Rethinking the pets industry - a revolution in the coming

1. “!The competition of the future is between business models not just products or solutions.”! 6 Thesis on the Pets Industry! by Dr. Patrick Stähler! ﬂuidminds GmbH, Zürich! !

2. “How can you dare to buy pet food at Aldi? ! !I buy my personal grocery at Aldi, but never for my dog.”! ! Quote from a dog owner to a friend of mine who buys his dog food at Aldi!

3. Agenda! !  The economics of the pet food industry! !  Shift happens! !  Innovation in Pets Industry! !  More choice is not better! !  The Internet is more than a channel! !  Reinventing your industry. That is your job!! !

4. A word of warning! I’m not a pet industry expert. I am an expert for the process of re-thinking and re-inventing business models! !

5. My childhood pets ! Dr. Patrick Stähler! !  Partner @ﬂuidminds – the business innovators, Zurich! !  Expert on Business Model Design & Innovation! !  Passion for customer experience & authenticity ! !  Passionate mystery shopper! !  Managing Director of Internet Firm Experteer (90 FTEs)! !  2 pets in my lifetime (Hannibal, turtle and Arpat, dog )! !  First website 1996, digerati ever since!

6. Humanization in marketing at the extreme

7. Your customers ! Your consumers ! (they pay)! (they eat and use)!

8. Your customers! Your consumers! !  Marketing & !  extreme high variety communication of breeds/sizes and aimed at needs of therefore of needs! the human being! Offer! !  Humanization of pet !  life stage products! food and pet !  therapy food for accessories ! better joints food or !  Highly emotional! for weight reduction! !  Ideologies regarding !  special food for all what pets need breeds! (BARF, Vegan, no preservatives, etc.)! Complex market with two different stakeholders with different needs

9. f The application o ing consumer market ion was a big innovat some years ago. !  4 pet food manufacturers control 80% of the market*! Procter & !  Originally, they are all fast-moving Gamble, consumer goods companies that Nestlé, Mars, have transferred their skills to the and Colgate- pet food market! Palmolive! !  logic consequence: humanization! *Source: Wikipedia!

10. The humanization of pet food is the logic st ep. That is the core b usiness of FMCG companie s The market leaders are champions! !  to deal with big retailers like " Carrefour, Metro, Tesco, Aldi or Rewe! !  to build brands like Frolic, Royal Carnin! !  to attract customers to retailers by traditional advertising! But they are still mass production ﬁrms that have no direct contact to their end customers or end consumers (the pets). They know almost nothing about the individual consumer (pet)! *Source: Wikipedia!

11. Large pet food ﬁrms are ! Masters of branding & 1! channel management! not of customer experience or production economics

12. but…! Shift! happens…!

13. Disruptive Innovation in the pet industry came from the retail side! !  The pets industry is following other industries where category killers like Toys “R” US, Home Depot, Media Markt, Globetrotter or Ikea revolutionized their industries! !  Fressnapf or Qualipet are disruptive innovators or category killers in the pets industry! !  Due to strong retailers, trade and private label pet food is doing well not only at Fressnapf & Co but also at Aldi and other discounters! !  Private label became brands in their own rights!

14. Business Model Innovation so far:! Disruptive innovation in 2! the pet industry came from the channels! and more will come due to the Internet

15. Getting the right balance of nutrients is not entirely simple and depends on a seemingly endless amount of variables such as breed, activity level, age and medical condition.*! ! Why is the pet food g industry not providin ? this individual food *Source: http://www.k9magazine.com/life-stage-dog-food/ #ixzz1ic35kWAS!

16. The tyranny of choice! Consumers ﬁnd too many options troubling because of the “risk of misperception and miscalculation, of misunderstanding the available alternatives, of misreading one’s own tastes, of yielding to a moment’s whim and regretting it afterwards”, combined with “the stress of information acquisition”*! *Source: Daniel McFadden, The Economist, The tyranny of choice, Dec 16th, 2010!

17. Distri bution as the bottle neck!

18. Customer Insight to build upon! Consumer want ! 3! the right choice! not more choice!

19. the Another challenge: of ecological footprint pets

20. ot Don‘t w orry! We do n . We fo llow the hype s cov er the basic

21. Electrification at We can learn from other the end of the 19th general purpose century technologies like electricity! Dr. Patrick Stähler | 21

22. It took 40 years between the of diffusion of electricity and …! At the beginning, steam engines were replaced by electric motors and power was transported by converter belts. Dr. Patrick Stähler | 22

23. ... and new processes and business models that were based on electricity like the assembly line! It much easier to distribute electricity than mechanical energy

24. Tradition is not a business model! The Internet will spark 4! business model innovations " but it will take time!

25. The internet is not facebook! The Internet is not Twitter.!

26. Failed business models due to lack of understand what the The Internet is not Internet is all about TV , just a bit better!! The Internet is not a newspaper, with some interactive features!!

27. More failure The Internet is not just another distribution channel, this time electronic! The Internet is not a telephone, just with music and video.!

28. New Media are! 1.  active (can act by themselves)! 2.  ubiqutious (space & time) 3.  interactiv (human can interact with and through the medium, but also the medium with other media)! 4.  interlinked (mashups are possible)! 5.  multimedia (text, voice, video)!

29. Tradition is not a business model! The Internet has very 5! special idiosyncrasies. Build your business models on top of them!" !

30. technology! X! value / utility! creates! enables! business model! deﬁnes! The business model business strategy! creates value not technology or a product itself !

31. To develop a business model, is " To Do the " right things " And Not to do things right!

32. „What is a business model?“!

33. Are you aware o f your DN A?! The business model is the DNA of your business!

34. The business model gives meaning to your employees and customers!

35. 4 key questions for a successful business: What How do we How do we Who is on excites our create value earn money? our team? customers? for our custo- What value mers? do we pursue? Value Proposition Value Architecture Revenue Model Culture and Values The core business challeng e

39. „ What industry are ! we in? Who are our competitors?! “ !

40. „ In which industry ! are we in?! “!

41. „That was the job ! the customer wanted to do.!“! Dr. Patrick Stähler | 41!

42. Value Proposition Customers Who are our customers? What job do we solve for our customers? Customer Benefit What benefit do we create for our customers? What benefit do we create for our partners?

43. Value Architecture O er Distribution & Communication What is our o er? Channels How do we reach our customers? How do we communicate with our customers? Value Chain What are our value creating steps? What is our value chain? Core Capabilities Partner What are the core capabilities Which partners do we need? we need?

44. Revenue Model Cost Structure Revenue Sources Cost structure is deﬁned by the With what do we earn money? value architecture.

45. Team & Values Team Values Who is on our team? What values do we pursue? What competencies do we have How do we interact with each on the team? other and the customers?

46. Questions for successful Business Model Innovation Value Architecture Value Proposition O er Distribution & Communication Customers What is our o er? Channels Who are our customers? How do we reach our customers? What job do we solve for our How do we communicate with customers? our customers? Value Chain Customer Benefit What are our value creating steps? What benefit do we create for our What is our value chain? customers? What benefit do we create for our partners? Core Capabilities Partner What are the core capabilities Which partners do we need? we need? Revenue Model Cost Structure Revenue Sources Cost structure is defined by the With what do we earn money? value architecture. Team & Values Team Values Who is on our team? What values do we pursue? What competencies do we have How do we interact with each other on the team? and the customers?

47. Questions for successful Business Model Innovation Value Architecture Value Proposition O er Distribution & Communication Customers What is our o er? Channels Who are our customers? How do we reach our customers? What job do we solve for our How do we communicate with customers? our customers? Value Chain Customer Benefit What are our value creating steps? What benefit do we create for our What is our value chain? customers? What benefit do we create for our partners? Core Capabilities Partner What are the core capabilities Which partners do we need? we need? Revenue Model Cost Structure Revenue Sources Cost structure is defined by the With what do we earn money? value architecture. Team & Values Team Values Who is on our team? What values do we pursue? What competencies do we have How do we interact with each other on the team? and the customers?

48. If you are in a market for giants...!

49. .. and you play with their rules you will get nowhere…!

50. „…but if you can create your own rules of engagement than you can compete even in a market for giants. “!

51. Innovation is all about being different!

52. But if everybody is doing he same, you have to ﬁnd something else!

53. Path to business model innovation Lead, don’t follow. Break 6! rules. Create markets. Throw away your market studies!

54. If you want to ﬁnd a disruptive business model innovation you just have to follow the prescription to the right." " Your success is guaranteed!!

55. Sorry, life is not a fairy tale." You can ﬁnd sustaining innovation with a structured process, but not disruptive business model innovation. " Business model innovation are all about try and error under high uncertainty!

56. Your Head! THE greatest working tool "

57. Creating Business model innovations is a creative and analytical process " There is a reason why god gave us two brain hemispheres !

58. The ﬂuidminds Way to Business Model Innovation 1 2 3 Understand Unlearn & mobilize Ideate Find fresh customer Unveil tacit assumptions Generate as many ideas as insights via jobs-to-be-done about your industry and possible for: Describe current business your business model Value proposition model Create discomfort with (customers & beneﬁts) Understand market trends current situation Value architecture & mechanisms Secure backing of top Revenue model management for the Values & culture rethinking process and the necessity for change 4 5 6 Design Select & prototype Build & learn Decide on three to four stra- Select the optimal business Execute business model tegic directions to work on models Gather customer data & Design of business models Test prototype with feedback on canvas potential customers Adapt & improve business Check interdependencies Build prototype model of all components of the Write business case designed business model Select the business model Work on uniqueness of your to start with positioning Optimize components Created with the friendly support of Wolfsburg AG | Designed by Gottschalk+Ash Int’l

59. What is a good strategy?! trend! differenti focus! ation! build on strengths!

60. It’s about ﬁnding the right trend to surf! !

61. „Business model innovation is about being! !DIFFERENT!“!

62. NO, REALLY ! DIFFERENT!

63. Dr. Patrick Stähler | 63!

64. DOING! not learning to do,! is the essence of !entrepreneurship! Guy Kawasaki, The Art of the Start 2004, p. xi!

65. „Scary to be this nail. Where will the hammer hit next time?“!

66. More information http://blog.business-model-innovation.com Dr. oec. Patrick Stähler! fluidminds GmbH! Seefeldstrasse 5a! CH-8008 Zürich! Patrick.Staehler@fluidminds.ch! www.fluidminds.ch! @business_inno!

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