1. Business Model
Innovation
Emmanuel Junio
M110059

2. Topics
I. Business Model (BM)
II. Business Model Innovation (BMI)

3. Business Model
Business Model describes the rationale
of how an organization creates, delivers,
and captures value (economic, social,
cultural, or other forms of value).
A set of interconnected activities and
processes designed to deliver a
proposition to the customers.
Note: The process of business model
construction is part of business strategy.

4. BM Canvas
Used to describe,
challenge, design, and
invent business models
more systematically

5. The BM canvas – a blank space
HOW?
WHAT?
HOW MUCH?
WHO?

6. 9 Building Blocks of the BM
Internal
External
Client
segments
Key activities
Partner
network
Key
resources
Cost structure
Design
Value
proposition
Client
relationships
Distribution
channels
Revenue streams
Insight

7. BM Block - Who?
Client
segments
Value
proposition
Client
relationships
Distribution
channels
Revenue streams

8. BM Block – How?
Key activities
Partner
network
Key
resources
Cost structure
Value
proposition

9. Business Model Framework
Client
segments
Key activities
Partner
network
Key
resources
Cost structure
Value
proposition
Client
relationships
Distribution
channels
Revenue streams

10. Customer Segments
Describing who a company is offering a value to

11. Value Propositions
Describing a company’s offer

12. Channels
Describing how a company reaches its customers

13. Customer Relationships
Describing the relationships a company builds

14. Revenue Streams
Describing how a company makes money

15. Key Resources
Describing what capabilities are required

16. Key Activities
Describing what activities are required

17. Key Partners
The partners that leverage the business model

18. Cost Structure
Describing the cost of the business model

19. BM Framework - Illustrated

20. BM Canvas

21. BM Canvas

22. BM Canvas
http://www.businessmodelgeneration.com/canvas

23. BM Sample: Coca Cola

24. BM Sample: Financial Times
http://www.businessmodelgeneration.com/canvas

25. BM Sample: Techno Cake

26. BM Conclusion
NO Business Model = No Business at all!

27. Innovation
Innovation (from Latin “Innovare”)
is the application of better
solutions that meet new
requirements, inarticulated needs,
or existing market needs.
This is accomplished through
more effective products,
processes, services, technologies,
or ideas that are readily available
to markets, governments and
society.

28. Business Model Innovation

29. Business Model Innovation
The process of envisioning and
successfully implementing new
ways of doing anything that
creates value for an enterprise
and it’s customers.

30. Business Model Innovation
Have you ever wondered why
hyper successful companies
like Nokia or Kodak suddenly
lose their edge?

31. Business Model Innovation
How can firms like Comodore
computers, Nakamichi,
Newsweek, or Polaroid
possibly fail?

32. Business Model Innovation
Do they not have abundant
R&D resources, top employees
and profound knowledge of
their markets?

33. Business Model Innovation
But, they had another thing in
common, they all missed the
moment when they should
have left their successful path
to rethink their business
model.

34. Business Model Innovation
They missed out on radical
innovation because they were
too busy managing daily
business and serving current
clients

35. Business Model Innovation
..instead of envisioning future
opportunities

36. Business Model Innovation
In other words, today's success
is the enemy of tomorrow's
success.

37. Business Model Innovation
The innovation cycle spins
faster than ever in nearly all
industries

38. Business Model Innovation
Innovation either increases the
customer value of a product or
service

39. Business Model Innovation
..or it lowers their cost

40. Business Model Innovation
.. and therefore creates a
competitive advantage

41. Business Model Innovation
Apple for example creates a
high perceived customer value
with its innovative new
products

42. Business Model Innovation
and Dell reduces its cost and
working capital through build
to order processes.

43. Business Model Innovation
Some misconceptions on
innovation..

44. Business Model Innovation
1. Innovation stems from an
idea that nobody has had
before

45. Business Model Innovation
2. Big success requires big
resources

46. Business Model Innovation
3. Innovation breakthroughs
are always based on fascinating
technologies

47. Business Model Innovation
Luckily they are all wrong!

48. Business Model Innovation
1. IBM did not invent the
personal computer,
Apple did not invent the MP3
technology,
Amazon did not invent the
online bookstore

49. Business Model Innovation
2. Successful innovators learn
and recombine, as the
pioneers get eaten by the
wolves

50. Business Model Innovation
Cisco had virtually non-existent
R&D resources but out-innovated
the largest research lab in the
world, AT&T's Bell labs

51. Business Model Innovation
14 out of 25 most innovative
firms have innovated their
business model, and not just
their technology

52. Business Model Innovation
..take firms such as google,
amazon or eBay..

53. Business Model Innovation
.. great algorithms, Yes.

54. Business Model Innovation
But it is the business model,
not just the technology that is
responsible for their success

55. Business Model Innovation
So, what exactly is a business
model innovation?

56. Business Model Innovation
A Business Model provides
answers to 4 questions..

57. Business Model Innovation
1. Who is your target
customer?

58. Business Model Innovation
2. What do you offer to the
customer?

59. Business Model Innovation
3. How do you create the value
proposition?

60. Business Model Innovation
4. And, how do you generate
revenue?

61. Business Model Innovation
And a Business Model
Innovation, changes at least 2
of these dimensions

62. Business Model Innovation
For the past 50 years,
companies, BMI have
revolutionized one or several
industries.

63. Business Model Innovation
For Instance, IKEA has
redefined how we buy
furniture.

64. Business Model Innovation
Tomtom has transformed the
navigation business.

65. Business Model Innovation
or Ebay has changed the world
of trade

66. Business Model Innovation
..yet only 10% of these BM
innovations were novel and
introduced NEW BM patterns

67. Business Model Innovation
.. the other 90%..

68. Business Model Innovation
..merely adapted, refined or
combined these patterns

69. Business Model Innovation
for instance, innovative
companies often apply creative
imitation

70. Business Model Innovation
they ask themselves, how can
a BM innovation from another
industry revolutionize our own
industry?

71. Business Model Innovation
..there are ~55 BM's that are
responsible for all BM
innovations..

72. Business Model Innovation
Examples are:
•
•
•
•
•
•
Flat Rate
Supermaket
Rent instead of buy
Experience Selling
E-commerce
Razor and Blade pattern

73. Business Model Innovation
“Razor and Blade”
..since 1904 Gillette has been giving
away razors to next to nothing
but selling its blades to exceedingly
high prices..

74. Business Model Innovation
“Razor and Blade”
.. Nespresso creatively imitated this
pattern, selling cheap coffee
machines and expensive coffee and
revolutionized the coffee industry

75. Business Model Innovation
“Razor and Blade”
.. and many other companies apply
the razor and blade pattern too!
• Apple's i-Tunes
• Amazon's kindle or
• HP's inkjet printers

76. Business Model Innovation
Now, what do you have to do
to innovate your business
model?

77. Business Model Innovation
I advise you to follow 4 steps:
•
•
•
•
Initiation
Ideation
Integration
Implementation

78. Business Model Innovation
1. During initiation, you
analyze your current BM

79. Business Model Innovation
Again, you ask the questions:
• Who is your target customer?
• What do you offer to the
customer?
• How do you create the value
proposition?
• And, how do you generate
revenue?

80. Business Model Innovation
2. During Ideation, you
confront this BM with the 55
BM innovation patterns and
develop new models

81. Business Model Innovation
how would Nespresso conduct
your business?

82. Business Model Innovation
is there a match between your
product and the experienced
selling pattern?

83. Business Model Innovation
challenge your basic
assumptions and the dominant
logic of your industry..

84. Business Model Innovation
but don't try to re-invent the
wheel, instead use analogies
and learn from other industries

85. Business Model Innovation
3. During Integration, you need
to check the consistency of the
BM

86. Business Model Innovation
..this is important detail work,
wherein you examine all 4
questions regarding
Organizational Fit

87. Business Model Innovation
4. Finally, during
Implementation, it is time to
awaken the beast! But be
careful!

88. Business Model Innovation
In INNOVATIVE CYCLES:
1. You design a BM
2. Build a Pilot
3. Test the Pilot
and return to the
design phase

89. Business Model Innovation
It is important to not
only gain Qualitative
and Quantitative data

90. Business Model Innovation
..to verify or falsify your
assumptions about your
new BM

91. Business Model Innovation
..but also not to forget
about the SOFT factors
of innovation

92. Business Model Innovation
.. thanks to incorrect
Management behavior

93. Business Model Innovation
.. and organizational
resistance more than
70% of all change
initiatives fail!

94. Business Model Innovation
Therefore, keep a few
rules in mind!

95. Business Model Innovation
First, only implement 1
BM at a time

96. Business Model Innovation
Second, clearly
communicate the BM
and the need for change

97. Business Model Innovation
Third, don't over
emphasize short term
KPIs (innovation needs
time)

98. Business Model Innovation
Fourth, get top
management commitment.
without their sponsorships
BM innovation is doomed
to fail

99. Business Model Innovation
Finally, overcome the NOT
INVENTED here syndrome

100. Business Model Innovation
Let's wrap it up then!

101. Business Model Innovation
Innovation is the key factor..

102. Business Model Innovation
to defeat path dependency..

103. Business Model Innovation
and stay competitive in today's economy..

104. Business Model Innovation
yet, innovation is not necessarily about new technologies,
excessive R&D, or about creating completely new ideas..

105. Business Model Innovation
most of the time, innovation is learning from others..

106. Business Model Innovation
or re-inventing your BM, not just your technology..

107. Business Model Innovation
this can be done in a structured process of..

108. Business Model Innovation
Initiation..

109. Business Model Innovation
Ideation..

110. Business Model Innovation
Integration..

111. Business Model Innovation
and Implementation..

112. Business Model Innovation
•
•
•
•
•
you analyze your BM
apply the 55 BM innovation patterns
check for inconsistencies and
start implementing carefully
keeping in mind success factors and pitfalls

113. Business Model Innovation
Are you ready then to revolutionize your own industry?

114. Business Model Innovation
Try to creatively learn from the Giants who shoulders your
standing on

115. Business Model Innovation
Think BIG, and think DIFFERENT!

116. Business Model Innovation
Steve Jobs did it, so why can't you!?

117. References
BusinessModelsInc.com
BMI, Prof. Dr. Oliver Gassman
http://www.item.unisg.ch/en/Chairs/Innovation+Mgmt/Research/Business+Model+Innovation
http://www.im.ethz.ch/education/HS13/MIS13/VL_BMI___IT_012efl.pdf
http://www.wu.ac.at/wutv/other/elgar_fleisch.pdf
BusinessModelGeneration.com
Wikipedia, Google, WWW..