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New Business Models
12 June 2007
2
Opening thoughts
• Frank discussion
• Diversity
• Summary and contact list
• Introductions
9th breakfast seminar
First one here at Duke’s Hotel
3
Age of Discontinuity
Disco
ntin
uity
Acceleratio
n
Ch
ang
e
‘00 - ‘12?‘84 – ‘02 ‘64 – ‘87Post-War
Stab
ility
Globalisation
Technology
Business Model Innovation
Infrastructure Development
Human Capital Growth
Historical Development• Simultaneous multiple changes;
shifting frames of reference
• Growing ambiguity; shrinking certainty
• Opportunity window opens and closes very quickly
• Low margin for error, growing performance demands
New models for strategy and leadership needed
4
What Can Happen at a Discontinuity
• Everybody headed in roughly the right direction.
• Multiple tools and systems to ensure this is so: business plans, performance management systems, reporting structures, etc.
• Tools aren’t perfect, so relies heavily on informal systems, workarounds, and individual initiative.
• Lack of clarity about what the right direction is.
• Formal systems become counterproductive; informal systems and workarounds get overloaded or break down.
• Unless addressed, organisational performance can decline dramatically.
5
Thought-to-Action Cycle
Context
Clarify: See the current situation, how it is changing, and what that means. Identify the predictable futures that might come as a result and ways to influence which occurs.
Identity / Journey
Align: Select specific goals to be reached, actions to be used to reach them, and boundaries on those actions.
Practices
Act: Conversations, symbolic actions, writing, presentations, formal decisions, habits and other activities that shape what happens.
6
Business Model Overview
Suppliers
Business infrastructure
(IT systems, equipment, facilities)
Control system
(management structure, performance metrics, culture, purpose, “core group”, etc.)
• Goods / services
• Labour
• Capital
• Direct
• Indirect
“Public goods” infrastructure
(legal, transport, communications, waste disposal, etc.)
External control system
(legal / regulatory, public opinion, etc.)
CustomersSellAdd valueSource
7
Suppliers Customers
“Public goods” infrastructure
External control system
Business infrastructure
Control system
SellAdd valueSource
Pressure Points
Continuing time pressure
Customer knowledge
growing
Proliferation of channels / advisors
Environmental and other externalities
become internalised
Regulators press for transparency and
fairness
Liquidity is everywhere
Suppliers can be from
anywhere
Employees more
demanding
Public infrastructure
goes “user pays”
Infrastructure costs become variable, barriers to entry
drop
More inclusive (mission-based) strategies, rather than
oppositional (competition-based)
Control systems overmatched by
complexity / uncertainty
Core value gets
commoditised
Suppliers go direct
8
Suppliers Customers
“Public goods” infrastructure
External control system
Business infrastructure
Control system
SellAdd valueSource
Control System: Optimising the Value / Money Flow
Value delivery
Money Flow
Customer Surplus:
Strategic barrier
Supplier Surplus:
Strategic barrier
Today
Finer detail
• Increasing frequency, finer granularity
• Understand strategic surpluses in more detail
Bigger picture
• Holistic view of system (Big Numbers)
• Extract more information across transactions
Today
9
Core Value Gets Commoditised – Internet Retailing
Huh?
What’s this?
10
Core Value Gets Commoditised – Internet Retailing
• 10% of revenue now from services – sees as major strategic move for future
• Used to be seen as a weak point, major source of customer complaints
Also:
• Plan to sell through Wal-Mart and other resellers
• Expanding own-branded stores
11
Core Value Gets Commoditised – High Street Retailing
Price competitive commodity
product
Up-sell opportunities
Link to out-sourced services
12
Core Value Gets Commoditised - Media
13
Core Value Gets Commoditised - Media
Community
Community
Community
Community
14
Proliferation of Channels / Advisors
£1BN estimated market cap
Traditional insurers and intermediaries trying to
figure out how to respond
15
• What can you do when your most significant revenue source goes away?
• How do you respond when your customers seem to know more than you - even about your own business?
• How can you use seemingly negative trends to break out of a stale positioning?
16
Contact Information
London Office:
+44 20 7349 7140
Suite 105
132 - 134 Lots Road
London SW10 0RJ
www.menkus.net
For more information, please email us on:
newclients@menkus.net
Specialist Support for Business Leaders
Clarify Align Act
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