Business Model Innovation: Introduction to Implementation
Business Model Innovation: Introduction to Implementation Dr Michael Teng Assistant Secretary-General Singapore Manufacturing Federation DBA(UNISA), MBA(NUS), BEng, FCMI, FIMechE, FIEE, CEng, PEng, FCIM, FMIS, PMC, ACTA 24 March 2015 Business Model Innovation: How to beat your giant? Number of Years to Reach 50 Million Audience Nokia VS Motorola Facebook VS Myspace Fountain pen VS Ball pen Bicycle VS Car iTunes VS Music industry CNN VS NBC Amazon VS Borders Radio 28 years TV 13 years Internet 5 years Facebook ? years Vietnam VS USA War Dell VS IBM Subway VS McDonalds Small Japanese VS Big cars in US Tablet VS Notebook Google VS Yahoo Singapore Airlines VS Pan Am The underdogs have beaten the big boys through innovation and productivity Strategy 1: Find the Right Niche Customer Competition Orientation Matrix High MarketDriven Competition-Driven Myspace, Yahoo, Motorola Facebook, Google, Apple Internally-Driven Customer-Driven The Well, Archie, Creative Tech Geocities, Netscape, Wang Computers Level of Competition Orientation Low High Level of Customer Orientation To be a follower, understand the competitors and customers. To be the leader, understand the market. Strategy 2: Business Model Canvas Key Partners Key Activities Value Propositions Customer Relationships Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? Motivations for Partnerships Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities Categories Production Problem Solving Platform/Network Key Resources What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? Types of Resources Physical Intellectual (brand patents, copyrights, data) Human Financial Characteristics Newness Performance Customization “Getting the Job Done” Design Brand/Status Price Cost Reduction Risk Reduction Accessibility Convenience/Usability Examples Personal assistance, Dedicated Personal Assistance, Self-Service Automated Services, Communities, Co-creation Mass Market Niche Market Segmented Diversified Multi-sided Platform Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? Channel Phases 1. Awareness How do we raise awareness about our company’s products and services? 2. Evaluation How do we help customers evaluate our organization’s Value Proposition? 3. Purchase How do we allow customers to purchase specific products and services? 4. Delivery How do we deliver a Value Proposition to customers? 5. After sales How do we provide post-purchase customer support? Revenue Streams What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? Sample Characteristics Fixed Costs (salaries, rents, utilities) Variable costs Economies of scale Economies of scope For whom are we creating value? Who are our most important customers? Channels Cost Structure Is your business more… Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing) Value Driven (focused on value creation, premium value proposition) Customer Segments Types Asset sale Usage fee Subscription Fees Lending/Renting/Leasing Licensing Brokerage fees Advertising Source: http://businessmodelgeneration.com/canvas/bmc?_ga=1.199513454.1576209768.1424664901 Fixed Pricing List Price Product feature dependent Customer segment dependent Volume dependent Dynamic Pricing Negotiation (bargaining) Yield Management Real-time-Market strategyzer Strategy 3: Analyse the Situation for Bottlenecks Identify the viruses/giants attacking the company Determine which of the three phases of corporate transformation and turnaround are applicable Treatment Phase I: Surgery Productivity Treatment Phase II: Resuscitation Productivity/Innovation Treatment Phase III: Therapy Innovation The three phase transformation methodology will help to identify and break the bottlenecks so that the company can be faster, cheaper and better Strategy 4: Execute Productively and Innovatively Productivity and innovation depend on effective & efficient corporate transformationimproving efficiency effectively and effectiveness efficiently Corporate Transformation Index TM = Productivity @ Innovation = Output/Input x Innovation Culture Productivity is increasing revenue and decreasing costs or increasing output and decreasing input Innovation Culture is the measurement of the predisposition of the company to implement innovation Successful execution is key to any innovative and productivity initiatives David defeated Goliath by targeting the right niche and executing with innovativeness and productiveness Video: How small companies can take on the big boys Number of Years to Reach 50 Million Audience Nokia VS Motorola Facebook VS Myspace Fountain pen VS Ball pen Bicycle VS Car iTunes VS Music industry CNN VS NBC Amazon VS Borders Radio 28 years TV 13 years Internet 5 years Facebook ? years Vietnam VS USA War Dell VS IBM Subway VS McDonalds Small Japanese VS Big cars in US Tablet VS Notebook Google VS Yahoo Singapore Airlines VS Pan Am The underdogs have beaten the big boys through innovation and productivity BUSINESS MODEL INNOVATION Dr Mike Teng [email protected] www.smfederation.org.sg Best Selling Book: Corporate Turnaround: Nursing A Sick Company Back To Health. Endorsed by: Professor Philip Kotler, Professor Jagdish Sheth, Mr Oei Hong Leong, Dr Wong Yip Yan 1. Corporate Turnaround : Nursing a sick company back to health 15. Business Model Innovation: Introduction to Implementation 2. Internet Turnaround 3. Change Management Leadership 17. How the small can beat the big companies 4. Buying and selling of distressed companies 18. Jesus: The corporate turnaround expert 5. Corporate Turnaround: GlobPerspective 19. Africa, the next economic tiger: Lessons from Asia 6. Business Diagnosis 20. What we can learn from the animals about office politics 7. Turnaround Yourself 21. Office Politics Mania 8. Fundamentals of buying and selling companies 22. Admiral Zheng He: The collaborative transformational leader 9. Inspiring Notebook: Corporate Transformation 23. Business Model Innovation: Example 10. Ultimate Internet Strategy 24. Corporate Cyberwar 11. Training Manual: Corporate Turnaround 16. Ancient Chinese Wisdom: Zheng He, Sun Zi, Confucius Books are available for purchase at THANK YOU 13
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