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Business Model
Innovation: Why, What
and How
John Scott July 2011
© New Media Partners Ltd.
Why should
you care?
The return on investment that you need to generate can
increase to infinity at any time for any reason
Would you compete for food and land on his terms?
Would you fight a war on these terms?
The right business model can tip the balance of success……it will diversify the risk associated with the infinite ROI problem…it will help you navigate around 500lb gorillas
What is it anyway?
A business model describes the rationale of how an
organisation creates value, delivers value and captures
valueOsterwalder & Pigneur, 2010
"People don't want to buy a quarter-inch drill. They want a quarter-inch hole!“
Theodore LevittWe hire solutions to get jobs doneFor the job of oral maintaining healthy teeth and gums we•hire dentists and associated instruments of torture•hire toothbrushes & toothpasteWe create value when we allow customers do achieve a given job quicker, easier and/or at lower cost
the job of maintaining healthy teeth and gums well-served with existing
solutions?
Prevent conditions from occurring
Prevent physical damage from occurring
Prevent Contain Diagnose Treat
Job: Maintain healthy teeth and gums
Monitor known conditions to ensure proper healing
Confirm nature of condition
Determine appropriate course of treatment
Administer treatment
Confirm proper healing is occurring
Innovating the
Milkshake
A business model describes the rationale of how an
organisation creates value, delivers value and captures
valueOsterwalder & Pigneur, 2010
Deliver valueCreate value
Capture value
Customer segments
Value proposition
Customer relationship
Channels
Key activities
Key resources
Key partners
Revenue streamsCost structure
www.businessmodelgeneration.org
Create, deliver, capture
The Business Model Canvas
Customer segments
Value proposition
Customer relationship
Channels
Key activities
Key resources
Key partners
Revenue streamsCost structure
Jobs being addressed?Environment is the job being undertaken?Outcomes being targeted?
What improvements are you bringing?What products & services are you applying to achieve this?
Type of relationship desired?How is it achieved?
Type of channel desired:
Pre-salePurchaseDeliveryPost-sale
What are our production, problem solving, platform and network activities?
What are our physical, intellectual, human and financial needs?
What key activities will be performed?What key resources will be acquired?Who are our key partners?Who are our key suppliers?
What value will our customers pay for?How would they prefer to pay?How crucial is each revenue stream?
What are the up-front and on-going costs of our key activities?What are the up-front and on-going costs of our key resources?
www.businessmodelgeneration.org
How can I innovate?
Customer segments
Value proposition
Customer relationship
Channels
Key activities
Key resources
Key partners
Revenue streamsCost structure
www.businessmodelgeneration.org
Strong relationships
Effective channel network
Strong customer
focus
Increasing proportion of
customer spend
Customer segments
Value proposition
Customer relationship
Channels
Key activities
Key resources
Key partners
Revenue streamsCost structure
www.businessmodelgeneration.org
R&D
Recruitment
Skilled practitioners
Innovative products and
services
High staffing costs
Customer segments
Value proposition
Customer relationship
Channels
Key activities
Key resources
Key partners
Revenue streamsCost structure
www.businessmodelgeneration.org
Expanding infrastructure
Maintain infrastructure
High fixed costs
Low marginal costs
• Does your target opportunity have a prevailing model that can be challenged?
– Does that model maximise customer value?
• Can you create new customer value by serving jobs-to-be-done more effectively?
– Utilise new channels to market? Different pricing models?
• Are there aspects of the business model that are completely entrenched?
– Value proposition? Partnering?
• Can you simplify delivery and/or value proposition to take out a whole chunk of costs?
• It’s all there for you!!!
