122
Version 8.0, December 2008 Create innovative opportunities Accelerator Workshop 1 Workbook Help our customers to be more successful

Hand Book Streamer

Embed Size (px)

Citation preview

Page 1: Hand Book Streamer

Version 8.0, December 2008

Create innovative opportunities Accelerator Workshop 1

Workbook

Help our customers to be more successful

Page 2: Hand Book Streamer

2

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Title Time(Method)Title TimeACCELERATOR WORKSHOP 1 AGENDA

Accelerator Workshop 1 content is taught along the Value Innovation Approach

Visual Fair• Presentation of ideas

8) 90

Introduction1) 90

IDEO• One company's secret weapon for

innovation

45

Market Exploration cont.• Path 3: Across the industry value chain• Path 4: Across complementary offering• Path 5: Across functional or emotional

appeal• Path 6: Across time & trends

6) 240 Visual communication preparation• Work on Impact Group project• Preparation of Visual communication

10) 240

Business Case & Visual Communication• Elements of a business case• BASF PhaseGate

9) 60

The Blue Ocean• Value innovation• BASF success story

2) 45

Jamming• John Kao on innovation

3) 30

To-be Value Curve• Development of To-be Value Curve• Preparation of Visual Fair

7) 90Visual Awakening• Strategy Canvas• ERRC• Innovation activity• As-is Value Curve

4) 120

Market Exploration• 6 Path overview• Path 1: Across alternative industries• Path 2: Across strategic groups

5) 135Transfer & Workshop Feedback12) 60

Challenge session• Presentation of Impact Group project

11) 90

Page 3: Hand Book Streamer

3

Version 8.0

AW 1 – Create innovative opportunities - Workbook

KEY CHALLENGES IN BASF’S PAST & FUTURE

BASF 2015 seeks to achieve superior growth above the industry curve

ProductsDifferentiation at the product level is insufficient to win

Processes Lean processes are a “need to play” criterion

Innovation & PeopleThe winning combination is innovation driven by the best team in the industry

Growth

Time

Potential BASFGrowth Curve

Industry Growth Curve

BA

SF 2015

Page 4: Hand Book Streamer

4

Version 8.0

AW 1 – Create innovative opportunities - Workbook

BASF Leadership Compass

Clarity and a Sense of RealityClarity and a Sense of Reality

Enthusiasm and InspirationEnthusiasm and Inspiration

Performance Performance and Speedand Speed

Strategic & Strategic & Operational Operational LeadershipLeadership

Page 5: Hand Book Streamer

5

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Strategic guidelines

INSTRUCTIONS EXERCISE

10 min

Discuss the specifics of „your“ guideline and how it interacts with the others

• Get together in 4 groups – one for each strategic guideline• Briefly discuss in your group:• Have you seen this guideline applied in your BU?

– What are you doing in respect of the guideline?– What challenges are you facing?– What changes resulted from this pillar? What are further

possible changes?– How does your guideline interact with the others? Do

you see synergies or challenges?• Select a spokesperson to present your findings

Earn a premium on our cost of

capital

Form the best team in industry

Ensure sustainable

development

Help our customer to

be more successful

Page 6: Hand Book Streamer

6

Version 8.0

AW 1 – Create innovative opportunities - Workbook

“Helping our customers to be more successful” means improved customer interaction

Earn a premium on our cost of

capital

Form the best team in industry

Ensure sustainable

development

Help our customer to

be more successful

• Learning organization: know-how transfer and best-practice exchange

• Culture change: bottom-up action across regional and unit boundaries

• Business impact: scout and implement innovative business opportunities

• Common language: BASF-wide M&S concepts, standards and tools

• Customer intimacy: promote M&S excellence, customer focus and value

Improved Customer Interaction

Help our customers to

be more successful

Page 7: Hand Book Streamer

7

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Two Initiatives - One Goal: Value Based Management (VBM) andHelp our Customers ... (perspectives)

Back-End-Business Model

GeneralValue Driver

SpecificValue Driver

CIM-SpecificValue Driver KPIs

EBIT afterCapital Cost

EBIT

CapitalCost

ContributionMargin 1

Sales

Fixed Cost

Interest Rate

Capital Base

Variable Cost

Spot Sales

CurrentAssets

FixedAssets

Price

Volume

Monthly Contract Price

Budget

Administration

Accounts Receivable

Inventories

Commission

Merchandise Material

Freight

Transfers + Sales

Styrene Purchases(dependant on C2 and C6)

Swaps + Offers

Contract Closure

Sellig Cost

-

-

Dunning

Volume Planning

+x

-

Invoice Creation

Sales Forecast

Customer Ordering Pattern

GeneralValue Driver

SpecificValue Driver

CIM-SpecificValue Driver

GeneralValue Driver

SpecificValue Driver

CIM-SpecificValue Driver KPIs

EBIT afterCapital Cost

EBIT

CapitalCost

ContributionMargin 1

Sales

Fixed Cost

Interest Rate

Capital Base

Variable Cost

Spot Sales

CurrentAssets

FixedAssets

Price

Volume

Monthly Contract Price

Budget

Administration

Accounts Receivable

Inventories

Commission

Merchandise Material

Freight

Transfers + Sales

Styrene Purchases(dependant on C2 and C6)

Swaps + Offers

Contract Closure

Sellig Cost

-

-

Dunning

Volume Planning

+x

-

Invoice Creation

Sales Forecast

Customer Ordering Pattern

KPIs

EBIT afterCapital Cost

EBIT

CapitalCost

ContributionMargin 1

Sales

Fixed Cost

Interest Rate

Capital Base

Variable Cost

Spot Sales

CurrentAssets

FixedAssets

Price

Volume

Monthly Contract Price

Budget

Administration

Accounts Receivable

Inventories

Commission

Merchandise Material

Freight

Transfers + Sales

Styrene Purchases(dependant on C2 and C6)

Swaps + Offers

Contract Closure

Sellig Cost

-

-

Dunning

Volume Planning

+x

-

Invoice Creation

Sales Forecast

Customer Ordering Pattern

EBIT afterCapital Cost

EBIT

CapitalCost

ContributionMargin 1

Sales

Fixed Cost

Interest Rate

Capital Base

Variable Cost

Spot Sales

CurrentAssets

FixedAssets

Price

Volume

Monthly Contract Price

Budget

Administration

Accounts Receivable

Inventories

Commission

Merchandise Material

Freight

Transfers + Sales

Styrene Purchases(dependant on C2 and C6)

Swaps + Offers

Contract Closure

Sellig Cost

-

-

Dunning

Volume Planning

+x

-

Invoice Creation

Sales Forecast

Customer Ordering Pattern

Customer

VBM and perspectives

generatevalue

costs

profit

VBM translates customerrequirements

to the BASF back-end

perspectives targets theinteraction with the customer

BASFEnablers Back-End

Model

Customer Interaction Model (CIM)

Page 8: Hand Book Streamer

8

Version 8.0

AW 1 – Create innovative opportunities - Workbook

With perspectives… …to a well connected organization

Supporting tools:

• Accelerator Workshops

• Coaching

• perspectives Intranet

PROCESS OVERVIEW

BU Impact

You have successfully finished the BU Dialogue......and now the work starts!

Impact GroupsBU Dialogue

Page 9: Hand Book Streamer

9

Version 8.0

AW 1 – Create innovative opportunities - Workbook

As a Change Agent you will encounter different levels of commitment

CHANGE COMMITMENT CURVE

Time

Com

mitm

ent L

evel

Understanding

Acceptance

Commitment

Advocacy

I know that the Project

is happening

I understand what the project

will mean for business, our product/output

and me personally

I am willing to begin working in new ways and

adopt new processes and systems and

make them work

I support the changes the

project brings and am committed to

doing what it takes to make it a

success

I publicly support the new processes and

provide help and guidance to

colleagues, to enable their adoption of the

new working practices

Negative Perception*

Confusion*

Change Aborted after Implementation*

Decision not to Attempt/ Support Implementation*

*Change Risks

Awareness

Page 10: Hand Book Streamer

10

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Achieving the right balance between supply for change and demand for changeTaking action at a macro level (the organization) and a micro level (the individual)Placing emphasis on the different quadrants at the right time

Managing change to a successful conclusion involves different aspects

Macro

Micro

Supply Demand

Setting and communicating the vision of the “To-be” state; directing

the organization to get there

Providing the organization with the competence, structure and

environment to make the change and realize the benefits

Creating demand for the change in the business

Planning and managing the move from the “As-Is”

organization to the desired “To-be” state NAVIGATION

ENABLEMENT BUSINESSOWNERSHIP

EXECUTIVE LEADERSHIP

Page 11: Hand Book Streamer

11

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Time

Supp

ort f

or C

hang

e

End Users

Understanding

Acceptance

Commitment

Advocacy

Sponsors Change Agents

Navigation Leadership Enablement Ownership

Focus and importance of the Change Management quadrants and related activities vary during the change lifecycle

Managing all 4 quadrants ensures commitment to the change, increasing the ability to sustain it.

Awareness

Page 12: Hand Book Streamer

12

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Accelerator Workshops 1 to 3 cover the entire marketing & sales process

The sales process

Customer analysis & power mapping

Sales process

Deliver the solution/product

Negotiate contract and close deal

Offer value

Assess customer needs

Understand customer business and structure

Purchasing process

Implement solution/ use the product

Negotiate and sign

Search for suppliers, request and compare offers

Realize problems and search for solutions

Plan business analyze gaps and define actions

Purchasing process

Implement solution/ use the product

Negotiate and sign

Search for suppliers, request and compare offers

Realize problems and search for solutions

Plan business analyze gaps and define actions

Implement solution/ use the product

Negotiate and sign

Search for suppliers, request and compare offers

Realize problems and search for solutions

Plan business analyze gaps and define actions

Secretary of State (MoI); name

Department heads other

Data centers; name

IT applications and policies; name

IT and Infrastructure

Telecommunications and Radio; name

Ratifier

Immigration and Border Control; name

Operations; name

Civil security;name

Federal and Border Police; name

Crisis management; name

Expert

Coach

Decision maker

Multiplier

Multiplier

IT infrastructure and networks; name

IT Security and data privacy; name

Multiplier

Expert

Multiplier

Expert

Gatekeeper

Supportive

Coach

Not known

Negative

Central procurement; name

Interagency manag-ement; name

Strategy and planning;name

Multiplier

Expert

Gatekeeper

ackground questions

inalize-requirements questions

Question

trengthen-case questions

BB

nalyze-issue questions

AA

SS

FF

"BASF" model for needs assessment

Customer Interaction Models

Needs-based segmentation

Pricing layersCreate a To-be Value Curve

Value Innovation Approach

6 Paths

"Capture maximum value""Design winning offers""Create innovative opportunities"

Across strategicgroups

22

Across the industryvalue chain

Across complemen-tary offerings

44

Across alternativeindustries

11

Across functional oremotional appeal

55

Across time & trends66

33

Create Reduce

Raise

Eliminate

To-bevalue curve

Process partner

Image buyer

Convenience buyer

Quality buyer

Price buyer

BASF's current position with the customer

Futu

re c

usto

mer

attr

activ

enes

s

OVERVIEW OF ACCELERATOR WORKSHOPS 1 TO 3

Market pricing

Product/ Market Pricing

transactional pricing

Product pricing

Transactional pricing

Page 13: Hand Book Streamer

13

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Participation in perspectives –Continued growth of participation

CUMULATIVE NUMBER OF PARTICIPANTS*

1.030 1.350400

450350

2.290

50

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

2005+2006 2007

* as of 30th June 2008

Impact Group

Business Model Lab

perspectivesKey Concepts

6,500

cumcum

Deep Dive

1,030 1,350 1,580400

450550350

2,290

4,20050

170

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

2005+2006 2007 Target 2008

* as of 30th June 2008

Impact Group

Business Model Lab

perspectivesKey Concepts

1,800

4,140

cumcumcum

Deep Dive

For more information please visithttp://perspectives.internal.basf.com

Page 14: Hand Book Streamer

14

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Visual awakening

Visual fair Visual communication

Market exploration

Business case

Value innovation approach

6 Paths

Exploration & interview

Final presentation

To-be Value Curve

Business caseAs-Is Value Curve

Idea presentation

Page 15: Hand Book Streamer

15

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Framework steps in detail

• Gather information through research to find out about potential factors and as-is situation

• Show current situation by setting up As-is Value Curve using the Strategy Canvas

• Develop questions according to 6-paths

• Interactive presentation of potential ideas to customers & other BASF challengers

• Assessment & rating of ideas by all participants

• Voting on most promising business ideas

• Decision by project manager on which ideas to pursue further

• Concept paper & business case will be developed for selected ideas

• If business case is negative, the idea will not be pursued

• Preparation of positive business case(s) for final leadership presentation

• Final prioritization, alignment of ideas and decision on next steps by BU leadership

• Interviews with customers & other people along the industry value chain

• Develop ideas and To-be Value Curves

• Prepare visual fair (including prototypes, drawings, presentations etc.)

Visual awakening

Visual fair Visual communication

Market exploration

Business case

Page 16: Hand Book Streamer

16

Version 8.0

AW 1 – Create innovative opportunities - Workbook

What are key elements in finding profitable customers and markets?

What enables companies to clearly differentiate from competitors and to create new markets?

What is innovation? What is value?

Key questions of this session

Page 17: Hand Book Streamer

17

Version 8.0

AW 1 – Create innovative opportunities - Workbook

BLUE VS. RED OCEAN

Red Ocean –Existing competitive arena

• Market boundaries given and not challenged

• Focus on competition (outperform)

• Market boundaries not set

• Focus on market/ industry/ customers

Blue Ocean –Untapped market space

When searching for value innovation, you need to dive into the Blue Ocean

Page 18: Hand Book Streamer

18

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Get to know the characteristics of Red and Blue Ocean

INSTRUCTIONS

• Get together in groups

• Discuss the characteristics of Red or Blue Ocean and document them on a flipchart

• Be creative: You may draw pictures, write down points or even act a short scene…

• Be prepared to present your results

What is Red Ocean? What is Blue Ocean?

EXERCISE

5 mins

Page 19: Hand Book Streamer

19

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Blue Ocean and Red Ocean strategy are characterized by different features

OVERVIEW

Source: Blue Ocean Strategy (W. Chan Kim, Reneé Mauborgne)

Align the whole system of a firm’s activities in pursuit of differentiation and reducing cost

Break the increase value-reduce cost trade-off

Create and capture new demand

Make the competition irrelevant

Create uncontested market spaceBlue Ocean Strategy

Align the whole system of a firm’s activities with its strategic choice of differentiation or reducing cost

Make trade-offs between increase value and reduce cost

Exploit existing demand

Beat the competition

Compete in the existing market space

Red Ocean Strategy

Page 20: Hand Book Streamer

20

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Low

HighRelative offering level

Price(Hotel prices in

Berlin, Germany)

Value innovation through differentiation creates profitable growth

STRATEGY CANVAS AND VALUE CURVE EXAMPLE

1-star hotel €40

€602-star hotel

€35

Eatingfaci-lities

Archi-tecture

Lounges Room size

Furni-ture

Access-ibility

Bed quality

Hygiene Quiet-ness

Principal factors

Page 21: Hand Book Streamer

21

Version 8.0

AW 1 – Create innovative opportunities - Workbook

a c d ebLow

HighRelative offering level

f

Avg. of major competitors

BASF As-is 1,80

1,82

Price(EUR/kg)

To differentiate from competition it is essential to define Principal factors from the customer’s perspective

FICTITIOUS BASF EXAMPLE

1,90BASF To-be

Technical service

Backward-integration

Expertise Supply chain

Contracts Channel manage-

ment

BASF perspectivePrincipal factors

STRATEGY CANVAS AND VALUE CURVE

Dedicated in-house

technician

Offer 100% supply

guarantee for A-products

24 hrs. on-line training

for all operators world-wide

Delivery of A-products

within 36 hrs. world-wide

Individual contract design

One stop shopping

Customer perspective

Page 22: Hand Book Streamer

22

Version 8.0

AW 1 – Create innovative opportunities - Workbook

• Understanding customer requirements and differentiate from competitors

• Identification and communication of Blue Ocean is a continuous process to which everyone can contribute

• Offerings need to be reviewed regularly to ensure that customer requirements are consistently met, so that BASF gets a fair share of the value created.

Key messages

Page 23: Hand Book Streamer

23

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Key questions of this session

• How can “Jamming” help you to find Blue Oceans?

• Why are structure and creativity important for developing innovative ideas? How do they play together?

Page 24: Hand Book Streamer

24

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Blue Ocean is only achieved when you combine both structure and creativity

STRUCTUREBLUE

OCEANJAMMING+

GENERAL REQUIREMENTS FOR INNOVATION

Page 25: Hand Book Streamer

25

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Key messages

• Through the creative process of Jamming you can find Blue Ocean ideas

• For Jamming you need both creativity and structure. The structure provides you with the general conditions.

Page 26: Hand Book Streamer

26

Version 8.0

AW 1 – Create innovative opportunities - Workbook

How can customer requirements be translated into Principal (key buying) factors?

How to visualize and assess to what degree customer requirements are currently met?

Key questions of this session

Page 27: Hand Book Streamer

27

Version 8.0

AW 1 – Create innovative opportunities - Workbook

INTRODUCTION

Strategy Canvas and Value Curves

Eliminate / Reduce Raise / Create

To-be

As-is

Relative offering level

Principalfactors

Factor 1

Factor n

Industry standard

Page 28: Hand Book Streamer

28

Version 8.0

AW 1 – Create innovative opportunities - Workbook

BASF EXAMPLE

Possible definitions of Principal Factors of the “As-is” Value Curve

Ability to comply fully with supply agreement

Relevant & broad product portfolio across different business units within BASF to improve offering to the customer

Ease, speed and safety in application of product

Company reputation which also includes its code of conduct, financial strength and success in the marketReliable technical problem solving ability, related to product/process at customer site

Proactive approach towards developing forward looking application with the customer

Ability to share relevant market information (eg: market trends, new innovation & applications) with the customers

Ability to deliver consistent product quality from batch to batch

Reliability

Capability to SupportGrowth

Flexible Payment Term

Company Image

Relationship Management

Customer Service

Product Stewardship

Quality

Supply Reliability

Optimized Product Portfolio

Process Ability

Company Image

Technical Service –Trouble Shooting

Joint Application Development

Provision of Market Intelligence

Consistent Product to Specification

Page 29: Hand Book Streamer

29

Version 8.0

AW 1 – Create innovative opportunities - WorkbookSource: perspectives

EBITafter costof capital

EBIT

Costof capital

Contri-butionmargin

Fixed costs

Cost ofcapitalpercentage

Operatingassets

Sales

Variablecosts

Fixedassets

Currentassets

Sales

Variablecosts

Fixedassets

Currentassets

Value interface

CUSTOMERS VALUE DRIVER TREE

BASF

Customer

Revenue Increase

Cost/ Risk Reduction

Lever to influence

performance

Remember the ultimate reason for innovation: Customers want to improve their value drivers

Value driver

Value driver

Value driver

Page 30: Hand Book Streamer

30

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Value drivers

INSTRUCTIONS EXERCISE

10 min

• Get together in your table groups • Choose one example (BASF product/ service) from

your daily business • Identify how this offering affected the customer’s

value drivers • Discuss how these drivers influenced the

customer’s costs and revenue • Briefly present where the offering hit the customer’s

value tree

Identify value drivers and their influence on the customer‘s value tree

Page 31: Hand Book Streamer

31

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Improve a business by applying the Value Innovation Approach

INSTRUCTIONS

Redesign the selected business into something differentiated, that adds more value for your customer!

EXERCISE

• Choose a business example to work with in the next sessions

• Either work on your impact group topic or• Choose a BASF example from your own

business background (another product or offering)

• Get together in groups according to your topic• Create your group's business working

environment

Page 32: Hand Book Streamer

32

Version 8.0

AW 1 – Create innovative opportunities - Workbook

What does the As-is Value Curve look like?

INSTRUCTIONS EXERCISE

45 min

• Split your group into two and define Principle factors for your selected business taking into account the customer’s perspective:

• Brainstorm and create a list with all relevant factors that determine the buying decision

• Narrow it down to the 6 - 8 most important factors• Get together with the other half of your group again and consolidate

your findings: agree on 6-8 final Principal factors and phrase these on an operational level

• Draw a strategy canvas on a flipchart, add your Principal factorsand rate the relative offering level (from the customer’s perspective!) on a scale from 1 to 5, where 3 represents the industry standard

• Draw the As-is Value Curve for your selected business. Do the same for one selected competitor

• Be prepared to present your findings

Define the right Principle factors and draw your As-is Value Curve

Page 33: Hand Book Streamer

33

Version 8.0

AW 1 – Create innovative opportunities - Workbook

• As-is Value Curve is a visualization of our current offerings based on inside out view of customer requirements

• The As-is analysis has to be robust because mistakes in the early stage can bias the further process

• Customer requirements need to be translated into Principal factors (factors have to be formulated in a precise and differentiated way, taking the customer’s point of view into account)

Key messages

Page 34: Hand Book Streamer

34

Version 8.0

AW 1 – Create innovative opportunities - Workbook

How does the 6 path framework connect As-is and To-be Value Curves?

What should be kept in mind when identifying Principal factors to be Eliminated, Reduced, Raised or Created?

Key questions of this session

Page 35: Hand Book Streamer

35

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Across strategicgroups

2

Across the industryvalue chain

Across complemen-tary offerings

4

Across alternativeindustries

1

Across functional oremotional appeal

5

Across time & trends6

3

Create Reduce

Raise

Eliminate

To-beValue Curve

Use 6 Path framework to develop ideas beyond common market boundaries

• Systematic exploration along 6 main search Paths

• Central question:Which Principal factors can be– Eliminated– Reduced– Raised– Created

OVERVIEW

Page 36: Hand Book Streamer

36

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Look across alternative industries

Source: C. Kim and R. Maubourgne

PATH 1

Value Curve for short haul travel

High

Low

Rel

ativ

e le

vel o

f offe

ring

Car

Meals Lounges Seatingclasschoice

Hubconnec-tivity

Friendlyservice

Speed Frequentdepartures

Principal factors

Existing airlines

• Southwest Airlines did not benchmark with other airlines

• Car was identified as the Next best alternativecompetitor

Page 37: Hand Book Streamer

37

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Guiding questions for looking across alternative industries

PATH 1: POTENTIAL QUESTIONS TO ASK YOURSELVES

1. What industries / segments do I sell into?

2. What are the applications of my product at the customer?

3. What is the function of my product in my customer’s product?

4. Which alternatives / substitutes exist in my step in the value chain that fulfil the same function or purpose? Substitute technologies, substitute products, …

5. What are the differences between my products and the substitutes/ substitute offerings? What are the UVPs? What are the advantages and disadvantages?

6. What advantages or functions could my product / offering provide as well? Would that be a value added for the customer or the value chain?

7. Which substitutes exist within the next steps of value creation?What are the UVPs, advantages and disadvantages?Could my offering provide these or similar functions and would that be a value add?

Page 38: Hand Book Streamer

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Looking across alternative industries

PATH 1: POTENTIAL QUESTIONS TO ASK YOUR CUSTOMERS

What are and what could be substitutes?

Would you think of a substitution and why? Why not?

What functions do the other technologies provide that are advantageous? What is their UVP?

Which functions could your product provide as well? Would they add value?

What are the disadvantages of the substitutes?

Do you see any substitutes for your product or the end product today or in the future? For which substitute do you see largest potentials?

How do you rate your product compared to each of the possible substitutes?

How could you increase your performance in order not to be substituted? How could your product effect that development?

Main goal: What can I learn about technologies and products threatening my position or my customer’s position? What can I learn from these substitutes to improve my offer?

What are and what could be substitutes?

Would you think of a substitution and why? Why not?

What functions do the other technologies provide that are advantageous? What is their UVP?

Which functions could your product provide as well? Would they add value?

What are the disadvantages of the substitutes?

Do you see any substitutes for your product or the end product today or in the future? For which substitute do you see largest potentials?

How do you rate your product compared to each of the possible substitutes?

How could you increase your performance in order not to be substituted? How could your product effect that development?

Main goal: What can I learn about technologies and products threatening my position or my customer’s position? What can I learn from these substitutes to improve my offer?

Page 39: Hand Book Streamer

39

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Look across strategic groups

PATH 2

Value Curve for Curves Women Health Club

• Curvesanalyzed the strengths of 2 typical strategic groups in the health club industry

• Therefore Curves built on the decisive advantages of the two groups and eliminated or reduced everything else

High

Low

Rel

ativ

e le

vel o

f offe

ring

Ameni-ties

Workoutequip-ment

Workouttime

Avail-abilityof in-struc-tors

Environ-ment en-couragingmotivation

Conven-ience

Womanlyatmos-phere

Same-Sex environ-ment

Strategic group 1: Home ExercisePrograms

Strategic group 2: TraditionalHealth Clubs

Source: C. Kim and R. Maubourgne

Principal factors

Page 40: Hand Book Streamer

40

Version 8.0

AW 1 – Create innovative opportunities - Workbook

The process of defining strategic groups

PATH 2

How can strategic groups be defined?

• Choose two competitive dimensions that describe the key strategic decisions companies can make in the market, e.g.– Price– Specialization– … your suggestions?

• Plot firms into a matrix based on these two dimensions

• Repeat the process with different dimensions until differentiated patterns (i.e. different strategic groups) emerge

Com

plet

e bu

ndle

Onl

y po

wde

r

Local Global

= most interesting areas

Example

24

13

• Inver• Frei

• BASF• DuPont• PPG

• Akzo

• Jotun• R+H• Teknos

Com

plet

e bu

ndle

Onl

y po

wde

r

Local Global

= most interesting areas

Example

24

13

• Inver• Frei

• BASF• DuPont• PPG

• Akzo

• Jotun• R+H• Teknos

Com

plet

e bu

ndle

Onl

y po

wde

r

Local Global

= most interesting areas

Example

24

13

• Inver• Frei

• BASF• DuPont• PPG

• Akzo

• Jotun• R+H• Teknos

Com

plet

e bu

ndle

Onl

y po

wde

r

Local Global

= most interesting areas

Example

24

13

• Inver• Frei

• BASF• DuPont• PPG

• Akzo

• Jotun• R+H• Teknos

Onl

ypo

wde

rco

atin

gsP

owde

r& o

ther

coat

ing

tech

nolo

gies

Page 41: Hand Book Streamer

41

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Guiding questions for looking across strategic groups

PATH 2: POTENTIAL QUESTIONS TO ASK YOURSELVES

1. How do I cluster my competition into strategic groups?

2. What are the differences among the clusters? (Inside-out focus)

3. What advantages or functions could I also provide? Would that be added value for the customer or for the value chain?

Page 42: Hand Book Streamer

Version 8.0

AW 1 – Create innovative opportunities - Workbook

If you think of all the suppliers in your industry, do you recognize any fundamental differences among them?Do you perceive these different players as groups of companies showing strategically similar patterns? Who is different from the rest?

Are there other differences among these strategic groups?

Do your customers (or non-customers) prefer purchasing from one of these groups? Why?

Who is your customers’ favourite / best supplier? What makes him stand out from the rest? Services? Quality? Speed? Price?

Why do your customers buy from him?

What are the requirements the supplier has to meet? What does the offer look like? Who would be a serious alternative?

How do suppliers meet these criteria overall and who does this exceptionally well and how?

How does BASF perform on these criteria?

If you think of all the suppliers in your industry, do you recognize any fundamental differences among them?Do you perceive these different players as groups of companies showing strategically similar patterns? Who is different from the rest?

Are there other differences among these strategic groups?

Do your customers (or non-customers) prefer purchasing from one of these groups? Why?

Who is your customers’ favourite / best supplier? What makes him stand out from the rest? Services? Quality? Speed? Price?

Why do your customers buy from him?

What are the requirements the supplier has to meet? What does the offer look like? Who would be a serious alternative?

How do suppliers meet these criteria overall and who does this exceptionally well and how?

How does BASF perform on these criteria?

PATH 2: POTENTIAL QUESTIONS TO ASK YOUR CUSTOMERS

Looking across strategic groups

Page 43: Hand Book Streamer

43

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Develop ideas for your To-be Value Curve

INSTRUCTIONS EXERCISE

Use the Paths in order to develop innovative offerings

• Get together in the working teams for your impact group topic oryour business example

• Brainstorm Alternative industries for exploring Path 1 and possible dimensions for a strategic group analysis

After 10 minutes briefly present your findings in plenary

• Afterwards think of innovative ideas based on alternative industries

• Conduct a strategic group analysis for your case and deduce innovative ideas from this analysis

• Decide which principal factors you could ERRC in your case and put them into the ERRC-grid

• Be prepared to share your findings 60 min

Page 44: Hand Book Streamer

44

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Look across alternative industries to find new ideas

PATH 1: ALTERNATIVE INDUSTRIES WORKING TEMPLATE

Alternative industries:Functions

of substitutes:

Page 45: Hand Book Streamer

45

Version 8.0

AW 1 – Create innovative opportunities - Workbook

PATH 2: STRATEGIC GROUP ANALYSIS

...

...

... ...

Looking across strategic groups

1. Choose two competitive dimensions:

Specialization

Price

Quality (needs to be further specified)

Vertical integration in value chain

Complexity of distribution channels

Product line breadth

Technological or R&D leadership

Brand identification

Capacity utilization

Sales, margin or EBIT

Local, regional or global setup

Ownership structure

2. Plot firms into the matrix based on these two dimensions

3. Repeat step 1 & 2 with different dimensions until differentiated patterns (i.e. different strategic groups) emerge

WORKING TEMPLATE

Page 46: Hand Book Streamer

46

Version 8.0

AW 1 – Create innovative opportunities - Workbook

INSTRUCTIONS EXERCISE

Discuss how to use today’s concepts in your daily work

• Discuss in your table group:

• Which of today's concepts are applicable for your daily work?

• How would you use them?

• Complete the notes you took during the day on your transfer handout

• Regarding the topics covered today - think about what it means for you to be a change agent

15 min

Focus on transfer

Page 47: Hand Book Streamer

47

Version 8.0

AW 1 – Create innovative opportunities - Workbook

EDG looked across the chain of buyers

• EDG's main customer for super-absorbents used in diapers is the Consumer Goods Industry (CGI)

• The players in this industry focused on developing diapers that were as thin as possible, to save costs and presumably fulfill the needs of end customers (mothers)

• EDG looked across the chain of buyers and asked the end consumers (mothers) directly what they needed

• It turned out that the majority of mothers was not interested insuch thin diapers

• EDG used this information to create a more focused offering to the CGI including value based prices

Super-absorbents

BASF EXAMPLEPATH 3

Page 48: Hand Book Streamer

48

Version 8.0

AW 1 – Create innovative opportunities - Workbook

4 steps are required to conduct a value chain analysis (1/2)

PATH 3: STEPS IN A VALUE CHAIN ANALYSIS

•Number of players / concentration

• Growth• Trends …

• .••••

• .••••

Depict the "steps" of the value chain

1

Highlight key market characteristics and

customer needs

3

Identify the key players involved per

step

2 • Key Player a• Key Player b• Key Player ...•

• Key Player m • Key Player n• Key Player ...•

• .•••

• .•••

• .•••

• .••••

• .••••

Step 1 Step 2 Step ...

To validate your results you have to talk to people along the value chain.

Customer’scustomer

Page 49: Hand Book Streamer

49

Version 8.0

AW 1 – Create innovative opportunities - Workbook

4 steps are required to conduct a value chain analysis (2/2)

The profit pool depicts how the overall industry revenue is shared among the different steps of the value chain.

Depict the "steps" of the Value chain

1

Highlight key market characteristics and

customer needs

3

Identify "profit pools" per step

4

Identify the key players involved per

step

2

Operating margin (in %)

0

5

10

15

20

25

Share of industry revenue(in %)

Auto manufacturing

Used car dealers

Auto loans

Gas-oline

Leas-ing

War-ranty

Auto insurance

Ser-vice re-pair

After mar-ketparts

Auto rental

New car dealers

100%

PATH 3: STEPS IN A VALUE CHAIN ANALYSIS EXAMPLE

Page 50: Hand Book Streamer

50

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Various parties are involved in the construction industry value chain

Chemical raw materials

Construction materials producer

CM* wholesalers

DIY* stores

Construction companiesCraftsmen

Commercial constr.

Public constructionResidential constr.

Architects

Key players

• Maxit• Readymix• HeidelbergCement• …

• OBI• Praktiker• Hornbach• Hagebau• Toom• …

Construction:• Hochtief• Holzmann• Bilfinger+BergerCraftsmen:• Fragmented, local

market..

• N/A• BASF• …

Key market characte-ristics

• Fragmentation• Constant margin

pressure• Trends towards

branded products

• Fragmentation• Cyclical business• "Commoditization"'

• DIY stores become increasingly important

• Focus on selection and service recently also increasingly on price

Construction companies• Few large and

several mid-sized companies

• Due to over capacities extremely competitive (e.g., stagnating prices since 1995)

• Constantly declining demand in all 3 sectors

VALUE CHAIN ANALYSIS – CNT BASF EXAMPLEEnd customers

* Construction materials; not further investigated here, Do it yourselfSource: Industry Sector Management

Europe, perspectives

Page 51: Hand Book Streamer

51

Version 8.0

AW 1 – Create innovative opportunities - Workbook* For e.g., selection of/proposal for certain construction materials to be used

Architects have been identified as key decision makers and are now targeted more explicitly

VALUE CHAIN ANALYSIS – CNT

Architects

General responsibility

• Architects are the key decision makers that plan and are involved in the whole construction process

• They are responsible for all technical, economic, and design-oriented specifications in the planning of a building

Decision criteria*

• Of high importance are optical/haptical and technical features as well as brand/image

• Price and durability are also important criteria

Level of involvement in "life cycle"

• High level of involvement in all phases of the construction

Coordination w/other parties involved

• Central coordinators and decision makers• Most often hired directly by the customer/client• Make suggestions about construction system to the

customer/client• May select construction material producer and define exact

specifications for important construction systems

Chemical raw materials

Construction materials producer

CM* wholesalers

DIY stores

Construction companiesCraftsmen

Commercial constr.

Public constructionResidential constr.

Architects

Due to their central decision-maker and coordination role, architects are now being targeted more explicitly via e.g., workshops and focus groups

BASF EXAMPLE

Page 52: Hand Book Streamer

52

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Develop ideas by exploring the market

INSTRUCTIONS EXERCISE

• Get together in the groups for impact group topic or your business example

• Conduct the following 2 steps according to Path 3:

– Conduct a value chain analysis for your case and identify potential ideas for a value offering along the industry value chain

– Based on your findings think of innovative ideas that you could ERRC for your case

• Add these ideas to the ERRC-grid

• Present your results using the "Human Value Chain"

Use Path 3 in order to develop innovative offerings

60 min

"Human Value Chain"

Page 53: Hand Book Streamer

53

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Four steps are required to conduct a value chain analysis

PATH 3: VALUE CHAIN ANALYSIS

• . ••••

• .••••

• .••••

Depict the "steps" of the value chain

1

Highlight key market characteristics and

customer needs

3

Identify "profit pools" per step

4

Identify the key players involved per

step

2 • .•••

• .•••

• .•••

• .•••

• .•••

• .••••

• .••••

The profit pool depicts how the overall industry revenue is shared between the different steps of the value chain.

WORKING TEMPLATE

Page 54: Hand Book Streamer

54

Version 8.0

AW 1 – Create innovative opportunities - Workbook

1. What are the steps of the value chain?

2. What are the key market characteristics and customer needs?

3. Who are the key players per step?

4. What are the profit pools per step?

5. Who are the influencers at the different steps of the value chain?

Guiding questions for a value chain analysis

PATH 3: QUESTIONS TO ASK YOURSELVES

Page 55: Hand Book Streamer

Version 8.0

AW 1 – Create innovative opportunities - Workbook

What exactly does the value chain look like?

Who decides about specifications? Who decides about supplemental technologies? Buyers? Deciders? Influencers?

How much value is created in each step of the value chain? Are there significant differences between the players at each step? What could be the reasons for these differences?

Are there unmet needs that you would be eager to satisfy?

Do you see future changes in the existing market value-chain for your product?

What are the challenges for the players further down the value chain?

What exactly does the value chain look like?

Who decides about specifications? Who decides about supplemental technologies? Buyers? Deciders? Influencers?

How much value is created in each step of the value chain? Are there significant differences between the players at each step? What could be the reasons for these differences?

Are there unmet needs that you would be eager to satisfy?

Do you see future changes in the existing market value-chain for your product?

What are the challenges for the players further down the value chain?

Looking across the industry value chain

PATH 3: POTENTIAL QUESTIONS TO ASK YOUR CUSTOMERS

Page 56: Hand Book Streamer

56

Version 8.0

AW 1 – Create innovative opportunities - Workbook

version 6.0

Source: C. Kim and R. Maubourgne

Value Curve for Barnes & Noble

• Barnes & Noblerealized the lack of differentiating factors in bookstores

• As a result they integrated café & lounge areas into their mega-bookstore, provided a wide book selection, and extended the store hours

High

Low

Rel

ativ

e le

vel o

f offe

ring

PATH 4

Knowledge-able staff

Selectionof books

Storeambience

Storehours

Mall Bookstore

Independent Bookstore

Café &loungearea

Look across complementary products & services

EXAMPLE

Principal factors

Page 57: Hand Book Streamer

57

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Disposal

Look across complementary activities & products to identify customer needs

COMPLEMENTARY ANALYSIS CONSISTS OF FOUR STEPS

1. Key activities in the buying cycle

Quality management

Additional service

Use ofproductPurchasing

2a. Dream points

3. Possible solution/ Complementary offering

4. Potential partner for this at customer / BASF?

Pre-Sales

2b. Pain points

Where to get lowest price?

Call center

Lean purchasing dept.

Customer has no SAP system

E-shopprovides easy order process

In-house training too expensive

Trained people needed

Customer training center

“RATIO repair shop": spot repair set

BASF EXAMPLE

Body shop check:process optimization

Fast & easy repair of spot damages

Inefficient processes

Source: ECR

Page 58: Hand Book Streamer

58

Version 8.0

AW 1 – Create innovative opportunities - Workbook

1. Ask your customer to guide you through the touch points he experiences with you or your product.

2. Find out what his dream or pain points are and discuss possible solutions with him.

3. What are the key activities in the buying cycle?

4. What possible solution could we offer?

5. Who would be the right partners for this at customer/ BASF?

Guiding questions for a complementary analysis

PATH 4: QUESTIONS TO ASK YOURSELVES

Page 59: Hand Book Streamer

59

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Looking across complementary offerings

What is the “experience cycle” of your customers with BASF and its products? Where in the value chain are your customers in contact with you and your products?

Go through the entire process from sales call to product disposal or claims. What could BASF do to improve his process?

Who are the contact persons on both sides?

What are your dream points and pain points in this experience cycle?Which points of interaction in particular work very smoothly and which ones create problems for you?

Dream points: What could be done even better?

Pain points: Serious problems, e.g. handling, quality etc. (Here you can find out about opportunities for improvement.)?

To gain insight into how to improve your offer, talk to your customer about any problems connected with his every day job

Which complementary offering could solve the issues that you discovered above?

What is the “experience cycle” of your customers with BASF and its products? Where in the value chain are your customers in contact with you and your products?

Go through the entire process from sales call to product disposal or claims. What could BASF do to improve his process?

Who are the contact persons on both sides?

What are your dream points and pain points in this experience cycle?Which points of interaction in particular work very smoothly and which ones create problems for you?

Dream points: What could be done even better?

Pain points: Serious problems, e.g. handling, quality etc. (Here you can find out about opportunities for improvement.)?

To gain insight into how to improve your offer, talk to your customer about any problems connected with his every day job

Which complementary offering could solve the issues that you discovered above?

PATH 4: POTENTIAL QUESTIONS TO ASK YOUR CUSTOMERS

Page 60: Hand Book Streamer

60

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Look across complementary activities & products to identify customer needs

PATH 4: COMPLEMENTARY ANALYSIS WORKING TEMPLATE

1. Key activities in the buying cycle

2a. Dream points

3. Possible solution/ Complementary offering

4. Potential partner for this at customer / BASF?

2b. Pain points

Page 61: Hand Book Streamer

Version 8.0

AW 1 – Create innovative opportunities - Workbook

• Swatch transformedthe functionally driven budget watch industry into an emotionally driven fashion statement.

• At the same time, Swatch dramatically reduced manufacturing costs, so it became unattractive for competitors to copy their innovation.

Value Curve for Swatch

High

LowManu-facturingcosts

Productquality

Fashion& design

Newcollect-ions

Brand image

Asian competitors

Reliability

Look across functional or emotional appeal

Rel

ativ

e le

vel o

f offe

ring

Principal factors

PATH 5 EXAMPLE

Page 62: Hand Book Streamer

62

Version 8.0

AW 1 – Create innovative opportunities - Workbook

1. What elements that you are currently offering to your customers are functional? (e.g. product specification, terms of delivery)

2. What elements are emotional? (e.g. branding, loyalty programs, packaging)

3. Which functional elements can be turned into emotional elements? (e.g. co-branding)

4. What new emotional elements could you add to your current offering?

Guiding questions: looking across functional or emotional appeal

PATH 5: QUESTIONS TO ASK YOURSELVES : FOCUS ON PRODUCT

Page 63: Hand Book Streamer

63

Version 8.0

AW 1 – Create innovative opportunities - Workbook

1. Identify all relevant buying cycle stages (e.g. pre-sales, purchase, delivery, use, supplements, maintenance and disposal) of your market and think about the following questions:

2. At which stage are the biggest blocks to......fun and image?...convenience?...environmental friendliness?...risks?

3. After locating the biggest blocks go one step further: What innovative ideas can you derive from these insights?

Guiding questions: looking across functional or emotional appeal

PATH 5: QUESTIONS TO ASK YOURSELVES : FOCUS ON BUYING CYCLE

Page 64: Hand Book Streamer

Version 8.0

AW 1 – Create innovative opportunities - Workbook

What are the functional elements of your current offering to your customers:Product/service specificationsTerms of deliveryetc.

What are the emotional elements?BrandingLoyalty programsLocation of productionetc.

Which functional elements can be turned into emotional elements?

What new emotional elements could you add to your current offering?

What are the functional elements of your current offering to your customers:Product/service specificationsTerms of deliveryetc.

What are the emotional elements?BrandingLoyalty programsLocation of productionetc.

Which functional elements can be turned into emotional elements?

What new emotional elements could you add to your current offering?

Looking across functional or emotional appeal

PATH 5: POTENTIAL QUESTIONS TO ASK YOUR CUSTOMERS

Page 65: Hand Book Streamer

65

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Look across functional or emotional appeal

PATH 5 WORKING TEMPLATE

1. Key activities in the buying cycle (copy from previous exercise)

2. At which stage are the biggest blocks to...- fun and image- convenience- environmental

friendliness- risks?(please check)

3. After locating the biggest blocks go one step further: What innovative ideas can you derive from these insights?

Page 66: Hand Book Streamer

66

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Develop ideas by exploring the market

INSTRUCTIONS EXERCISE

• Get together in the working teams for your impact group topic oryour business example

• Conduct the following 2 steps according to the Paths 4 and 5:

- Find out the key activities in the buying cycle, your customers’dream & pain points, as well as solutions for them or

- Based on functional and emotional appeal, search for innovative ideas along the buying cycle steps you identified

• Based on your findings think of innovative ideas that you could ERRC for your case

• Add these ideas to the ERRC-grid and be prepared to share your findings

70 min

Use the Path to develop innovative offerings

Page 67: Hand Book Streamer

67

Version 8.0

AW 1 – Create innovative opportunities - Workbook

The four elements of a PEST Analysis help to look across time and trends

Political

What are political drivers of governments and regulation authorities impacting the project‘s task?

Economical

Social

What are social trends such as demographic and cultural aspects impacting your business?

Technological

In how far do technological factors impact your business in terms of entry barriers, efficiency and productivity?

What are economical drivers impacting purchasing power and habits making this project necessary?

Answering these questions helps to identify the drivers for a project and related motivation for change

PATH 6: ELEMENTS OF A PEST ANALYSIS

Page 68: Hand Book Streamer

68

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Develop ideas by exploring the market

INSTRUCTIONS EXERCISE

• Get together in 4 working teams

• For your selected factor discuss in your group potential elements or aspects of this factor that might be influencing your business

• Collect these aspects on the flipchart and indicate how they could influence your business/ IG project (positive/ neutral negative)

• Be prepared to briefly present your findings and explain how the different aspects could influence your work

(In the Business case session later this day you will have the chance to use the PEST analysis for your IG topic) 10 min

Have a look at political, economic, sociocultural and technological factors in your market

Political

… +

… 0

… -

Page 69: Hand Book Streamer

69

Version 8.0

AW 1 – Create innovative opportunities - Workbook

1. Discuss the trends you identified with your customer or other players (see target group)

2. How does your customer see these trends? What other trends does he see?

3. Working jointly with your customer, identify trends and how to capitalize on (or overcome) them.

Guiding questions for looking across time and trends

PATH 6: QUESTIONS TO ASK YOURSELVES

Page 70: Hand Book Streamer

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Before talking to your customer, identify trends you see that you want to discuss with him.

What could be major trends related toDemandTechnologyRegulationCompetitive situation / industry situation

What major business and market trends are challenges for your company right now? What do these trends mean for you?

How does your customer intend to respond to these trends?

How will they impact your customer’s business?

More important, how could you help your customer to succeed in this developing market?

Goal: Search for opportunities to work jointly with your customer to identify trends and capitalize on them or overcome them.

Before talking to your customer, identify trends you see that you want to discuss with him.

What could be major trends related toDemandTechnologyRegulationCompetitive situation / industry situation

What major business and market trends are challenges for your company right now? What do these trends mean for you?

How does your customer intend to respond to these trends?

How will they impact your customer’s business?

More important, how could you help your customer to succeed in this developing market?

Goal: Search for opportunities to work jointly with your customer to identify trends and capitalize on them or overcome them.

Looking across time and trends

PATH 6: POTENTIAL QUESTIONS TO ASK YOUR CUSTOMERS

Page 71: Hand Book Streamer

71

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Validate your hypotheses with your customers

INSTRUCTIONS EXERCISE

• Get together in the working teams for your impact group topic or your business example

• Brainstorm different approaches to validate the hypotheses regarding your customer needs that you developed

15 min

Collect approaches to validate your findings

Page 72: Hand Book Streamer

72

Version 8.0

AW 1 – Create innovative opportunities - Workbook

perspectivesoffering

Potential methodsProcess stepsTarget

-Customer surveys-Conjoint Analysis-Customer Interviews-Customer Workshops-Prototyping

-Focus Groups/ Target Groups-Mixed questionnaires (qualitative/ quantitative)-Customer Workshops-Crowd sourcing

-6 Paths-I2I-Ideo-Delphi-Expert polls-Customer Workshops-Trend scouting

- Validate your hypothetical To-be Value Curve with your customer

IDEA Validation

- Test the hypotheses you generated using the 6 paths

IDEA Testing

- Develop new principal factors

- Identify which factors to ERRC

IDEA Generation

Various tools can be used for validating your hypotheses with your customers

SOLUTION HANDOUT

BMLIGsAWs

Page 73: Hand Book Streamer

73

Version 8.0

AW 1 – Create innovative opportunities - Workbook

The BASF Business Model Lab

Business Model Lab (BML) is the structured support for the definition and execution of innovation and growth projects.

BML: focuses on stimulation of innovation in the area of business models (esp. Customer Interaction Approach)

BML: accelerates the successful launch of growth ideas into business impact.

Business Model Lab vs. Impact Group

BMLs are special Impact Groups. The BMLstructure and methodology is used by teams that work on:

larger scale innovation and growth projects

Therefore the Impact Groups receive comprehensive project coaching, workshop moderation and project guidance.

Page 74: Hand Book Streamer

74

Version 8.0

AW 1 – Create innovative opportunities - Workbook

The BASF Business Model Lab –helps you along the journey from red into blue ocean

Page 75: Hand Book Streamer

75

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Supporting tools:

Step 1: Interview preparation

– Develop interview questions– Practice interviews– Schedule Interviews

Step 2: Conduct interview

Step 3: Document interview

Step 4: Meeting of each Path team

– Discuss findings from market exploration– Structure business ideas

Step 5: All-team meeting

– Exchange findings– Structure business ideas– Prepare presentation for workshop II

– Interview guide– External interview trainer– Interview tracker

– Weekly conference call (optional)

– Templates for interview notes & golden nuggets

– ERRC Grid

– ERRC Grid– Templates for value innovation Ideas

Next steps:

Process of the market exploration and supporting tools

PROCESS ACCORDING TO BUSINESS MODEL LAB

Page 76: Hand Book Streamer

76

Version 8.0

AW 1 – Create innovative opportunities - Workbook

IdeaCreation Tool I2I – Ideas to Impact

SELECTED TOOLS 1/3: I2I

Source: BrainStore – Biehl, Switzerland

Page 77: Hand Book Streamer

77

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Key Learnings for conducting customerworkshops

Do not underestimate the lead time needed to get thecustomer to agree to a date.

Customer Workshops should last minimum 2,5 hrs

Involve project lead in all customer workshops (cross-regionally)

The more cross-functional participants on customer side, the more reliable the output of the customer workshops

Develop thorough storyline, before sales approach customers for workshop

SELECTED TOOLS 2/3: CUSTOMER WORKSHOPS

Page 78: Hand Book Streamer

78

Version 8.0

AW 1 – Create innovative opportunities - Workbook

• What do customers really want?

• What are the most important/decisive needs of the market?

• Is there a willingness to pay for certain service/product offers?

• Do all customers have the same requirements?

• How is BASF positioned compared to competition?

• Where are the strength/weaknesses of BASF/most important competitors?

Objectives of Conjoint Study:

To understand how choices are madeby customers/ non-customers

To define key To-be characteristics of product/ services (Value Curves)

To identify opportunities for differentiation from competitors

Conjoint Studies represent a solid base for identifying customer needs and willingness-to-pay

SELECTED TOOLS 3/3: CONJOINT ANALYSIS

Page 79: Hand Book Streamer

79

Version 8.0

AW 1 – Create innovative opportunities - Workbook

• The 6 path framework helps to identify Blue Ocean opportunities from different and unusual perspectives.

• Different methods can be applied in the 6 path

• Identified opportunities allow us to apply the ERRC

• It is important to keep in mind cost-to-serve for Raising or Creating Principal factors as well as identify internal and external barriers when Eliminating or Reducing factors.

Key messages

Page 80: Hand Book Streamer

80

Version 8.0

AW 1 – Create innovative opportunities - Workbook

What are the major challenges to develop a To-be Value Curve?

What are the major advantages of a sound To-be Value Curve?

What are important steps to implement a To-be Value Curve?

Key questions of this session

Page 81: Hand Book Streamer

81

Version 8.0

AW 1 – Create innovative opportunities - Workbook

INGREDIENTS OF A GOOD UVP

A UVP is a specific promise of the benefits provided to target customers that differ from competitors at an explicit price

What will customers get?

Why should these customers buy it from you?

Characteristics of a goodUVP

• Addresses the full array of customers' needs –beyond product features alone

• Provides an easy means for the customer to distinguish the company from its competitors

• Gives the customer a clear idea of the price that they are paying for the benefitsUVP = a specific promise of the benefits provided to target

customers that differ from competitors at an explicit price

• "Unique"• "Value"

How much is it? Which customers will get it and how?

• "Propo-sition"

Page 82: Hand Book Streamer

82

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Create an innovative presentation of your To-be Value Curve

Develop a Unique Value Proposition for your offering

• Get together in your table group• Develop a To-be Value Curve for your selected offering:

– derive up to 8 principal factors from the ideas you posted to the ERRC grid and

– adjust their relative offering level on your strategy canvas: keep in mind customer needs and willingness to pay, cost-to-serve and reluctance to change, and strategic targets

• Phrase the UVP of your offering. Refer to the value your offering level of the Principle factors creates for the customer

• Develop a flipchart with your To-be Value Curve and your UVP: reorder your Principle factors to create an S-shaped To-be curve (start on the left with the factors you plan to eliminate/ reduce and sort to the right the factors you are going to raise or create)

• Be prepared to present your findings

INSTRUCTIONS EXERCISE

30 min

Group #

Unique Value Proposition

Additional information

Page 83: Hand Book Streamer

83

Version 8.0

AW 1 – Create innovative opportunities - Workbook

• The To-be Value Curve is a representation of a targeted offering that meets identified customer needs.

• It is essential to validate the defined Principal factors and respective offering levels with the customer/non-customers and other value chain players and identify the willingness-to-pay

• The relation between willingness-to-pay and cost-to-serve has to be balanced for targeted offering levels. Furthermore, we have to identify whether we have the capabilities to fulfill ourcustomer needs.

• Necessary changes to implement the To-be offering have to be discussed and business rules as well as a standardized information and communication policy has to be implemented.

Key messages

Page 84: Hand Book Streamer

84

Version 8.0

AW 1 – Create innovative opportunities - Workbook

How could a To-be Value Curve bevalidated with the customers?

How can you ensure that customers appreciate the value of attending your Visual fair?

How do you incorporate the feedback of your customers in your final offering?

Key questions of this session

Page 85: Hand Book Streamer

85

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Visual fair of potential To-be Value Curves – An effective way to get your customer’s attention

MAJOR STEPS OF VISUAL FAIR

Ideas developed through market exploration are presented on posters

Participants (e.g. customers, non-customers, colleagues from other BUs, project team members)challenge and discuss ideas

Participants vote for their favorite ideas and give feedback

Based on economic evaluation & feasibility management decides which ideas to pursue further

End of Visual fair

Page 86: Hand Book Streamer

86

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Make sure that the customer sees value in attending your visual fair

How would you ensure a customer attends the visual fair?

• Get together in your group and discuss how to conduct a visual fair for your offering (target group, invitation process, scope, …)

• How can you get the attention of customers/ noncustomers?

• What can you do to ensure that (potential) customers attend the visual fair? Consider the following questions:

– Whom from the customer side would you invite?

– How would you invite the customer?

– How would you ensure that the customer perceives the value add of participating in your customer event?

– What possible objections might they have and how could you overcome them?

• Present your findings (max. 5 mins)

INSTRUCTIONS EXERCISE

10 min

Page 87: Hand Book Streamer

87

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Conduct the visual fair

Visual fair preparation

• Get together in your group and prepare the visual fair • Define how you would assess the outcome of the visual fair and

include your customers’ feedback in your final To-be Value Curve • Select one presenter to introduce your potential To-be Value Curve

and UVP (5 mins)• In a next step define a certain customer segment within your market

and draft a specific, execution focused Value Curve for this target group (e.g. specify factors if necessary, change their weighting and offering level, consider the costs to serve for these adjustments)

• Pick one factor you would E or R and another you would R or C and devise Business rules for each of these

• Have a second presenter introduce this VC and the respective Business rules (5 mins)

INSTRUCTIONS EXERCISE

30 min

Eliminate / Reduce Raise / Create

To-be

As-is

Relative

offering level

Principal

factors

Eliminate / Reduce Raise / Create

To-be

As-is

Relative

offering level

Principal

factors

Page 88: Hand Book Streamer

88

Version 8.0

AW 1 – Create innovative opportunities - Workbook

• Plan your visual fair carefully and take enough time to prepare the event.

• Communicate the value add for the participants to ensure their attendance.

• Find the right balance between presenting your ideas and asking open questions to discover unmet needs.

• Make sure to consider any feedback you receive in the future design of your offering and customer interaction process.

Key messages

Page 89: Hand Book Streamer

89

Version 8.0

AW 1 – Create innovative opportunities - Workbook

• What is the role of analysis tools and a Business case?

• What are the main elements of a business case?

• How is the value innovation approach linked to the BASF PhaseGate process?

Key questions of this session

Page 90: Hand Book Streamer

90

Version 8.0

AW 1 – Create innovative opportunities - Workbook

The Business Case for innovation projects needs to cover four basic elements

Market• Main Customers• Market Segment• Market Growth• BASF Market Share• BASF Volume• BASF Prices• BASF Sales• Competitors• Customer Benefit • Business Model

Technology• Technical Feasibility• Production Cost• Investment• Patent/ Licensing• Raw Material • Safety/Health/

Environment• Registration/

Toxicology

Profitability• NPV• Probability of

Success

General• Goal• Strategic Fit • Team• Gates• Timing

ELEMENTS OF BUSINESS CASE

Page 91: Hand Book Streamer

91

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Business Context and Challenge: Industry Environment – Porter’s Five Forces

Overall industry profitability is determined by the relative power of these five forces

Degree of RivalryHow do you evaluate

the overall rivalry in the

specific business field?

Supplier PowerWhat is the pressure your business faces from the supplier landscape and how does this impact the project task?

Customer PowerTo what extend does the power of your customers change and what does that mean for your business / project?

To what extend does your business experience the threat of new competitors in the market?

Barriers of Entry

Substitute ThreatsTo what extend do potential substitution products and services threaten the business and what does that mean for your project?

Page 92: Hand Book Streamer

92

Version 8.0

AW 1 – Create innovative opportunities - Workbook

StrengthsStrengths: attributes of the organization that are helpful to achieving the objective.

WeaknessesWeaknesses: attributes of the organization that are harmful to achieving the objective.

OpportunitiesOpportunities: externalconditions that are helpful to achieving the objective.

ThreatsThreats: externalconditions which could do damage to the business's performance.

The SWOT Analysis displays strengths, weaknesses, opportunities and threats collected in different analyses

Identifying internal Strength and Weaknesses and external Opportunities and Threats: SWOT – Analysis 1/2

Page 93: Hand Book Streamer

93

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Comparing Strength and Weaknesses with Opportunities and Threats: SWOT –Analysis 2/2

Strengths

How do I use these strengths to take advantage of these opportunities?

Weaknesses

How do I overcome the weaknesses that prevent me taking advantage of these opportunities?

How do I use these strengths to reduce the likelihood and impact of these threats?Thre

ats How do I address the

weaknesses that will make these threats a reality?

The Enhanced SWOT Analysis helps to deduce strategies from different combinations of strengths, weaknesses, opportunities and threats

Opp

ortu

nitie

s

Page 94: Hand Book Streamer

94

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Analyze your business context and challenges

Analyze the environment of your IG project

• Get together in your group and take a closer look at your business environment

• Use the provided working templates to either conduct a

• PEST-Analysis or a

• Porter’s Five Forces Analysis or a

• SWOT-Analysis

for your Impact Group topic (take a few minutes to decide which adds the most value to your project at this point in time)

• Identify potential influences, e.g.: impacts on your cost position, anticipated gain in market share (topline impact) and likely reactions from your competitors (substitution)

• Be prepared to briefly present your findings

INSTRUCTIONS EXERCISE

20 min

Page 95: Hand Book Streamer

95

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Business Context and Challenge:Macro Environment – PEST Analysis

Political drivers:

Social trends:Technological factors:

Economical drivers:

WORKING TEMPLATE

Page 96: Hand Book Streamer

96

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Supplier Power

Substitute ThreatsCustomer Power

Barriers of Entry

WORKING TEMPLATE

Business Context and Challenge: Industry Environment – Porter’s Five Forces

Degree of Rivalry

Page 97: Hand Book Streamer

97

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Strengths:

Threats:Opportunities:

Weaknesses:

WORKING TEMPLATE

Identifying internal Strength and Weaknesses and external Opportunities and Threats: SWOT – Analysis 1/2

Page 98: Hand Book Streamer

98

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Strengths & Opportunities:

Weaknesses & Threats:Strengths & Threats:

Weaknesses & Opportunities:

WORKING TEMPLATE

Deriving strategies from combining Strength and Weaknesses with Opportunities and Threats: SWOT – Analysis 2/2

Page 99: Hand Book Streamer

99

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Business Model Lab business case template: Business Case Framework.xls

BUSINESS CASE TEMPLATE

Source: BML

http

://pe

rspe

ctiv

es.in

tern

al.b

asf.c

om/p

orta

l/bas

f/en

/dt.j

sp?s

etC

urso

r=1_

2535

2&lo

gin=

true

Page 100: Hand Book Streamer

100

Version 8.0

AW 1 – Create innovative opportunities - Workbook

The team presents the project results to the BU leadership

Outcomes:

•Final prioritization

•Alignment of ideas

•Decision on next steps by BU leadership

VISUAL COMMUNICATION

Content of presentation:

•Validated As-is Value Curve

•Business ideas including

-To-be Value Curve

-Business case

-Targeted customer segments

-Concept paper

Source: BML

Page 101: Hand Book Streamer

101

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Phase 4Pilot Phase

Phase 3Lab Phase

Phase 2Business

Case

Phase 1Opportunity

FieldsPhase 5Launch

Gat

e 1

Gat

e 2

Gat

e 3

Gat

e 6

Gat

e 4

Gat

e 5

After the visual communication the idea would be suitable to submit into phase 2 of the PhaseGate process

VALUE INNOVATION APPROACH LINKS TO PHASEGATE

€$¥ £

The business format youwork on in the

Accelerator Workshops is the actual Business Case you submit in the

PhaseGate process

Page 102: Hand Book Streamer

102

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Where you can find more information about PhaseGate and perspectives

perspectives Intranet http://perspectives.internal.basf.com

BASF INTRANET LINKS

BASF Innovation Chainshttp://www.innovationsketten.basf-ag.de

Page 103: Hand Book Streamer

103

Version 8.0

AW 1 – Create innovative opportunities - Workbook

• In depth analyses of your business environment provide the basis to develop a sound business case

• The business case helps you to screen your ideas through quantitative evaluation

• In the visual communication workshop you present your ideas to management

• The PhaseGate process assesses the ideas found with the Value Innovation Approach

Key messages

Page 104: Hand Book Streamer

104

Version 8.0

AW 1 – Create innovative opportunities - Workbook

INSTRUCTIONS EXERCISE

Discuss how to use today’s concepts in your daily work

• Discuss in your table group:

• Which of today's concepts are applicable for your daily work?

• How would you use them?

• Complete the notes you took during the day on your transfer handout

• Regarding the topics covered today - think about what it means for you to be a change agent

15 min

Focus on transfer

Page 105: Hand Book Streamer

105

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Prepare your visual communication

Present your Impact Group project to get the approval from your sponsor

• Prepare with your Impact Group for your visual communication

• Recap all the information you collected during the last two daysusing the different perspectives tools (e.g. Value Curves, 6 paths, business environment analyses)

• Plan your information gathering and types of analyses that you will conduct for your IG project including: analysis of the market, exploration of industry dynamics, customer needs and derive a hypothesis of the unique value proposition (UVP)

• Use the time to work in your group on the most important aspectsbefore going into the visual communication session

• Prepare a 10 minute presentation outlining target and scope of your project, timeframe and estimate potential financial impact, your approach as well as the anticipated customer benefits

INSTRUCTIONS PROJECT WORK

210 min

Page 106: Hand Book Streamer

106

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Based on your customers’ needs – define which principal factors to ERRC

Eliminate Reduce

Raise Create

Page 107: Hand Book Streamer

107

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Business Context and Challenge:Macro Environment – PEST Analysis

Political drivers:

Social trends:Technological factors:

Economical drivers:

WORKING TEMPLATE

Page 108: Hand Book Streamer

108

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Supplier Power

Substitute ThreatsCustomer Power

Barriers of Entry

WORKING TEMPLATE

Business Context and Challenge: Industry Environment – Porter’s Five Forces

Degree of Rivalry

Page 109: Hand Book Streamer

109

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Strengths:

Threats:Opportunities:

Weaknesses:

WORKING TEMPLATE

SWOT – Analysis 1/2 – Identify internal Strength and Weaknesses and external Opportunities and Threats

Page 110: Hand Book Streamer

110

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Strengths & Opportunities:

Weaknesses & Threats:Strengths & Threats:

Weaknesses & Opportunities:

WORKING TEMPLATE

SWOT – Analysis 2/2 – Derive strategies from combining Strength and Weaknesses with Opportunities and Threats

Page 111: Hand Book Streamer

111

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Headline: Description of impact group task...

Source: perspectives

Business challenge/context...

1

Targets to be achieved and criteria for (financial) success/KPIs...

3

Scope of solution space and constraints...

2Tools/frameworks...

6

Process/milestones/team...

5

Support needed/ information sources...

7

Deliverables…

4

Project Plan – Document and discuss your approach to achieve the desired project results

Other stakeholders...

8

• Specific• Measurable• Attainable• Relevant• Time-limited

Page 112: Hand Book Streamer

112

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Sample Workplan – Define working packages, timelines and responsibilities

EXAMPLE

Page 113: Hand Book Streamer

113

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Let’s see whose project approach gets approved…

PRESENTATION

IGproject:

Go

No go

Refine

• After lunch you will have 10 minutes to introduce your project

• 2 members of your group – randomly selected – will present your approach in plenary

• Decide in advance “who you are going to present to” and tell the audience who they are representing

• The audience will evaluate your presentation according to predefined criteria. Afterwards the audience will challenge yourpresentation and vote whether your approach would be given a

• Go/ No go/ Refine decision and

• Recommend further To dos

• Use this session as actively as possible to practice your presentation and gather valuable feedback for your project!

Page 114: Hand Book Streamer

114

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Practice your visual communication

Present your Impact Group project

• Present your IG project outlining target and scope of your project, timeframe and financial impact, your approach as well as the customer benefits (UVP)

• Sell your project and your approach as well as possible to get the approval from your IG sponsor

• After your presentation use the chance to question the audience on what they liked about your presentation and what recommendations they would give

• Those who are not presenting – take notes of the feedback to incorporate later into your presentation

INSTRUCTIONS PRESENTATION

10 min

Evaluation criteria:

Passion and enthusiasm

Project target and scope

Outline of project approach

Timeframe

Financial impact

Anticipated customer benefits

Evaluation criteria:

Passion and enthusiasm

Project target and scope

Outline of project approach

Timeframe

Financial impact

Anticipated customer benefits

Page 115: Hand Book Streamer

115

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Connecting the dots…

Customer Needs

Willingness to pay

?!Customer Interaction Models

Customized solution provider

Product/process innovator

Standard package provider

Lean/reliable basics supplier

Trader/transactional supplier

Value chain integrator

To-be

As-is

Relative offering

level

Principalfactors

Factor 1

Factor n

Industry standard

What will customers get?

Why should these customers buy it from you?

• "Unique"• "Value"

How much is it? Which customers will get it and how?

• "Propo-sition"

Page 116: Hand Book Streamer

116

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Reflect on this Accelerator Workshop and share your learnings and ideas with the audience

• Complete the „Take-away“ templates you received on the last two days

• In your groups reflect your key learnings and ideas that you collected during the sessions

• Afterwards share your findings in plenary

• Take the following questions into consideration:

– How will I be a change agent in my BU?

– How will I execute the concepts I learned in this workshop?

– Which elements can I use to strengthen/ help my Impact Group topic?

INSTRUCTION EXERCISE

Share your key learnings and ideas

20 min

Page 117: Hand Book Streamer

117

Version 8.0

AW 1 – Create innovative opportunities - Workbook

CIM(s) in your BU –How would you know?

CIM (%) Alignment of your BU with the CIMs (refer to the preread you receive for AW 2)Recent visible changes in your BU (business rules, organizational changes, …)

HOMEWORK

Page 118: Hand Book Streamer

118

Version 8.0

AW 1 – Create innovative opportunities - Workbook

What’s next?!

perspectives is…

Global! Continuously growing! Focusing on customer orientation …

So how is my BU involved?

You will see the work on the topics in your daily working life! It‘s a continuing change process …

So what does it have to do with me?

It is the responsibility of everybody to identify optimization potential and communicate it to help our customers be more successful!

Page 119: Hand Book Streamer

119

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Get more information about perspectives

Marketing & Sales Glossary

perspectives brochure

Intranet: http://perspectives.internal.basf.com

Page 120: Hand Book Streamer

120

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Get more information about perspectives

Marketing & Sales Glossary

perspectives brochure

Intranet: http://perspectives.internal.basf.com

Page 121: Hand Book Streamer

121

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Complete checklist tasks to capture maximum value out of perspectives

RECOMMENDED TO-DOS

Deepen Network

Access Impact Group profiles on perspectives Intranet to find topic-related Impact Groups

Foster knowledge exchange with other Impact Groups

Define actions to build and maintain your Impact Group Network

Gather further information

Download AW material from perspectives Intranet

Download Marketing & Sales Glossary (incl. templates) from perspectives Intranet

Check perspectives newsletter for updates on working materials, news and networking

Boost Impact Group work

Download Marketing & Sales Glossary working templates for your Impact Group work

Schedule first coachingsession

Page 122: Hand Book Streamer

122

Version 8.0

AW 1 – Create innovative opportunities - Workbook

Closing thoughts

• Look for opportunities to apply skills you have learned and to develop new business ideas

• Build on the relationships you have developed during the last three days and continue to grow your network

• Stretch outside your comfort zone

• Become an expert and share your learnings with your colleagues

THANKS - have a good trip home!