Viewpoint on Business Model Innovation

Viewpoints on Change
STRATEGY & GROWTH ISSN: 1904-6758 – NR. 4 / 2012

Business Model Innovation
New paths to creating growth
and delighting customers

CONTENTS

P. 3 P. 20 P. 28 P. 30

Article Article Model Article
Create growth through Facing the New Normal Discovery-driven Business model innovation as
innovative business models of Retail Banking innovation a response to increased com-
petition in the energy sector

STRATEGY & GROWTH

EDITORIAL

Why not?
results. Rather promise little and surprise positively than
BY NIELS AHRENGOT
reaching for the stars and risking not quite reaching them –
CEO, IMPLEMENT CONSULTING GROUP
analogously to the above example.

However, large innovations solely based on analyses of the
past are rare. For even though the analysis is imperative in
order to being able to understand and generalise and, thus,
We are involved in a project for a global growth company scale, the tempo and complexity in our surrounding world
where we have recently carried out a project with focus on have reached a level where we need to change the bal-
developing products faster and more efficiently. The project ance between value creation and our need for predictabil-
was, in our opinion, a success. The client company, which is ity. Those of us who think analytically must learn to speak
recognised as one of the world’s leading experts within their an intuitive language, and those who think intuitively must
area of expertise, was, basically, satisfied. However, because learn to communicate in an analytical mindset. Both sets of
they act the way they do when clients are at their best, they competences are absolutely necessary. Even though innova-
ask anyway: Seeing that we are capable of reducing the lead tion and intuitive thinking are closely linked, it is only when
time of a project from 600 to 300 days, why not reduce it to rationality and analysis are involved in the process that the
100 days? large-scale commercial and business breakthroughs take
place.
It is, of course, quite the partykiller in a situation where we
had expected to get a pat on the shoulder for our efforts. Companies such as Apple, Google and Just Eat are good ex-
But he is right. Why do we consider good results as final amples. Their development has been unpredictable, but their
when we are fully aware that in 12 months from now, we will value creation has been immense, because they have been
be able to create the same percentage improvements one able to combine intuitive and analytical thinking. Whether
more time and once again 12 months later? Why do we not we, as Roger Martin, call it Design Thinking is of minor im-
change our mindset radically, raise the bar and reap the full portance. We MUST be able to combine that which is ration-
benefits now? And once again – not in 12 months, but in six al and analytical with that which is intuitive and irrational. In
months? this cross field, limitations turn into opportunities. This is also
where the most successful companies operate and the best
Recently, we had the pleasure of discussing strategy with employees thrive, develop and generate most value.
Roger Martin, Dean of the Rotman School of Management.
According to Martin, today, most strategic work suffers from Thus, the question presented in the beginning of this article
a gap between analytical and intuitive thinking. This is pri- is just a logical consequence of the reality we live in and a
marily caused by the fact that strategy has become an ana- question that we – who are well on in years – must get used
lytical discipline where predictability is rewarded more than to being asked: Why not?

2 Viewpoints on Change

ARTICLE

Create growth through
innovative business models
Understanding the why, what and how of business model innovation
by Morten Hejlesen

Short-term competitive advantage is ness should lie the aspiration to delight and influence key decisions through
created by exploiting existing business customers. It might seem deceptively rhetoric or regulations. Inside impedi-
models. However, in the long term, simple, but, in reality, this core tenet is ments come in many shapes. Actions
all markets mature, competition challenged every day. of the past such as investments and
intensifies and turbulence increases. strategic choices create commitments
Consequently, new sources of growth Outside pressure from investors trig- that are hard to escape when customer
must be explored, and fresh answers gers the desire to focus on short-term needs are changing. Often, the un-
to enduring success must be found. optimisation putting long-term cus- derstanding of customer needs lacks
The answer used to be innovate or die. tomer and, thus, shareholder value depth or is based on false assumptions,
But research shows that pouring more
creation at risk. Diverse stakeholder thus limiting capabilities to conquer a
money into pure product innovation
groups compete to capture attention differentiated position in the market-
does not lead to improved performance.
We need to dig deeper.

To succeed in innovation and to WHAT IS CUSTOMER VALUE?
seize new oppor-tunities, the scope
of innovation must be expanded to
The idea of ”delighting customers” can be translated into the equally simple
encompass the full business model,
idea of ”creating value” for customers. But what exactly is customer value,
and new processes must be mastered.
and how can it be defined?
This article explores how an innovative
business model is linked to customer Firstly, customer value cannot be equated with low price. More precisely,
value creation, defines growth value creation is a trade-off between certain benefits and costs associated
opportunities and presents key success with the value proposition over its entire life cycle. The total value of owner-
factors to exploit the potential of ship must be calculated to assess the value creation potential.
business model innovation.
Secondly, value lies in the eye of the beholder. Value is subjectively judged
by the customer, which means that we must identify perceived benefits and
costs. All insurance companies know this fact as they, in reality, sell products
Rethink customer which, hopefully, are not used. Value is not related to product attributes, but
value creation rather customer benefits.

Thirdly, the value creation potential must be adjusted for the riskiness of the
Delighting customers is the heartbeat value proposition. All innovators know this by heart. New products that are
of every business relatively unknown are always harder to sell than well-known products be-
While pundits claim that the only cause of a higher perceived risk.
constant in the world of business is
Taken altogether, customer value can be expressed as:
change, one factor remains unchanged
and stable. At the heart of any busi- Customer value = (perceived benefits – perceived life cycle costs) x (1 – perceived risk)

Issue no. 4 / 2012 3

STRATEGY & GROWTH

CREATE GROWTH THROUGH INNOVATIVE BUSINESS MODELS

place. Management incentive structures However, excess post-war production in the 1970s and is still an effective ap-
are aligned with a strong focus on ”run- capacity and a frugal culture created proach to customer-centric sales. In
ning the business” rather than ”devel- the perfect storm, motivating compa- fact, many businesses are still on a jour-
oping the business”. Mental blinders nies to find new ways of reaching the ney from delivering products to creat-
tend to pop up resulting in a bias to run heart of their customers. Increasingly, ing solutions composed of both tangi-
business as usual, and new ideas are generic products were differentiated ble products and intangible services.
judged unattractive due to the risk of and associated with emotional and so- The trend has also been dubbed ser-
cannibalising the current business. And cial benefits. The rise of branding and vitisation of manufacturing, which also
the list continues. segmented marketing strongly indicat- highlights the shift towards designing
ed a shift towards a broader concept all aspects of the customer experience
Altogether, the simple goal of delight- of customer value creation. The shift is as well as tailoring the experience to
ing customers is not that simple at all. beautifully portrayed in the TV series individual customer needs. Customer
Even though it has been proven time Mad Men about the American flourish- delight was no longer perceived as a
after time that customer-centric or- ing advertising industry in the 1950-60s result of simple products, but integrat-
ganisations are the most successful, it and the boom of Madison Avenue ad ed solutions with a carefully designed
is complex and challenging to walk the agencies. and value-adding layer of experiences
talk. Moreover, the ways in which or- that surrounded the core product.
ganisations deliver valuable customer In parallel, the strong focus on tangible
experiences have dramatically changed products was replaced with the idea In the 1990s, Joe Pine and Jim Gilmore
in the past decades. of comprehensive value propositions portrayed the rise of the experience
and selling total solutions to customers. economy in which they claim that work
Focus on customer benefits Solution selling emerged as a discipline is a theatre and every business a stage.
– not product attributes
A quick glance at the history of delight-
ing customers shows that focus has ex-
WHO IS YOUR CUSTOMER?
panded from fulfilling simple needs to
addressing the full range of advanced
Simple questions usually turn out to be tough ones. Theodore Levitt asked:
customer needs, and the scope of in-
”What business are you in?”. We also need to ask: ”Who is your customer?”.
novation has been widened from ba-
While the examples mentioned show the importance of the end user, value
sic products to integrated solutions. In
creation should be managed for all touch points that your offerings have be-
other words, the key driver has been
fore reaching the final customer.
growing attention to manipulating all
parameters of the business ecosystem In the insulation industry, Rockwool has analysed and designed value proposi-
in order to deliver customer value. tions for all customers involved with their core product. The chain of custom-
ers includes building owners, architects, contractors, sub-contractors, install-
In the days of mass production, ers and distributors. Moreover, a careful evaluation of different segments
customers were delighted by simple within each customer group needs to form the basis for the design of differ-
products fulfilling basic needs and ent value propositions for every group.
wants. Henry Ford famously dictated
In the case of fast-moving consumer goods, all companies face similar chal-
in 1909 that customers could have the
lenges. Value creation cannot only focus on the end consumer, but should
functional benefits of his Model T, while
also consider the needs of the shoppers buying the goods, the retailers selling
he cared less about fancy colours: ”Any
the goods, the wholesaler distributing the goods and even external partners
customer can have a car painted any
responsible for production. Before pouring a simple glass of milk, customer
colour that he wants so long as it is
needs must be served appropriately many different places in the total con-
black”. Cars were black and nothing
sumption chain.
but black.



Accompanied by branding strategies experienced-based differentiation. Develop experience-based solutions
that engaged all five senses and even Fuelled by financial meltdowns, rising to gain competitive advantage
experiences designed around the idea awareness of human impact on the en- As a consequence of increasing com-
of catalysing personal transformations, vironment and increased global inter- petition in mature markets, new op-
the experience-centric thinking supple- connectedness, most organisations are portunities in emerging markets and
mented past logics of value creation. now consciously evaluating how to fulfil near-constant disruptions at the fringes
On the one hand, products developed altruistic benefits for customers. In oth- of most industries, focus on delighting
into solutions. On the other hand, fulfil- er words, how to incorporate elements customers plays a key role in gaining a
ment of functional needs was accom- of selfless concern for the welfare of foothold in a competitive marketplace.
panied by addressing more sophisticat- others in their value propositions, e.g. Although the notion of creating blue
ed customer needs. cradle-to-cradle principles and the am- oceans is appealing, real-life experience
bition to safeguard the planet for the often shows that competitors quickly
Recent developments in the ways of coming generation through company- invade uncontested space and capture
delivering customer value might be wide social responsibility, plays a still market share.
considered as a counter-reaction to the more vital role in order to delight cus-
mainly narcissistic attempts to achieve tomers (figure 1). To carry on delighting customers on a
continuous basis, advanced manners
of delivering value and creating com-
petitive advantage are needed. Add
to that the dramatic consequences of
recent technological developments
such as the internet that has created
Functional
an unprecedented range of opportuni-
benefits
ties to interact with and deliver value
Efficiency
to customers. By leveraging the power
Excellence
of emerging technologies, entirely new
markets have been made accessible,
and novel manners of interacting with
customers have been created.
Emotional Social
benefits benefits Consider Danish telecom TDC that
Feelings Status bundles telephony subscriptions with
Aesthetic Esteem free access to millions of music tracks
through the TDC Play service or the
rise of internet-based portals for long-
distance microfinancing and interac-
tions with African entrepreneurs such
as MYC4 and Kiva. Since Kiva was
Altruistic
founded in 2005, 636,949 lenders
benefits
have invested USD 255 million in poor
Ethics
entrepreneurs in remote areas of the
Spirituality
world. The entrepreneurs have grown
their businesses and repaid 99% of the
loans. Both examples highlight the re-
cent explosion of colours on the palette
Figure 1. Four dimensions of customer value creation of delivering valuable customer experi-

Issue no. 4 / 2012 5

STRATEGY & GROWTH


panded from delivering basic products
to crafting advanced business models.

Professor Michael Porter captured this
paradigmatic shift back in 1996 when
Integrated Value-based Experience- he noted that a strategic fit among
solutions solutions based solutions many activities is fundamental – not
only to competitive advantage, but also
Internal to the sustainability of that advantage.
innovation Porter argued that it is considerably
focus
harder for a competing firm to match
Basic Complex an array of interlocked activities than
Basic
products and products and it is merely to imitate a particular sales
offerings
services services force approach, match a process tech-
nology or replicate a set of product
features. Therefore, positions built on
Simple needs Advanced needs systems of activities are far more sus-
tainable than those built on individual
External customer focus activities.

Consequently, we have to revise the
Figure 2. Customer and innovation focus matrix old dictum of ”building a better mouse-
trap” to make the world beat a path to
our door. Although more than 4,400
patents have been issued by the United
ences. The message to old Ford is sim- Above all, the uniting discovery across
States Patent and Trademark Office for
ple: Black is no longer the only option. the spectrum of opportunities is the
new mousetraps, and it is the most fre-
recognition of the need to carefully
quently invented device in history, the
While the shift can be described as consider and design all elements of the
driver of long-term success resides not
an overarching trend, it is evident that business model to address the specific
only in the mousetrap itself, but in the
success can still be found in all quad- needs of the particular customer seg-
complete business model.
rants (Figure 2). Customer needs dif- ment. The explosion of colours on the
fer across segments and markets. design palette has created an unprec-
The business model view resonates
Industries compete on different factors. edented range of opportunities to be
with research on how to profit from
In some cases, an attractive opportu- explored in order to find the right fit
innovation. The mousetrap approach
nity can be exploited by developing between the value proposition and the
clearly plays an important role. A tight
simple and convenient products that customers.
regime of patents, copyrights and trade
attract non-users and, thus, expand-
secrets is one component of the equa-
ing the current market. In other cases,
tion, but to commercialise an innova-
advanced experience-based solutions
can be leveraged to capture the prof-
Develop new business models tion or exploit a new business strategy,
complementary assets are needed such
itable high-end of an existing market.
Innovate your business models as manufacturing capabilities, distribu-
However, it is clear that competitive
to reap superior returns tion channels, specialised services and
advantage as a rule of thumb is more
In essence, the scope of creating cus- a sales force.
sustainable when solutions are hard to
imitate as well as based on deep and tomer value propositions and, thus,
enduring customer relationships. competitive advantage has been ex-



What is a business model? is enabled by the organisation’s ability The external perspective describes
to standardise and industrialise opera- how the value proposition is delivered
In brief, a business model describes tions across the activity system. The to the targeted customer segments. To
how an organisation creates, delivers aim is not to add complexity, but to en- reach the customers, the value propo-
and captures value. More precisely, a able scalability through simple, but ef- sition is distributed and communicat-
business model articulates the content, fective activity systems. ed through a set of channels, and to
structure and governance of the activ- establish long-term customer relation-
ity system that delivers a value propo- The activity system can be illustrated ships, ways of building the relationship
sition to the customer and enables by using a simple model consisting of have to be identified. E.g. car manu-
economic value creation for all activity 4 dimensions and 9 building blocks. facturers have established a number
system exchange partners. of customer clubs – both online and
The value perspective describes the offline – to build close connections to
A simple example of customer needs total market offering provided by the their customers.
being fulfilled by radically different company. It consists of a value proposi-
business models is car transportation. tion composed by an integrated solu- The internal perspective describes
Getting from A to B and the freedom tion of products and services. Typically, how the market offering is produced. A
to choose when to go can be served the core offering is linked to comple- number of tangible, intangible or finan-
by a car that is bought, leased, rented mentary offerings to create a compre- cial key resources must be leveraged to
or even shared with co-owners through hensive customer experience. E.g. car create the value proposition through a
car sharing services. The core product manufacturers have recently begun to range of key processes. Strong brands
is essentially the same, while the activ- offer leasing contracts, which has prov- are important intangible resources, and
ity system underlying the product cov- en to be an important complementary the design of processes both in back
ers a spectrum of business model de- service to the core product that drives and front office functions is vital to
sign options. In all cases, value capture growth. economies of scale. Often, an external
partner network is a key component
of the value proposition, e.g. the finan-
Internal Value External cial service providers involved in the
perspective perspective perspective car leasing contracts mentioned in the
example.
Key Customer
processes relationships The financial perspective describes
how profit is made by identifying rev-
enue streams and depicting the cost
structure. Revenue comes in many
Partner Value Customer shapes as the car example illustrates,
network proposition segments
and both financial components should
be carefully designed to maximise prof-
its and customer value.
Key
Channels
resources The activity system is generic and
can be used to systematically visual-
ise and redesign any business model.
Furthermore, it creates a unified lan-
Cost Revenue guage around the elusive business
drivers streams model concept that can be used across
Financial
organisational functions and units.
perspective

Issue no. 4 / 2012 7

STRATEGY & GROWTH


Decide on what game to play before
Operating margin growth in excess of competitive peers innovating the business model
Per cent compound annual growth rate over 5 years Obviously, all companies have a busi-
ness model. Therefore, the key question
is whether all elements of the business
model deliberately have been thought
6
through in a customer-centric way?
Does your company purposefully de-
5
sign all elements of the business model,
or are you focusing most of your inno-
4
vation on improving the core product?
3
The complexity of grasping the en-
2 tire activity system often leads to both
overlooked areas as well as activity
1 systems with designs purely based
on the dominant logic of the indus-
0
try. Consequently, in many cases, all
eggs are put into the product innova-
-1
tion basket searching for differentia-
Products/services/ Operations Business model
tion through superior products while
markets innovators innovators innovators
failing to see opportunities in other
parts of the business model. In these
cases, business model change is lim-
ited and fundamentally responsive.
Figure 3. Business model innovation outperforms other types of innovation
Large changes occur when changes
in the environment require action and
response. However, taking a closer look
at the business model on a continuous
basis in a proactive manner leads to a
Research undertaken by academics, tended to be a slippery slope. To in- number of potential opportunities for
global consultancies and our experi- crease investments in R&D proved to customer value creation and growth.
ence proves that a business model-cen- be fruitless, while a dual focus on both A proactive focus holds the promise of
tric look at value creation is imperative innovating the business model and de- harvesting first-mover advantages, but
to business success. An IBM study from livering superior products actually ena- obviously also the risk of designing a
2006 found that innovating across the bled lowering the R&D spend. Apple business model that does not deliver as
business model had a much strong- – often described as business model in- expected.
er correlation with operating margin novator par excellence – has managed
growth over a five-year period than to significantly lower R&D spend as a Scrutinising the business model to dis-
both product/service innovation and percentage of sales while growing en- cover new business opportunities plac-
operations innovation. See figure 3. terprise value at an extraordinary pace. es the customer centre stage by asking
if the fit between current activities and
A 2010 survey of the world’s top 150 When executed in the right manner, customer needs maximises value crea-
companies confirmed the findings and business model innovation quite simply tion for both customer and company.
discovered, furthermore, that a single- delivers superior returns to both cus-
minded focus on product development tomers and shareholders. Four areas should be investigated to



RESPONSIVE BUSINESS MODEL ORIENTATION PROACTIVE BUSINESS MODEL ORIENTATION

What are the sources Products, services and processes The entire business model
of differentiation?

What business model Standard designs and exploitation Best fit with customer needs and
designs are used? of the dominant logic of the industry exploration of alternative design patterns
for the business model

When does the business Reactive change based on articulated Proactive change based on latent needs
model change? needs of the customers of the customers

What type of innovation Fast follower or late mover First-mover advantages
strategy is pursued?

What are the key risks in Disruptions from entrants, weak Novelty in approaches, complexity
relation to the business protectability and intense competition and unprofitable niche markets
model?

How sustainable are Short-term due to weak protectability Long-term due to strong protectability
competitive advantages?

Figure 4. Proactive and responsive business model orientation

establish a systematic overview of op- Launch a sticky value-added service, emotionally attached to their broad-
portunities to exploit business model acquire customers through smart pric- band provider, while the composition
design to enhance customer value cre- ing models or partner with great com- of a music collection is fundamental to
ation. See figure 5. panies to leverage their brand power. signalling who we are and what we like.
Adding a complementary music service
Adjust the current business model to Consider the role of value-added ser- has helped reduce loss of market share
exploit opportunities in existing mar- vices in the telecom industry where through improved customer loyalty
kets: Changing needs of existing cus- TDC’s launch of the previously men- and satisfaction in a highly competitive
tomers and a turbulent environmen- tioned free music service TDC Play re- market.
tal context present the opportunity to duced churn by 50% for existing broad-
adjust the business model on a con- band customers back in 2009. The core As shown in the opportunity matrix,
tinuous basis. While competitors are product is essentially unchanged, while business model innovation does not
focusing on improving products, sim- adding a service layer on top based on have to be radical. Simple moves can
ple incremental moves in other areas partnerships with the music industry achieve great results in existing mar-
of the business model can be exploited changes the ”stickiness” of the business kets and discover new differentiation
to achieve important business goals. model dramatically. Few people are factors.

Issue no. 4 / 2012 9

STRATEGY & GROWTH


sions. Should all segments be served
by the same business model while
running the risk of opening a flank for
competitors? Or should a radically new
business model be designed to serve
Expand Create
attractive sub-segments while canni-
New balising the existing business model?
the market new markets

The dilemma is well-known in the tel-
Customers ecom industry where a range of low-
cost players with no-frills value propo-
sitions based on online self-service
Adjust fit to Disrupt the have disrupted the market several
Existing
existing market existing market
times. Recently, Danish low-cost mo-
bile telephony provider Onfone was
acquired by TDC after having captured
Incremental Radical a large share of the low-end market
populated with customers looking for
convenient, simple and cheap telepho-
Business model change
ny. No-frills solutions, innovative pricing
models and technology-driven automa-
Figure 5. Typology of business model innovation opportunities tisation are classic ways of conquer-
ing the low-end of an existing market.
Ryanair and Google’s free web services
spring to mind.
Redesign the current business mod- changes, and, thereby, a latent demand
el to expand the market: Incremental can be converted into real demand. At the other end of the spectrum, the
change in the current business model Typically, non-customers are those who high-end of a market can be equally at-
can be leveraged to expand the mar- are either unaware of your offering or tractive to explore through new busi-
ket by attracting non-customers. For meet some sort of barrier to consump- ness models. Consider the makers of
example, the practice of serving prod- tion. Understanding and removing the automated espresso machines pow-
ucts in small and affordable sizes is a barriers are keys to expanding the mar- ered by easy-to-use coffee capsules
widely used strategy by global con- ket. Understanding commonalities in such as Nespresso. By removing the
sumer brands to enter emerging mar- the non-customer segments paves the risk of failing to brew the perfect cup
kets. Seven out of ten Filipino smokers way for redesigning the business mod- of coffee and reducing the time it takes
buy their cigarettes by the stick rather els. to make a nice single-shot espresso,
than by the pack, and as much as 68% an attractive niche of espresso drink-
of Procter and Gamble’s shampoo busi- Launch a new business model to dis- ers has been identified. Whereas high-
ness in the Philippines is generated by rupt the existing market: Investigating end disruptions typically are based on
sachet sales. The core product is left the needs of current customers in a technology leap, low-end disruptions
unchanged, while innovative distribu- some cases leads to the discovery of can also be achieved by simplifying and
tion setup and packaging changes are attractive sub-segments which are lowering costs.
keys to success. not appropriately served by the cur-
rent business model. The discovery of Launch a new business model to cre-
Attracting non-customers can some- underserved or overserved customers ate new markets: Designing radically
times be achieved through small leads to important managerial deci- new business models can be leveraged



to create entirely new markets where tom of the pyramid live on less than ness unit level and when developing
large groups of customers have been $2.50 per day and are by far the larg- new market offerings. Obviously, new
locked out. In some markets, minor est global socio-economic group. business models are not launched out
business model tweaks such as sachet Furthermore, fulfilling the vision leads of the blue, but rather closely aligned
marketing are simply not enough. A to value creation that, by far, goes be- with overarching strategic growth am-
complete overhaul or even a new busi- yond pure economic value creation. bitions of the company. In other words,
ness model is needed to commercialise a diagnosis of the strengths and weak-
a value proposition for a new market. New market creation demands innova- nesses of current business models
New markets can be defined both geo- tive business models. Moreover, these needs to form the basis for any at-
graphically such as bringing products emerging markets are often judged tempt to pursue one or more of the
from developed markets to emerging unattractive to well-established compa- four opportunities.
markets and as needs-based such as nies, because they start out small and
fulfilling emerging customer needs. do not meet the expected growth rates Combine diverse knowledge perspec-
to attract ordinary innovation invest- tives to create new business models
A business model currently under de- ments. However, these markets often Becoming a business model innovator
velopment illustrating the idea is the become large and profitable, and pa- can be compared to an artist shifting
current debate concerning designing tience for growth pays off. style from painting with monochrome
a house for the poor that can be con- colours to using a palette with all the
structed for under $300 which keeps The four generic growth opportuni- vivid colours of the rainbow. Options
a family safe, allows them to sleep at ties (see figure 6) can be explored and explode, and the number of possible
night and gives them both a home and exploited by any company to sustain solutions for designing the next market
a sense of dignity. It is a grand chal- growth and delight customers. The offering increases. However, in order to
lenge that surely can only be solved by common denominator is a proactive be successful, the colours on the pal-
thinking innovatively about the entire posture that recognises the need to ette need to be picked carefully. Not all
business model. The potential is huge. cover all components of the business colours can be used for the next break-
2.5 billion people at the so-called bot- model – both when strategising at busi- through. In other words, the articulat-

ADJUST FIT TO DISRUPT THE EXPAND CREATE
EXISTING MARKET EXISTING MARKET THE MARKET NEW MARKETS

Customers Existing Existing New New

Level of change Incremental Radical Incremental Radical

Characteristics Improve the existing Develop new business Improve the existing Develop new business
business model to model to exploit oppor- business model to fit model to exploit
attract and retain tunities in either under- needs of customers opportunities in new
customers in existing serviced high-end seg- in unserved markets markets or segments
markets characterised ments or overserviced or segments of non- of non-customers
by intense competition low-end segments customers

Figure 6. Generic growth opportunities

Issue no. 4 / 2012 11

STRATEGY & GROWTH


Context
Macro factors, trends and technologies

Internal Value External
perspective perspective perspective

Key Customer
Resources and core competences

processes relationships

Customers and markets
Capabilities

Partner Value Customer

Customers
network proposition segments

Key
Channels
resources

Cost Revenue
Financial drivers streams
perspective

Competitors
Industry structure and competitive situation

Figure 7. Four knowledge perspectives

ed or latent customer demand that is tives must be explored and combined evaluating market options and estab-
targeted needs to be matched with the to extract insights and create the right lishing a foundation of deep customer
best possible business model. In order fit between the market and the busi- insights. A key point when moving be-
to design new business models, op- ness model. yond simple tweaks of existing market
tions must be limited and focused on offerings is the fact that asking what
the most promising solutions to ex- Customers: The customer perspec- the customer wants will not be very
ploit the demand. Therefore, all efforts tive has already been discussed. At all helpful in most cases.
should start out informed. More pre- times, a customer-centric approach
cisely, four distinct knowledge perspec- is the right approach, which entails Firstly, the mainstream customer only



experiences what he or she already lutions. On the one hand, a number of Furthermore, an analysis of close com-
knows and lacks knowledge about dif- constraints can be identified by analys- petitors can be used to spot industry
ferent options. The customer’s frame of ing macrofactors such as legal regu- orthodoxies and mental models that
reference is severely limited, and usu- lations, economic factors and soci- could be challenged. Whirlpool ob-
ally customer ideas cannot be used to etal trends. Often, constraints can be served that all white goods were de-
leap-jump competition. They tend to turned into great opportunities, which signed and sold with women in mind,
be incremental and result in me-too producers of outdoor ashtrays discov- and they used that piece of competi-
products. Secondly, the knowledge that ered when indoor smoking in public tive insight to create a new product line
can be accessed easily by asking the buildings was prohibited in Denmark for men and their garages. While the
customer will most likely not be very some years ago. A simple change in idea might seem a bit sexist, business
unique. All competitors will have access regulations caused an instant boom in for Gladiator® GarageWorks is flourish-
to the same knowledge through ana- demand. On the other hand, many po- ing, and American men are eager to in-
lyst reports and industry market stud- tential solutions can be discovered by stall designer fridges in their garages.
ies. One exception is the so-called lead studying the context. Both microtrends
users who typically represent a tiny and macrotrends can provide answers To identify and break out of industry
fraction of your customer base. They to great experience design. orthodoxies, the analysis should not be
are characterised by their eagerness to restricted to close competitors when
tweak, modify and rebuild your prod- Due to the explosion of small digi- bigger and bolder ideas are wanted.
ucts. Looking at their modifications can tal sensors embedded in many con- Just as lead users and emerging tech-
be helpful to identify emerging de- sumer products, it is easy to measure nologies can inspire the discovery of
mands, since they are usually ”ahead” almost everything that we do. Nike new business models, so can research
of the mass market. and Apple partnered and designed into analogous industries. Looking
the Nike+ tracking device for runners. across industries helps identify emerg-
Instead of asking the customers what Fitbit has developed a personal tracking business model design patterns
they want, the best approaches for dis- ing device collecting real-time data on that can be imported from one industry
covering unique insights are to listen every step taken, stairs climbed and to another. Danish playground produc-
and observe customers in their real-life calories burned. Both examples illus- er Indu basically copied Google’s busi-
context. To get under the skin of the trate the booming interest in measuring ness model by offering ad-supported
customer, ethnographic research meth- and quantifying your everyday life. New playgrounds to schools and communi-
ods must be used, and data should be technologies shape trends and can also ties for free. Looking across the indus-
interpreted systematically to find the be mapped to identify design options. try value chain can also be used as a
surprising insights which pave the way A key area of interest should be emerg- tool for identifying shifts in the industry
for innovation. While high-level quanti- ing technologies and careful analysis profit pool. Small changes in the loca-
tative analysis of customers can set the of their possible implications for future tion of high profits in the value chain
direction, deep qualitative studies are business models. A simple but power- can be used to anticipate important
the best option to find the latent needs ful exercise is to map 20-30 important changes and growth opportunities. The
to exploit. Sharpen knowledge through technology-based trends and concep- message is clear: When innovation am-
exploring the full upstream chain of tualise a set of new solutions on the bition levels are high, an ordinary com-
customers and understanding needs in basis of each of those trends. petitive analysis will not be sufficient.
all phases of the customer journey from
initial consideration to disposal of a Competition: The competition Capabilities: The capability perspective
market offering. Put simply, get out of perspective should without a doubt is used to explore both internal and ex-
the building and meet the customers. be explored. Competitive analysis can ternal capabilities and resources. Firstly,
be used to single out those customer a mapping of internal capabilities and
Context: The context perspective of- wants and needs which are not cur- resources can provide insight about
fers both constraints and possible so- rently satisfied in the marketplace. underused resources or underexploited

Issue no. 4 / 2012 13

STRATEGY & GROWTH


business capabilities. For instance, the Know your options before innovat- of a product line. But bold moves do
service business of many manufacturing. A broad and diverse foundation of require a decent amount of knowledge
ing companies has been profession- knowledge simply makes it easier to and inspiration upfront.
alised in recent years. At Danish wind be both innovative and goal-oriented.
turbine manufacturer Vestas, the ser- However, the deep dive into emerging The bottom line is that analysis must
vice business is growing, while the to- technologies, latent customer needs always serve a purpose and enable
tal turnover growth is under pressure. and inspiring business models should you to challenge world views. That
Services accounted for EUR 214 million always be timeboxed and balanced also means that research efforts guid-
in 2006 growing to EUR 700 million in with the innovation challenge at hand. ing business model innovation must be
2011 out of a total turnover of EUR 6.4 There is no need to boil the ocean to designed to build surprising hypoth-
billion. design a simple service business on top eses as opposed to just testing and

Secondly, resources and capabilities
of the business ecosystem should be
mapped to identify partnering, collabo- WHAT ARE THE CHARACTERISTICS OF A GREAT BUSINESS MODEL?
ration and integration opportunities. A
highly profitable business model in the Not all business models are created equal, and some key factors must be con-
publishing industry is to license for- sidered when evaluating different design options. A delighted customer is the
gotten comic book characters to toy, ultimate goal of your business model, but to survive in the long run as a busi-
movie and computer game produc- ness, the challenge is not just creating customer value, but capturing value as
ers. In that way, resources are exploited well.
in a new context through smart part-
nering agreements. Consider Marvel To capture value, your design must provide a high degree of protectability
Entertainment’s lucrative licensing of through either legal or natural barriers. Legal barriers could be patents, trade
Spiderman and X-men to Hollywood secrets, copyrights or non-disclosure agreements. Natural barriers could
studios. If partnering opportunities are be difficulty in reverse engineering your offering, switching costs or tacit-
lackluster, a business ecosystem can be ness of relevant technology. To capture value, you must also have some de-
designed when the right incentives are gree of control over so-called complementary assets. Such assets are for in-
present. External app developers play stance manufacturing capabilities, an effective distribution setup, a portfolio
a vital role in Apple’s iPhone and iPad of strong brands, innovative services and leverage of shared technologies. In
success. More importantly, the use of other words, the strength of your protection mechanisms and supporting as-
external developers and their resourc- sets will determine your ability to capture value.
es reduces the risk of failure for Apple
and increases the speed of innovation At the end of the day, great business models are based on solid financial mod-
at the same time. Bad apps die, while els. To support your efforts in discovering the right financial model, consider
Apple survives, and barriers of entry in some of the questions below:
the app market are so low that a 12- • Do high switching costs create effective lock-in of customers?
year old app programmer can achieve • Can you easily scale your business model?
significant success. Apps are all about • Does your business model produce recurring revenues?
survival of the fittest, and in the heat of • Can you design the financial model so that you earn before you spend?
the battle Apple’s business model just • Is it possible to exploit a partner network to reduce your costs and risk?
gets stronger and stronger. • Does your business model exploit protection mechanisms?
• Can you take advantage of existing assets and capabilities?
Altogether, new business opportuni- • Can you redesign the cost structure to change the rules of the industry?
ties are discovered at the intersection • How can you rethink the in- and outflow of cash throughout both
of the four knowledge perspectives. development and launch of the business model?



Issue no. 4 / 2012 15

STRATEGY & GROWTH


validating predetermined hypotheses. forts towards small incremental moves. growth when it comes to business
Without the will to deconstruct ortho- In many companies, you will find port- model innovation. Particularly in the
doxies, a desire to scan the periphery folios crowded with line extension cases of large disruptive moves. Focus
and proactive leverage of analogies work and customer request projects on early profitability pushes the innova-
from distant business models, your in- that extend the past into the future. tion efforts to find the markets in which
novation success will be based on pure Obviously, these efforts are important unique capabilities will be uniquely val-
luck. We have to question our assump- to be able to exploit current opportu- ued. Focus on fast growth makes you
tions to change the rules of the game. nities. However, the second step in the slip back to well-known business mod-
journey is to think about innovation els in well-known markets.
like great investors. They purposefully
Build capabilities for design a balanced portfolio of oppor- A company exhibiting strong top man-
business model innovation tunities and put their scarce resources agement support for innovation is the
to work by calculating risk versus po- Danish pump manufacturer Grundfos.
tential return. Experience and research The company’s innovation intent explic-
Expand the scope of innovation and
show that a balanced approach has the itly states that Grundfos in 2025 in-
build capabilities for high growth
largest payoff potential. Add to that the tends to employ 75,000 people com-
The first step in your journey to be- positive branding effects and employee pared to 16,000 in 2011, and that 50%
come a business model innovator will engagement created in companies that of growth will come from new technol-
be to expand the scope of innovation are actively ”changing the world” as ogy platforms. The ambitious intent
to include all components of the busi- opposed to those companies just doing has been decomposed to a number of
ness model. A key point is to actively ”more of the same”. To get started as a strategic innovation platforms, and to
manage all resources put into innova- business model innovator, management support the realisation, different inno-
tion. While the product development anchoring, innovation capabilities and a vation processes have been designed
department is important, it is essential learning mindset have to be developed. for low-risk and high-risk bets. Low-
to uncover and coordinate all innova- risk projects are managed according
tion work undertaken across depart- Create a strong innovation intent: A to traditional stage gate development
ments. These investments in innova- simplistic view of business states that processes, whereas high-risk projects
tion tend to be hidden in budgets, but you get what you measure. Hopefully, are rewarded for fast learning before
very important in real life. In marketing, this is not always the case, but on the scaling up the business. In some cases,
they design great websites to sup- other hand, the saying has some merit. companies seeking new growth beyond
port product launches. In supply chain, Especially when it comes to risky bets, the core even decide to establish sepa-
they invent new production methods. organisational incentives have to sup- rate organisational units to support the
In business development, they iden- port business model innovation. No one very different ways of working as illus-
tify potential targets for acquisition to in the organisation will take on the risk trated in the case of Grundfos. A strong
create synergies. As an alternative to of failing if corporate culture dictates innovation intent and a top manage-
departmentalised work without coor- that failure is not an option. Therefore, ment team walking the talk are pivotal
dination, companies actively pursuing innovation goals must be backed by to success.
the benefits of business model inno- strong top management support and a
vation open up silos and coordinate very clear recognition that risk is an in- Ask yourself if you have a clear man-
key activities. To get started, roles and tegral part of the game. When design- agement agenda for both renewing
responsibilities must be defined, and a ing new business models, incentives and reinventing the business model.
process enabling coordination needs to should be aligned with fast learning
be designed. and not fast growth. Harvard professor Establish entrepreneurial front-end
Clayton Christensen has put it nicely innovation teams: As more than 70%
When innovating, there seems to be a by saying that you want to promote of the total life cycle cost of a product
hidden gravitating force pulling all ef- impatience for profit but patience for is determined within the early stages of



the innovation project, innovators can problems to solve and actively explor- a prerequisite when forming innova-
substantially influence the outcome by ing the four knowledge perspectives tion teams. Common tools are also a
focusing on the front end of innovation. described above. If teams are eager to key ingredient in and enabler of knowl-
Success and failure are determined at focus on creating myriads of ideas to edge sharing and shared purpose. For
a very early stage, so spend a little to begin with, they run the risk of creating instance, everyone in the team needs to
learn a lot. ”solutions looking for problems”. This get tools which bring them ”out of the
approach is counterintuitive and will building” to meet the customer and us-
Firstly, the front-end innovation pro- lead to frustrations when they discover ers in order to observe, interview and
cess must be extremely well-defined in that there is no or little match between co-create with them. Simple tools will
order to ensure the right focus. Often, market needs and product ideas. give your team a head start. If possible,
the front end is notoriously fuzzy, teams should be co-located and even
which is a classic stepping stone to fail- Secondly, it is important to recognise work on the same weekdays in order
ure. Instead, focus on installing a solid the need for establishing a shared vo- to maximise effectiveness. Framed by
discovery-driven process where cross- cabulary and toolbox when bringing clear ambition levels and well-defined
functional and multidisciplinary teams people together with diverse compe- deadlines, such teams will power your
led by heavyweight project managers tences. Innovation flourishes through innovation engine and be the key to
are working on well-defined innovation cross-pollination, but without a com- identifying new paths to growth. To
challenges derived from the innova- mon ”language” communication sti- support customer focus and business
tion strategy. Demand that teams are fles. Therefore, entrepreneurial project model innovation, the discovery-driv-
proactively looking for major customer managers with great people skills are en innovation framework can be used.

Abstract

Direct Design
Generate insights Create ideas & solutions

Analysis Synthesis

Define
Frame the challenge

Discover Develop
Collect data & knowledge Test & feedback

Real
Figure 8. The framework for discovery-driven innovation

Issue no. 4 / 2012 17

STRATEGY & GROWTH


Each step of the framework is support-
ed by an advanced toolbox and innova-
tion best practices.

Ask yourself if you have strong innova-
Assumption N
tion teams dedicated to exploring and
exploiting new opportunities follow-
ing a well-defined and well-anchored Assumption N-1
process. Adjustment
Adjustment
Assumption ...
Master learning-based implementa- Exit 2 Exit 1
tion: Having defined a strong innova- Assumption 3 Adjustment
tion intent and formed entrepreneurial
teams enable creation of new business
Adjustment Assumption 2
opportunities. However, the tricky part
of the equation is often a successful
launch – in particular, if you are ventur-
ing beyond the existing business mod- Assumption 1
el. Simply put, you must use a different Adjustment
approach based on fast learning cycles
where you plan to learn.

All new business concepts are funda-
mentally an interlinked set of assump-
tions which must be proved to hold
true. But the assumptions are associ-
ated with different levels of risk, and Figure 9. A systematic approach to testing and implementing new opportunities
instead of doing a full launch to test
everything at once, you should learn
systematically about your assumptions.
feedback and extract new insights. A was not created overnight, but rather
Define assumptions for each element guiding principle for business model through a step-by-step roadmap tak-
of the business model, identify the level innovation efforts should be to reduce ing Apple from personal computers
of risk and start by testing the most time-to-learning and increase the rate into the tablet market. The first step
risky assumptions. In the early phases of customer feedback. Figure 9 illus- away from the old core was the iPod,
of innovation, testing rough prototypes trates how prioritised assumptions are and when success was ensured, the
and lots of iterations with customers tested and followed up by adjustments second step was the launch of iTunes.
will take you further, while test market- of the original concept – or even exit Hereafter, Apple ventured into mobile
ing and learning launches are used at if the concept does not prove to be a phones, copying the successful iPod
later stages. Moreover, it should be a valid solution. razor and blades business model –
fundamental principle in your innova- expensive product and recurring rev-
tion process to work on competing so- Apple is often touted as being a revo- enues through sale of cheap music
lutions at the early stages. Developing lutionary, but taking a closer look at tracks – with the invention of the App
concepts in parallel will not only enable Apple also reveals careful learning- Store. Thereby, the risk of failing was
learning about individual opportuni- based strategies behind every move intelligently outsourced to app devel-
ties, but also enable you to combine at a higher level. The success of Apple opers. Apple created a solid core



product and a strong dual-sided busi- ing orientation and proactively manage tive advantage. However, to stay true
ness platform – a meeting place for high-risk opportunities with the goal of to the principles, we should not get
Apple’s customers and app develop- learning as fast and cheaply as possi- caught up in too much theorising, but
ers – while much risk was placed on the ble. just do it and learn along the way. Close
shoulders of app developers trying out the laptop, get out of the building and
different options. Apple was safe, while Altogether, the three principles should learn from your customers to discover
a lot of apps failed. inform and guide all business model your future business models.
innovation efforts, and, obviously, the
Apple’s ”open innovation” approach importance of the principles is cor-
with strong reliance on a thriving eco- related with the level of risk. On the
system also points to the fact that part- other hand, all innovation activities
nering opportunities should be careful- and growth initiatives can benefit from
ly considered when implementing new gaining a fresh perspective from busi-
business models. Often, a great partner ness model thinking and from rethink-
can both fortify competitive advan- ing your business model through the
tage and create a shortcut by leverag- lens of discovery-driven innovation. Contact
ing their assets. Furthermore, different For further information
partnering options are also a possible In a world characterised by exponen- please contact:
way of escaping the invisible mental tially increasing turbulence, expanding Morten Hejlesen,
blinders of the core business. your innovation horizon to encompass moh@implement.dk,
the entire business model is timely and +45 4138 0012
Ask yourself if you have a strong learn- needed for gaining long-term competi-

Further inspiration about business model innovation

Brown, Tim (2009). Change by Design, Jaruzelski, Barry, Dehoff, Kevin and Martin, Roger (2009). The Design of
HarperCollins Publishers Bordia, Rakesh (2005). ”Money Isn’t Business, Harvard Business School Press
Everything”, strategy+business
Christensen, Clayton M. and Raynor, Osterwalder, Alexander and Pigneur,
Michael E. (2003). The Innovator’s Johnson, Mark W. (2010). Seizing the Yves (2010). Business Model
Solution, Harvard Business School Press White Space, Harvard Business Press Generation, John Wiley & Sons

Hejlesen, Morten (2010). ”Danske Lay, Bill (2009). ”Getting Bullish on Sehested, Claus and Sonnenberg,
pumper på afrikansk eventyr” i Business Model Innovation”, PRTM Henrik (2009). Lean Innovation,
Innovationsantologi, Systime Børsens Forlag
Markides, Constantinos C. (2008).
IBM (2006). Expanding the Innovation Game-Changing Strategies, Jossey- Zook, Chris and Allen, James (2001).
Horizon Bass Profit from the Core, Harvard Business
School Press

Issue no. 4 / 2012 19

STRATEGY & GROWTH

ARTICLE BASED ON INTERVIEWS AND DISCUSSIONS WITH EXECUTIVES FROM LEADING RETAIL BANKS IN DENMARK

Facing the New Normal of Retail Banking
Regain customer trust and financial performance through innovative business models based
on simplicity, agility and transparency in every aspect of customer interactions
by Nicky Overgaard Pedersen

The new normal: It is about making potentially radical
changes to the manner in which banks THE IDEA IN BRIEF
A disrupted industry
operate and engage with their custom-
ers. It is about designing new innova- The world economic turmoil has
The term “financial innovation” has a disrupted the entire financial ser-
tive business models with the ability to
certain ring to it that instantly brings vices sector, creating a new normal
delight the customers by leveraging the
the root cause of the current world characterised by increased regula-
banks’ core capability of putting money
economic turmoil to mind. tory demands and a severe loss
to work in a productive manner – with-
out increasing the risk. of trust from the average retail
When presented with this particular banking customer. More than ever,
term, the average retail banking cus- the industry will have to innovate
Characteristics of the new normal
tomer is left with a reluctant and cau- in order to prosper and rebuild the
tious mind, thinking of lost pensions, To fully understand the challenges that
damaged image.
enormous bailout plans and plain and retail banks are facing and why this has
disrupted the entire financial services However, the traditional sources
simple unfairness caused by “too smart
sector, consider this: of innovation cannot be tapped
investment bankers”.
this time as they themselves have
• The Occupy movement started
played a major part in getting to
It just does not smell right, and the im- in Spain in May 2011 as a protest
where we are now: risky and com-
perative customer experience metrics against the political system, unem-
plex products.
are suffering just as the general pub- ployment rates and corruption. Less
lic perception of the entire sector has than six months later, in Septem- To make up for the past and fit into
taken quite a beating. ber 2011, Occupy Wall Street was the new normal, retail banks must
formed, and since then the move- expand the scope of their strategic
Financial innovation as the remedy ment has evolved into a worldwide innovation efforts. They have to
protest against power vested in the look beyond products and services
On the other hand, financial innova-
top 1% income earners and general and look at their entire business
tion is exactly what retail banks need in
economic inequality. And it is all to
order to comply with “the new normal” model to regain trust and financial
be blamed on the banks.
they are facing. But how can one apply performance.
• The disintermediation trend is chal-
financial innovation without losing even In order to succeed, three essential
lenging the traditional role of banks
more of the precious customers’ confi- as intermediaries. Today, it is not design principles must be applied
dence? unusual to see private enterprises to every dimension of future busi-
with higher credit ratings than the ness models:
The answer to this is not about add- average bank. Boerse Stuttgart is
ing even more complexity to the finan- • Simplicity
taking advantage of this by offering
cial products and services – quite the • Agility
bonds issued by mid-cap companies,
contrary. • Transparency
effectively opening up for cheaper


FACING THE NEW NORMAL OF RETAIL BANKING

and alternative “business-to-business ers faster. And to some extent, this has
funding”. MANAGING THE CAPITAL COST proven to be a viable path.
• Some banks are now considered to OF RISK IS CRUCIAL
be systemically important financial However, the primary focus for strate-
institutions. They have been catego- Right now, it is all about survival by
gic business development has been on
rised as being “too big to fail” by trimming the balance sheet. ROE
the product side. Developing the right
policy makers. Currently, the total and credit ratings are imperative to
set of products and services capable of
capital ratio must not be lower than our ability to deliver superior cus-
both serving existing customers as well
8%. Once Basel III has been fully tomer experience.
as attracting new ones seemed to be
implemented in 2014, that number
Going forward, we will see that the one and only truth.
will reach 13-14% depending on the
only those with a solid financial
size and systemic importance of the
performance will have the freedom Over time, this product-oriented fo-
bank. This alone will potentially lead
to innovate: It is very expensive to cus has not only spawned increasingly
to a decrease in ROE between 4-5%
play the role of first mover. complex and risky products, but ironi-
– if nothing is done.
cally enough also made it even harder
Developing new products is a risky
to implement cost-effective straight-
In other words, banks are forced to act business, and mitigating financial
through processing solutions in the
just to maintain their ROE. Regulatory risk is the largest obstacle for inno-
back office operations.
demands are tightening, and the cost vation – but also the largest driver.
of being a regular bank customer is
The banks that find ways to man- Truly, this depicts an unfavourable
increasing – all in all, something that
age this catch-22 will have a clear situation where the striving for higher
does not go easy with low market con-
advantage. profits from the product side is jeop-
fidence, changed customer behaviours
ardising the agility and transparency of
and expectations. Ken Adrian
customer interactions.
Head of Segment Household
Fight for freedom to innovate Nordea Danmark
Reduce risk through product
As a consequence of ROE being under innovation
pressure in the years to come, all sails
Rest assured, product development will
are set to deleverage the books be-
banking and cash management – areas continue to be a central topic as the
cause without proper earnings, credit
in which the customers bring their own risk and complexity are bound to be
ratings will be lowered, funding of capi-
money to the table, so to speak. Still, reduced, thus requiring radical changes
tal will go up and products will become
this is not enough. There is a strong to products and product structures.
more expensive to the end customers,
need for even more innovative thinking.
which essentially affects the customer
An example of this type of innovation
experience in a negative way.
is the changes to the price and product

The fact is that a lot of retail banks The traditional sources of structure of home mortgage financing
innovation cannot be tapped recently introduced by Nykredit and
are in urgent need for deposits, and
Totalkredit:
Amazon-like promotions have begun this time
popping up, urging customers to “start 1. Under the new price structure, prices
saving now and get an instant givea- For decades, innovation in the finan- differ according to risk.
way or bonus!”. cial sector has been more or less trivial. 2. For a combined mortgage, the loan-
There has been a heavy focus on opti- to-value ratio of SDOs has been
Not all countries and regulations allow misation of internal processes to re- lowered from 80% to 60% for retail
for such instruments to be applied, so duce operating costs per customer as customers.
instead focus is shifting towards private well as to be able to serve the custom-

Issue no. 4 / 2012 21

Viewpoint on Business Model Innovation

Viewpoint on Business Model Innovation

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