan, Sipi

23. Business Model Innovation and Singapore SMEs – Key Challenges
23
Mindset/ Culture
Technological
Familiarity
Balancing with Day to
Day Operations
Marketing Hurdles
Lack of
Champions
Lack of Deep
Pockets/ unlike some
start-ups
The Discount
Trap

24. Business Model Innovation and Singapore SMEs
24
• 60% found BMI to be relevant to growth
• 46% indicate that they should assess BMI
Relevance
• #1 Cost Reduction – 67%
• #2 Market Share – 54%
• #3 Competitor Moves – 35%
Major Push Factors
• 86% succeeded with positive impact; 14%
without measured impact yet
• Focused on BMI in Selling & Customer
Engagement
Impact of BMI
Source: Frost & Sullivan, Sipi

25. Types of BMI Practiced in Singapore
Innovation in Selling
29%
Innovation in Customer
Engagement
22%
Innovation in
Organizational Culture
21%
Innovation in
Company Cost
Structure
14%
Innovation in Revenue
Model
7%
Innovation in
Customer Segments
7%
Innovation in
Marketing
0%
Innovation in
Channels to Customer
0%
25
Source: Frost & Sullivan, Sipi

26. Business Model Innovations
Examples of how companies in Singapore have adopted various BMIs to enhance competitiveness of their
product offerings
Digitally Led New Product Offerings
• Concorde Security’s patented I-Man Facility Sprinter
(IFS) offers security surveillance to cluster of buildings
• IFS is a mobile command and control centre equipped
with advanced monitoring & wireless communication
equipment (intelligent cameras with video analytic
capacities) managed by a team of 3 Intelligent-Man
• Clustering of multiple buildings via wireless connection
allows for resource sharing, significant cost savings and
increase in productivity
• Implementation of IFS transformed Concorde into a
unique security technology solution provider, from the
traditional security guard services
Hot Food Vending Machines
• JR Group specializes in production of ready meals and
institutional catering, and has introduced Singapore’s first
automated cafe, Vendcafe
• Uses “Chef-in-Box’ vending machines to dispense hot
meals (3 minutes) to customers
 Offers huge convenience to customers, as it is
available 24/7
• Food offerings span from local dishes such as nasi
biryani and seafood hor fun to Western-style offerings
like salted egg yolk pasta with prawns, and salmon with
vegetables
• Meals are packaged and prepared in a central kitchen,
hence little or no staff is needed to man the cafe, easing
the issue of labor shortage in the F&B sector
Sources: Concorde Security; JR Group Vendcafe

27. Business Model Innovations
Examples of how companies in Singapore have adopted various BMIs to enhance competitiveness of their
product offerings
Personalized Skincare
• Skincare brand, Skin Inc. offers customizable skincare
solutions for each customer based on their lifestyle
habits and skin conditions
• Each customer has to complete a computerized quiz “My
Skin Identity” with coverage on stress levels to daily
hours of sleep to level of pollution exposure, in order for
the algorithm to compute and recommend a skincare
solution for her needs
• Strong partnership with Sephora, leading to a global
footprint of over 100 cities worldwide
Sources: BoxGreen, Skin Inc.
Customized and Subscription-Based Snacks
• Boxgreen, offers food subscription services direct to
consumers, and users to customize and receive health
snacks in Singapore
• Data on customer preferences is collected online to
adjust menu offerings and subscription services
• Unique localized snack flavors such as Cheng Tng,
Royal Sultana Bryani Granolo and Lucky Laksa 888
• Shipping over 1,000 boxes of snacks every month
• Recent expansion towards physical vending machines
within the CBD and schools to enhance accessibility to
consumers

28. What does it mean to you?
28
How can you be leading the attack than being
defensive?
How do you reinvent your job, your company,
your industry, your society?
How is your company being innovated to zero?

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