Business Model Innovation Screen Training Ireland

Strategy and Business Models – DIT PM Module 1
RAOMAL PERERA
raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.facebook.com/LeanDisruptor
BUSINESS MODEL INNOVATION

ROHAN PERERA
 Entrepreneur
 Cheqio and LyfeStyle
 Facilitator of Entrepreneurial Studies
 UCD Innovation Academy, DIT New Frontiers Programme
 Ex-Professional Poker Player
 Plays locally/Internationally and Online
 Start up Consultant
 Volatile, Pundit Arena, UniTuition
 Brand Ambassador
 Cheqio (http://www.cheqio.com/othersports)
 Contact
 Rohan@leandisruptor.com
 www.linkedin.com/in/rohan-perera
2

RAOMAL PERERA
 Serial Entrepreneur
 ISOCOR (NASDAQ: icor) & Network365/Valista (Intel)
 Adjunct Professor of Entrepreneurial Studies
 INSEAD & UCD
 Business Model Innovation, Lean Startup, Design Thinking,
Leadership & Fund Raising
 Consultant
 Clients include MSD (Merck), HP, Irish Film Board (IFB), HSE
(Health Service Executive), Arvato (Bertelsman), Resmed …
 Accolades
 Finalist Ernst & Young Entrepreneur of the Year
 Tech Pioneer World Economic Forum
 ISA Award for Outstanding Software Achievement
 Blog: www.LeanDisruptor.com 3

www.Facebook.com/LeanDisruptor
4

7
What is the 1 single
most important thing
you want to take
away by the end of
the day tomorrow?

Learning Outcomes
8
• Use Design Thinking to understand
and develop creative ways to solve
problems.
• Learn to invent, design and build
powerful new business models
using a set of business model
innovation tools.
• Understand the environment in
which you operate.

Find the Gap
How to find
opportunities that others
don’t see.
- Amy Wilkinson
9

How breakthrough ideas emerge from
small discoveries
Creative thinkers practice a set of simple but
ingenious experimental methods
• failing quickly to learn fast
• tapping into the genius of play
• engaging in highly immersed
observation
Free their minds, opening them up to making
unexpected connections and perceiving
invaluable insights.
10

Hamel on successful innovators habits
Unchallenged Orthodoxies
To be an innovator you have to challenge the
beliefs that everyone else takes for granted –
the long-held assumptions that blind industry
incumbents to new ways of doing business.
12

Underappreciated Trends
Innovators pay close attention to emerging
trends, to the discontinuities that have the
potential to reinvigorate old businesses or
create new ones.
13

Underleveraged Competencies and Assets
Every company is a bundle of skills and
assets. To innovate, you need to see your
organization and the world around it as a
portfolio of skills and assets that can be
endlessly recombined into new products and
businesses.
14

Unarticulated Needs
Serial innovators are good at spotting the
•inconveniences, encumbrances, and
vexations that customers have come to take
for granted, and that industry veterans mostly
ignore.
The goal with innovation is to
amaze customers with something they
never could have imagined, but having
once experienced it, can’t imagine living
without. 15

17
“Seeing is not believing;
believing is seeing!
You see things,
not as they are, but as you are”
- Eric Butterworth

What is Design Thinking?
It is a mindset of combing creative and
analytical thinking and applying it towards
solving a specific problem.
18

How would we design a children’s toothbrush?

Until we used ‘design thinking’ we forgot that children are not
just scaled down versions of ourselves – they have chubby
little fingers and less dexterity…!

Empathy Define Ideate Prototype Test

Design Thinking is a mindset
Is about believing we can make a difference,
and having an intentional process in order to
get to new, relevant solutions that create
positive impact.
It give you faith in your abilities and a process
for transforming difficult challenges into
opportunities for design
•It’s Human-Centered
•It’s Collaborative
•It’s Optimistic
•It’s Experimental 23

29
IDEO’s Shopping Cart Challege
https://youtu.be/M66ZU2PCIcM

36
Share
1 observation per post-it note

As many as possible –
go for >100!

One very lucky fish…
https://www.youtube.com/watch?v=KJM7Nj1DCwk

The bells, the bells!
Separate idea generation and idea selection

IDEATE
•One idea per post-it
•Defer judgment
•Go for volume
•Encourage wild ideas
•Build on the ideas of others

45
Brainstorm
Only Idea Generation

“A lot of times, people don’t
know what they want
until you show it to them.”
- Steve Jobs

Prototyping
• Rough and rapid
• Build to think
• Communicate at every stage
• Various prototypes for various purposes
52

Test
• Test early, fail often, succeed faster
• Test with real users
54

55
Source: Luma Institute
A Taxonomy of Innovation – LUMA Institute
Looking (Observing) – Gain Insights
55

56
Understanding – Come up with Ideas
56

57
Making it a Reality
57

58The Innovation Engine Source: Tine Seelig
https://youtu.be/WK9EbpYpNXY

Tina Seelig – Innovation Engine - You
• Imagination
– Framing and Reframing Questions
• The way you ask the question determines the type of
answer you get. 5+5= ?
– Connect and Combine Ideas
– Chindogu is the Japanese art of inventing silly & useless
gadgets to solve an everyday problem. Translated literally,
– Challenge Assumptions
• Knowledge
– Toolbox for more imagination
• Paying attention
• Attitude
– The mindset, the drive, to solve the problems you are
going to solve
– Most people are puzzle builders – be a quilt maker 59

Tina Seelig – Innovation Engine - Environment
• Habitat
– People you work with, the rules, the constraints, the
rewards, the incentives, the physical space
• Resources
– Resources we have in our environment – not just money
• Culture
– Background music of the community
60

d.school.bootcamp.2008
DP 0 The Wallet Project
61

00:05Sketch… your ideal wallet.
Don’t think too much. Put your pen to paper and start drawing.
DP 0

An example sketch.
DP 0

Interview… to gain empathy.
Ask your partner for stories about his/her life told through the contents of his/her
wallet.
00:25
DP 0

Some example interview questions…
DP 0

Define… your point of view.
Use the insights gathered from your interview to fill in the blanks and draft a point of view.
00:05
___________’s WALLET IS HIS/HER_____________
BECAUSE__________________________________
__________________________________________ .
user user’s need
insight/meaning
_________________’s WALLET IS HIS/HER_________________________
BECAUSE____________________________________________________.
user user’s need
insight/meaning
DP 0

Ideate… To visualize alternatives.
Sketch at least 3 different ideas that would meet the needs define by your point of view.
00:30
DP 0

Some example sketches.
DP 0

Test… to gather feedback.
Briefly walk your partner through your sketches.
As your partner reacts capture feedback and changes directly on your sketches.
Make modifications as you go!
00:15
Iterate… with a physical prototype.
Decide which elements you will include in your new wallet concept.
Grab materials and build!
00:20
DP 0

Define… your point of view.
Use the insights gathered from your interview to fill in the blanks and draft a point of view.
00:05
user’s name
(e.g. Rebecca's)
meaning or purpose
(e.g. junk drawer)
wallet is his/her
meaning or purpose
wallet is his/her
First Try
Re-writes
Final
user’s name
DP 0

Reflect…
partner reacts capture feedback and changes directly on your sketches.
Make modifications as you go!
00:10
• Was your first wallet and your final
wallet the same?
• Why were they different?
• How much did your prototype tests
change your understanding?
• What would happen if you did another
iteration?
• How might you continue this iterative
process?
• How is this different from a traditional
project approach?
DP 0

Additional innovation
potential
through business model
innovation
Innovation
potential
Business model
innovation
Process innovation
Product innovation/
Technology
innovation
Time
New Business Models allow for additional
innovation potential on top of product and
process innovation
73

Tomorrow’s competitive advantage
of companies will not be based on
innovative products and processes,
but on innovative business models.
74

What is a business model?
Discuss with your neighbour what
you think a business model is and
write down your definition [the key
elements] .....
76

What is a business model?
A business model describes the rationale
of how an organisation Creates, Delivers
and Captures value
77

Why we need a shared language for
business models?
78
https://strategyzer.com/academy/cours
e/business-models-that-work-and-
value-propositions-that-sell/1/1
Note: You may need to license the online learning tool on Strategyzer to
view this clip from Osterwalder

Use of BMC in Established Companies
IMPROVE ----------------------------------INVENT
Know Problem/Know Solution -Unknown Problem/Unknown
Solution
------EXECUTE -------------------------SEARCH------------
79

Pivot
SEARCH EXECUTE
Customer Development
80

Problem/
Solution Fit
Product/
Market Fit
Scale
The 3 Steps
81
81

82
Knowledge is having the right answer.
Intelligence is asking the right questions
The Art of Customer Interviewing

84
Finding the Problem is the Hard Part
– Kevin Systrom & Mike Krieger (Instagram
Co_Founders)
Instagram Co-Founder Kevin Systrom believes building
solutions for most problems is the easy part; the hard part is
finding the right problem to solve. Here he opens up about
how he and fellow Co-Founder Mike Krieger identified the
problems they wanted to solve around sharing photos through
mobile devices. He also reminds entrepreneurs to embrace
simple solutions, as they can often delight users and
customers.

Your SOLUTION is NOT my PROBLEM
85
Take 5 minutes to write down the
PROBLEM/NEED you are addressing

Today, a company’s long term
competitive success depends upon
its ability to create an
innovative business model.
86

89
“It is not the strongest of the
species that survive, nor the
most intelligent, but the one
most responsive to change.”
- Charles Darwin

Getting from Business Idea to Business Model
90

Nespresso’s Business Model
What is Nespresso’s Business Model? What
made them so successful?
94

Getting started with the canvas
95

Valencia
Key Partnerships Key Activities Value Propositions
Key Resources
Cost Structure Revenue Streams
Customer Relationships
Channels
Customer Segments
Recruiting
volunteers
Volunteers
Schools
Publishing
Training
tutors
In-school projects: Help
teachers get students
excited about literary
arts
Donors
Partnerships
Teaching and
programme
management 826 news
Volunteers
Giving volunteers the
possibility to do good
‘for
purpose’
(non-profit)
network
Published
work of the
students
Self-
publishing and
selling books
written by the
kids
Donations
(financial and
in kind)
Managing
partnerships
In-school
projects
After-school tutoring: One-
on-one support on writing
skills
Newsletter
Social
Media
Store and
tutoring space
on 826 valencia
street, San
Francisco,
California,
94110
Word of
mouth
Volunteers
Teachers
Fundraising
events
Website
Kids 6-18 years
old
Sales from the
pirate supply
store
Donors
Opportunity to make
difference to children’s
lives
Rent
Staff
Procurement for
the shop

Airbnb
Key Resources
Channels
Customer Segments
Creating
technological
infrastructure
and design
bloggers
Marketing
Easy to use
Investors
Legal
institutions
Marketing
Free membership
Travel community
operators
Insurance
companies
Community of
home providers
and travellers
Platform development
& design
Customer
service
Maintenance of
the payment
system
Individual travellers
Commission renters (6-12%
of booking fee)
Data base with
accommodations
Property
insurance
coverage
Blog
Community
management
Rental of
unique spaces
PR
Product
development
Management
of
international
Mobile app
Human
resources
Brand
Social
media
Trustful &
reliable
platform
People who want to
rent out their place
Commission
home/apartment owners
(3% of each booked
place)
24/7
support
team
Use of unused
value
Website

Facebook
Key Resources
Channels
Customer Segments
Content Partners (TV
shows, Movies,
Music, News Articles)
Data Centre
Operations
Management
Platform
Development
Technology
Infrastructure
Facebook
Platform
Research and
Development
General and
Administrative
Marketing
and Sales
Data centre
costs
Payment
RevenuesAd Revenues
Free
Connect with your
friends, Discover &
Learn, Express
yourself
Personalised
and Social
Experiences,
Social
Distribution,
Payments
Reach, Relevance,
Social Context,
Engagement
Developer
Tools and
APIs
Facebook
Ads,
Facebook
Pages
Website,
Mobile Apps
Cross-side
Network Effects
Same-side
Network Effects
Developers
Advertisers
and
Marketers
Internet Users

1970 Invented・
1976 Patented・
1986 Launched・
Sold as a complete solution,
machines, and coffee for a per
cup price to restaurants and
offices.
1988 Acknowledged dud・
Nestle considers shutdown
102

Made and serviced by 3rd parties.
Sold through independent retail stores.
Manufacturers handle delivery and stocking.
Nespresso handles sales training.
Sold online and over the phone direct to
members of the Nespresso Club.
Delivered direct to consumers in 24 hours or
less.
103

As market matured
Nespresso added
their own brand
machines made by
an OEM.
Added it’s own retail boutiques to
further control the sales
message.
Created Nespresso Pro
channel to serve
the office market.
104

Nespresso
Key Resources
Channels
Customer Segments
Logistics
Production
Marketing
Hardware SalesCapsule Sales
Coffee Machine
Makers
Marketing
ManufacturingDistribution &
Sales
DistributionProduction
Plants
PatentsBrand
High-end
restaurant
quality espresso
at home
Loyalty Card
Advertising
(George
Clooney)
Nespresso
Boutiques
Nespresso.
co
Call CentreRetail
High-end
Hotels
Offices
Households

Exercise: 20 Mins
Work in groups of 4/5 and develop a BMC
for the Odeon Cinema
107

Cinema
Key Resources
Channels
Customer Segments
Premier Seats
Date night
Website
maintenance
Special
screening
Subscriptions
Popcorn/drinks &
treats
Children
Mother &
Baby
Movie
Timetable
updates
Discounts
Staff
Multiplex Surround Sound
Theater Style Premises
Live stream
of events
Movie
Studios
Social
media
Adults
Online
Students
Couples
GroupOn
Quick clean
turnarounds
for each
screen
Website
Entertainment
General
Overheads
Cheap
night out
Family
movies
Blockbuster
movies
Advertising
Revenues
Live stream
of sports
Vendors
FamiliesPromotions
IFCO (Irish Film
Classification
Office)
Corporate
events
‘All you can eat’
movie option
License fees
Cinema
Exclusive club
(loyalty card
for unlimited
access)
Event
Organisers
Getting
Advertisors imax
Theaters
Corporates
Advertising
3D movies
High quality
sound/picture and
ambience
unavailable to your
own home
Captive
Audience
Ticket sales
Advertsing
on Radio, TV,
Buses,
Billboards

Cinema
Key Resources
Channels
Customer Segments
Website
maintenance
Special
screening
Subscriptions
Popcorn/drinks &
treats
Children
Mother &
Baby
Movie
Timetable
updates
Discounts
Staff
Multiplex Surround Sound
Theater Style Premises
Live stream
of events
Movie
Studios
Social
media
Adults
Online
Students
Couples
GroupOn
Quick clean
turnarounds
for each
screen
Website
Entertainment
General
Overheads
Advertising
Revenues
Live stream
of sports
Vendors
FamiliesPromotions
IFCO (Irish Film
Classification
Office)
Grind
Schools
‘All you can eat’
movie option
License fees
Cinema
Exclusive club
(loyalty card
for unlimited
access)
Event
Organisers
Getting
Advertisors
Theaters
Corporates
Families
Colleges
Advertising
Captive
Audience
Ticket sales
Advertsing
on Radio, TV,
Buses,
Billboards
Parties
Ted Talks
Screen
/Space
Rental
Premier
Seating
3D/IMAX ticket
sales

“Studies comparing successful and
unsuccessful innovation have found that the
primary discriminator was the degree to
which the user needs were fully
understood.”
– David Garvin, Harvard Business School
110

Customer Persona/Archetypes
Profile
• Position/Title
• Age/Sex
• Role
• Discretionary budget
• Motivations
• Role models
112
•Who are you?
•How do you buy?
•What matters to you?
•Who influences you?

Customer Archetypes
Meet Paul, Sheetal and Barbara
Paul-RegularExerciser
• 20 – 45
• Aim to maintain and
track active lifestyle
• Looking for
inspiration on diet &
exercise regimes
• Gets a buzz from
exercising
Sheetal-SpiritualHealth
•
• 30 – 55
• Already follows a
healthy lifestyle
• Interested in
alternative
medicines/
treatments
• Believes eating well
is as important as
exercise
Barbara-On-OffDieter
•
• 30 +
• Yo-yo dieter, has
tried many of the fad
diets but never stuck
to one
• Needs tips and
motivation to keep
up a healthy lifestyle
• Irregular or
infrequent exerciser
113

Customer Types
 Saboteurs
 Intermediaries (OEM’s and resellers)
114

Q: Consider Selling Business Intelligence
Software into a large business. Which types
of customers are the following?
1. CFO
2. CIO
3. Report Users
4. Line of Business
Management
5. Business Intelligence
Group inside IT
a. Economic byer
b. Influencer
c. Recommender
d. Decision maker
e. Saboteur
115

Q: Consider Selling Business Intelligence
Software into a large business. Which types
of customers are the following?
1. CFO
2. CIO
3. Report Users
4. Line of Business
Management
5. Business Intelligence
Group inside IT
a. Economic byer
b. Influencer
c. Recommender
d. Decision maker
e. Saboteur
116

MULTI-SIDED MODEL
Buyer/Payer (e.g. Google)
Two sided markets – Buyers/Payees
1.Workers/Recruiters - LinkedIn
2.Banks/Merchants - Visa
3.Sellers/Buyers - eBay
4.Readers/Advertisers - New York Times
Each has its own value proposition
Each has its own revenue streams
One segment cannot exist without the other
117

Corporate? Consumer?
 Business to Business (B to B)
–Use or buy inside a company
 Business to Consumer (B to C)
–Use or buy for themselves
 Business to Business to Consumer (B to B
to C)
–Sell a business to get to a consumer
–Other Multi-sided Markets with multiple
customers
118

© 2004 Valista Ltd. confidential information.119
 top up
my phone
 subscribe to a
newspaper
 book a flight
download
a report
 book a hotel
pay a bill
 cancel a check
 top-up kid’s
phones
 vote online
 top-up my phone
 download a
new game
 buy an MP3
 download
a voucher
 change my ringtone
 play the lottery
 check my
phone credit
12
6
39
1
2
4
57
8
10
11
on the move at home
at play at work
premium services for subscribers
about Valista

“Studies comparing successful and
unsuccessful innovation have found that the
primary discriminator was the degree to
which the user needs were fully
understood.”
– David Garvin, Harvard Business School
120

Two Critical Channel Questions
How do you want to sell your product?1
is subtle, but more important than the first:
How does your customer want to buy your
product?
2
124

Physical Channels
© 2012 Steve Blank
125

Web Channels
© 2012 Steve Blank
126

Physical & Web Mobile Are Different
© 2012 Steve Blank
128

Physical Products – Get/Keep/Grow
© 2012 Steve Blank
129

Web/Mobile Products Get/Keep/Grow
© 2012 Steve Blank
130

“Direct” Revenue Models
 Sales: Product, app, or service sales
 Subscriptions: SAAS, games, monthly
subscription
 Freemium: use the product for free:
upsell/conversion
 Pay-per-use: revenue on a “per use” basis
 Virtual goods: selling virtual goods
 Advertising sales: unique and/or large
audience
132

“Ancillary” Revenue Models
 Referral revenue: pay for referring traffic/customers
to other web or mobile sites or products.
 Affiliate revenue: finder’s fees/commissions from
other sites for directing customers to make
purchases at the affiliated site
 E-mail list rentals: rent your customer email lists to
advertiser partners
 Back-end offers: add-on sales items from other
companies as part of their registration or purchase
confirmation processes, or “sell” their existing traffic
to a company that strives to monetize it and share
the resulting revenue
133

the tactics you use to set the
price in each customer
segment
Pricing Model
134

How Do We Price The Product?
 Product-based pricing
 Competitive pricing
 Volume pricing
 Value pricing
 Portfolio pricing
 The “razor/razor blade” model
 Subscription
 Time/Hourly Billing
 Leasing
Pricing Models - Physical
135

How Do We Price The Product?
 Product-based pricing
 Subscriptions
 Freemium
 Pay-per-use
 Virtual goods
 Advertising sales
Pricing Models – Web/Mobile/Cloud
136

Other Words We Use In The Place Of Price
 Fee
 Commission
 Subscription
 Toll
 Interest
 Rent
 Tax
 Shipping
137

HBO
Key Resources
Channels
Customer Segments
iTunes
Original
Programming
Home
Customers
HBO.com
HBO on
demand
HBO Go:
streaming
content
HBO Go
app
Network
Cable
Providers
Premium
Television
T.V Stations
International TV
Stations buying it's
content
Content ie. Originally
produced TV series
and movies
Based on
loyalty and
customer
satisfaction
Original
Programming Distributions
Cinemax for
international
distribution
Basic fee
subscription
Licensing
original
programming
content
Email
marketing
Social media
engagement
Individual
channel
subscriptionPackages
Infrastructure
DVD sales of the
original
programming
content
Original Programming
ie. TV series production
e.g sopranos, boardwalk
empire, six feet under
TV ads
Promotions
Exclusive
content

TED
Key Resources
Channels
Customer Segments
TEDx
events
Translators TEDx organisers
TED
community
Possibility
to translate
TED talks
TED Radio
Hour, TV
programs,
DVDs,Books
Innovators
Individuals and
organisations
looking for
inspiration
Coverage of a
wide range of
topics
People with curious
and open mindset,
change makers
Online
conversation/
social media
Possibility to
organise a local
TEDx event
Distribution
partners (e.g
youtube,
netflix)
mobile apps
TED
conference
Spreading of
ideas that can
change attitudes
and life
Free knowledge
and information
Brand
Speakers
Creating
solutions to
global
problems
Talks
available on
multiple
channels
Developers
Sponsors
Speakers
Ticket sales for
conference
Conference
management
Community
management
Communication
and design
Advertisements
Organisers of TEDx
events
Partnership
management
Fundraising
TED
programs
management
Private
donations
Human resources
Global
social
network
Sponsorships
Organisation of
the
conferences
Technological
maintenance
AdvertiserCaptive
audience

Telling Your Story
Pitch your business model in a clear,
simple, and compelling way
144
https://youtu.be/SshglHDKQCc

Group Exercise: 30 Mins
Develop a BMC for one of the selected
projects in teams of 4 using an A1 canvas
poster.
145

7 Questions to improve your business model
1. Switching Costs
– e.g. Apple iPod & iTunes
2. Recurring Revenues
– e.g. Nespresso
3. Earn before you Spend
– e.g. Dell
4. Game changing Cost Structures
– e.g. Skype
5. Getting others to do the work
– e.g. Facebook
6. Scalability
– e.g. Diners Club
7. Protection from Competition
– e.g. Apple i-Phone (double sided market – app
developers/users) 146

Great Business Models always
outcompete great products and
great technologies
– Alex Osterwalder
147
https://strategyzer.com/projects/academy/7-
questions-to-improve-your-business-model-design

Marshmallow Challenge
http://www.marshmallowchallenge.com/Welcome.html
• Build the Tallest Freestanding Structure: The winning
team is the one that has the tallest structure measured from
the table top surface to the top of the marshmallow. That
means the structure cannot be suspended from a higher
structure, like a chair, ceiling or chandelier.
• ✦The Entire Marshmallow Must be on Top: The entire
marshmallow needs to be on the top of the structure. Cutting
or eating part of the marshmallow disqualifies the team.
• ✦Use as Much or as Little of the Kit: The team can use as
many or as few of the 20 spaghetti sticks, as much or as little
of the string or tape. The team cannot use the paper bag as
part of their structure.
149

Marshmallow Challenge
•✦Break up the Spaghetti, String or Tape: Teams are free to
break the spaghetti, cut up the tape and string to create new
structures.
•✦The Challenge Lasts 18 minutes: Teams cannot hold on to
the structure when the time runs out. Those touching or
supporting the structure at the end of the exercise will be
disqualified.
•✦Ensure Everyone Understands the Rules: Don’t worry
about repeating the rules too many times. Repeat them at least
three times. Ask if anyone has any questions before starting
150

151
Business Model Canvas
Helps you create value for
your business
Business Modelling Tools

152
Value Proposition Canvas
your customer
Business Modelling Tools – Zoom In

153
Environment Map
Helps you understand the
context in which you create
your business
Business Modelling Tools – Zoom Out

154
St. Gallen Business Model
Navigator (Patterns)
Helps you innovate your
business model(s)
Business Modelling Tools – Zoom Around!

156
Value Proposition Canvas
your customer
Business Modelling Tools – Zoom In

Clayton Christensen
159
Jobs to be Done
“If you understand the job,
how to improve the product
becomes just obvious”

“People buy products and services to get jobs
done. As people complete these jobs, they
have certain measurable outcomes that they
are attempting to achieve. It links a company's
value creation activities to customer-defined
metrics.” - Ulwick
OUTCOME-DRIVEN
INNOVATION
160

Jobs To Be Done
• Functional Job
– Get a task done
– e.g. business travel: accommodation, appointment, eat, sleep
• Emotional Job
– How the customer wants to feel
– e.g. business travel: stay connected with home, stay safe
• Social Job
– How the customer wants to be perceived
– e.g. business travel: look good with clients
• Supporting Job
– Purchasing and consuming value
- e.g. business travel: reserve accommodation
161

Jobs To Be Done – Generic jobs
• Search or seek information
• Fix or repair something
• Satisfy my emotional needs
• Protect property or information
• Achieve objective efficiently
• Compare or evaluate alternative
• Offer somebody else advice
• Convey an image (of success)
• Transfer ownership rights
• Evaluate performance
• Achieve main objective
• Reduce stress 162

Back and forth between Business Model
and Value Proposition
171
https://strategyzer.com/platform/training/
courses/mastering-business-models/1/1/4

172
BUSINESS MODEL ENVIRONMENT

173
Environment Map
Helps you understand the
context in which you create
your business
Business Modelling Tools – Zoom Out

The Environment
https://youtu.be/7O36YBn9x_4?list=PLTZNT3Bcgb3-KaBCUY-V0yfMj54UsrELb
174

Objective
• The objective of this workshop exercise is to
visualize and map out everything that is going on in
your business model’s environment (the Market
Forces, the Key Trends, the Industry Forces, and
the Macroeconomic Forces).
• It is an immersion into the Business Model Design
Space, which will help you prepare for your quest
for new and innovative business models.
• By making it visual you will develop a more
tangible understanding of your environment.
175

Objective
• Ideally you conduct this workshop with a
diverse group of people in different functions
and from various parts of your organization.
• The workshop will help you develop a better
and shared understanding of what influences
your business model and it will help you un-
cover completely new opportunities and
avenues for the development of new and
innovative business models.
176

Outcome
–A visual map of your Business
Model Design Space.
–Deep discussions about your
business model’s environment
leading to a shared understanding.
–A starting point to design
innovative business models or
redesign current one.
177

Why this is Important?
• No individual alone in your organization could
paint a holistic picture of your business model’s
environment and design space. Only by mapping
out each specialist’s knowledge you can develop
a shared understanding of your environment.
• A visual map of your business model’s
environment with markets, trends, customer
needs, competitors, and more will make things
more tangible and it will allow you to uncover new
associations, discover new patterns, and
ultimately lead to new business model ideas.
178

INDUSTRY FORCES
Competitors (Incumbents)
New entrants (Insurgents)
Substitute Products & Services
Stakeholders
Suppliers & other Value Chain Actors 179

THE FIVE FORCES (PORTER)
Threat of new
entrants
Supplier Power Customer Power
Ease of
substitution
Internal rivalry
180

Competitors (Incumbents)
Identifies incumbent competitors and their relative strengths
• Who are your competitors?
• Who are the dominant players in our particular sector?
• What are their competitive advantages and
disadvantages?
• Describe their main offers.
• Which Customer Segments are they focusing on?
• What is their Cost Structure?
• How much influence do they exert on our Customer
Segments, Revenue Streams, and Margins?
181

New Entrants (Insurgents)
Identifies new insurgent players and determines whether they
compete with a business model different from yours
• Who are the new entrants in your market?
• How are they different?
• What competitive advantages or disadvantages do they
have?
• Which barriers must they overcome?
• What are their Value Propositions?
• Which Customer Segments are they focused on?
• What is their cost structure?
• To what extent do they influence your Customer Segments,
Revenue Streams and Margins?
182

Substitute Products and Services
Describes potential substitutes for your offers-
including those from other markets and industries
• Which products or services could replace ours?
• How much do they cost compared to ours?
• How easy it is for customers to switch to these
substitutes?
• What business model traditions do these substitute
products stem from (e.g. high-speed trains versus
airplanes, mobile phones versus cameras, Skype
versus long-distance telephone companies)?
183

Stakeholders
Specifies which actors influence your organization
and business model
• Which stakeholders might influence your
business model?
• How influential are shareholders? Workers? The
government? Lobbyists?
184

Suppliers and other Value Chain Actors
Describes Potential substitutes for your offers-
including those from other markets and industries
• Who are the key players in your industry value
chain?
• To what extent does your business model
depend on other players?
• Are peripheral players emerging?
• Which are most profitable?
185

Market Issues
Market Segments
Needs & Demands
Switching Costs
Revenue Attractiveness
MARKET FORCES
186

Market Issues
Identifies key issues driving and transforming your
market from Customer and Offer perspectives
• What are the crucial issues affecting the
customer landscape?
• Which shifts are underway?
• Where is the market heading?
187

Market Segments
Identifies the major market segments, describes
their attractiveness and seeks to spot new
segments
• What are the most important Customer
Segments?
• Where is the biggest growth potential?
• Which segments are declining?
• Which peripheral segments deserve attention?
188

Needs & Demands
Outlines market needs and analyzes how well
they are served
• What are the most important Customer
Segments?
• Where is the biggest growth potential?
• Which segments are declining?
• Which peripheral segments deserve attention?
189

Switching Costs
Describes elements related to customers
switching business to competitors
• What binds customers to a company and its
offer?
• What switching costs prevent customers from
defecting to competitors?
• Is it easy for customers to find and purchase
similar offers?
• How important is brand?
190

Revenue Attractiveness
Identifies elements related to revenue
attractiveness and pricing power
• What are customers really willing to pay for?
• Where can the largest margins be achieved?
• Can customers easily find and purchase
cheaper products and services?
191

MACRO ECONOMIC FORCES
Global Market Conditions
Capital Markets
Commodities and Other Resources
Economic Infrastructure
192

Global Market Conditions
Outlines current overall conditions from a
macroeconomic perspective
• Is the economy in a boom or bust phase?
• Describe general market sentiment.
• What is the GDP growth rate?
• How high is the unemployment rate?
193

Capital Markets
Describes current capital market conditions as
they relate to your capital needs
• What is the state of the capital markets?
• How easy is it to obtain funding in your particular
market?
• Is seed capital, venture capital, public funding,
market capital or credit readily available?
• How costly is it to procure funds?
194

Commodities and Other Resources
Highlights current prices and price trends for
resources required for your business model
• Describe the current status of markets for
commodities and other resources essential to
your business (e.g. oil prices and labor costs).
• How easy is it to obtain the resources needed to
execute your business model? (e.g. attract prime
talent)?
• How costly are they?
• Where are prices headed? 195

Economic Infrastructure
Describes the economic infrastructure of the
market in which your business operates
• How good is the (public) infrastructure in your
market?
• How would you characterize transportation,
trade, school quality and access to suppliers and
customers?
• How high are individual and corporate taxes?
• How good are public services for organizations?
• How would you rate the quality of life?
196

KEY TRENDS
Technology Trends
Regulatory Trends
Societal & Cultural Trends
Socioeconomic Trends
197

Technology Trends
Identifies technology trends that could threaten
your business model or enable it to evolve or
improve
• What are the major technology trends both
inside and outside your market?
• Which technologies represent important
opportunities or disruptive threats?
• Which emerging technologies are peripheral
customer adopting?
198

Regulatory Trends
Describes regulations and regulatory trends that
influence your business model
• Which regulatory trends influence your market?
• What rules may affect your business model?
• Which regulations and taxes affect customer
demand?
199

Socioeconomic Trends
Outlines major socioeconomic trends relevant to
your business model
• What are the key demographic trends?
• How would you characterize income and wealth
distribution in your market?
• How high are disposable incomes?
• Describe spending patterns in your market (e.g.
housing, healthcare, entertainment, etc.)?
• What portion of the population lives in urban
areas as opposed to rural settings? 200

Societal and Cultural Trends
Identifies major societal trends that may influence
your business model
• Describe key societal trends. Which shifts in
cultural or societal values affect your business
model?
• Which trends might influence buyer behavior?
201

“Pattern in architecture is the idea of
capturing architectural design ideas
as archetypical and reusable
descriptions”
– Christopher Alexander, Architect
Patterns
203

204
St. Gallen Business Model
Navigator (Patterns)
Helps you innovate your
business model(s)
Business Modelling Tools – Zoom Around!

Great Business Models vs. Great
Implementations
205
https://strategyzer.com/training/course
s/business-models-that-work-and-
value-propositions-that-sell/1/5/4

Prepare to cannibalize your Business Model
206
“if you don’t cannibalize
yourself, someone else
will. Don’t protect your
products …. Protect the
customer experience and
your customer
relationships” – Steve Jobs

What do you offer to
the customer?What?
Value
Propositi
on
How is revenue
created?
How is the value
proposition created?Who?
Revenue
Model
Value
Chain
Why? How?
Who is your target
customer
(segment)?
St. Gallen Business Model Navigator Triangle
Who-What-How-Why
A business model defines who your customers are, what you are selling,
how you produce your offering, and why your business is profitable

What?
Value
Proposit
ion
Who?
Value
ChainProfit
Mechanism
Why? How?
The magic triangle consists of 4 basic elements
of the canvas - simplified to enhance creativity
The first two (who and what) address its external aspects and the
second two (how and why) address its internal dimensions

Identified 55 Business Model
patterns in the 5+ years of
intensive research into detailed
analysis of all major successful
business model innovators in the
last 50 years
-University of St. Gallen
209

Pattern 39: Razor and Blade
Apple
iPod/iTunes
(2003)
Nestlé
BabyNes
(2012)
Nestlé
Special.Tea
(2010)
Hewlett-
Packard
(1984)
Nestlé
Nespresso
(1986)
Gillette
(1904)
Standard Oil
Company
(1880)
The basic product is either cheap
or give away for free. The
consumables that are needed for it
on the other hand are expensive or
high margin.
210

Pattern 48: Subscription
Next Issue
Media (2011)
Dollar Shave
Club (2012)
Jamba
2004
Spotify
2006
Netflix
(1999)
Salesforce
(1999)
The customer pays a regular fee,
typically on a monthly or an annual
basis, in order to gain access to a
product or service.
211
Blacksocks
(1999)

Lock-
in
Razor and
blade
Direct
selling
Gillette
(1904)
Nestlé
Nespresso
(1986)
Nestlé
Special Tea.
(2011)
Nestlé
BabyNes
(2012)
Source: Gassmann, Frankenberger, Csik (2012), Aus alt mach neu, Harvard Business Manager, 2012
LeverageCombineTransfer
3 Strategies to generate new Business Model
ideas: Transfer, Combine and Leverage
212

213
3 Challenges in Business Model Innovation
1. Overcoming the dominant Industry
logic
2. Thinking in Business Models and not in
Technology and/or Products
3. Lack of Systematic Tools

55 Business Paterns to Innovate your Business Model
Confronting your business model
with the 55 business model
patterns bring you to novel
business model ideas
214

215
Successful business model
innovation creates value for your
customers and captures value for
your company. Many business
models fail to capture enough
value.

Daniel Moser – Master’s Thesis (2014)
University of St. Gallen
216
How Amazon, Apple,
Google, Facebook &
Microsoft innovate
their Business
Models

University of St. Gallen 217

219

220

222
How would
conduct our business?
38 Performance based contracting

Rapid Fire Iterations of your BMC
Develop multiple BMCs for your
product/company using the A3 printouts
and the business model pattern cards.
223

15 Ways to use the Business Model
Canvas
224
https://strategyzer.com/training/course
s/business-models-that-work-and-
value-propositions-that-sell/1/2/2

Review
–Great business models always
outcompete great products and
technologies
–If you understand the job, how to
improve the product becomes obvious
–The BMC is a shared language for
business modelling
–Understanding the environment
–Transfer, combine and leverage using
existing business model patterns.
225

Strategy and Business Models – DIT PM Module 1
raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.facebook.com/LeanDisruptor
RAOMAL PERERA
THANK YOU!

Business Model Innovation Screen Training Ireland

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