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Cruising to Profits ® B USINESS T RANSFORMATION P ROCESS O VERVIEW R ICARDO V. P ILON CEO, MILLENNIUM AVIATION , INC . MILLENNIUM AVIATION, INC. © 2014 / CRUISING TO PROFITS®

C2P framework overview

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The Cruising to Profits business transformation method and toolbox is a process-based means of systematic business transformation planning. It contains 6 phases, 10 steps, and practical management exercises.

Text of C2P framework overview

  • 1. Cruising to Profits BUSINESSTRANSFORMATIONPROCESSOVERVIEWRICARDOV. PILONCEO, MILLENNIUMAVIATION, INC.MILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS

2. Successful Business ModelDefinition: The value proposition that delivers the most value andgenerates the highest return (revenue streams)to the clients that value it most (customer segments)by best capitalizing on/using the chosen activities and assets (key activities and key resources)offered and delivered through the most effective mechanisms (channels)and the most appropriate partnerships (key partners)and thus develop deep and lasting relationships (customer relationships)on the most efficient basis (cost structure).MILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 2 3. Business Transformation3Is about addressing the DNA or core character of the airlineIs fundamentally overarching strategic planningStrategic planning is concerned with activities that attain the goals of the current business modelBusiness Transformation addresses a move toward future business modelsBusiness Transformation Methodologies and techniques enable the creative development of new profits models in new business models, executed by the same teamCruising to Profits provides a framework, checklist and toolbox, but key elements are:It bridges business strategy and implementation (where most consultants are absent)A focus on disciplined execution and a systematic process(95% of strategies or transformations depend on how it was implemented)It cross-checks profit model components with traditional departmentsIt incorporates people and people-related aspects (simple, practical exercises translate to ownership)MILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 4. What is the Methodology?Cruising to Profits Business Transformation service is:The connection between strategy and executionA practical map that guides managers to strengthen, revive, or transform their business modelA process that allows airlines to obtain deep insights into the workings of the 9 building blocks of their business modelsA toolbox of pragmatic exercises that are simple, intuitive to adopt and put to practiceThe process is comprised of 6 phases and a total of 10 steps, each of which has practical exercisesThe method includes:Self assessments and scorecards (qualitative) to clarify company identity and purpose from a more holistic point of viewQuantitative metrics (how well the company is doing in profiting from its business model)Tools to analyze 9 business model building blocks and identify profit and revenue leakage (and inconsistencies)Techniques to identify and design new business modelsA checklist against proven business models and business model patternsThe detailed content and process is customized to the unique DNA of the respective airline in order to incorporate the organizational, cultural, and human elements in transformation planning and change management. MILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 4 5. Examples of Business Model Transformation Clients Cases1.Domestic charter airline wants to convert to a scheduled low-cost carrier2.Airline wants to move from transaction- based ticket pricing and implement subscription-based pricing (passes or membership)3.An international airline wants to remove its business class offering and introduce a premium economy service4.An Asian scheduled airline wants to convert to an ultra low-cost carrier5.A merger6.A partial stake and business alignment7.An IT division of a cargo company wants to spin off its technology as a stand-alone company8.Bankrupt airline needs a go-around and restartMILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 5 6. Key Building Blocks1/29/2014 6Redefine perspectiveResizeRebuildBusiness TransformationOpen Innovation(Customer Drives It)The ProcessThe Roadmap Forward +Implementation Method +The ToolboxMILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITSExecution 7. 7Cruising to Profits Business Transformation ProcessPhase 1: InsightsGround 0: PerspectivePhase 5: ExecutionPhase 2: VisualizePhase 3: BuildMILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITSDriver of changePhase 4: TestDiagnosis & RedesignStep 1:Define Identity and DNAStep 2:Commercial Health CheckStep 3:Business Model Building BlocksStep 4:Business Models PatternsStep 5:Model DesignStep 6:Strategy TestStep 7:StorytellingStep 8:DeliveryStep 9:Leading ChangeStep 10:DiagnosisNext TransformationStrategic PurposeIndustry PurposeCompany RolePotential RoleGuiding PrinciplesStrategy DisciplineCustomer Intimacy DisciplineConsumer TrendsIndustryTrendsCompetitive ContextRegulationsGuiding Principles 8. Perspective concentrates on:Characteristics of the fundamental drivers of demandObjectiveRe-state the strategic purpose of the industryWhat we are versus what we do.Describe how the industry is fulfilling its purposeRe-identify the key role of your airline in the industry(local community, nation, region, world).ResultsRefreshed sense of focus and set of guiding principles.8Strategic PurposeIndustry PurposeCompany RolePotential RoleCruising to Profits Business Transformation ProcessDriver of changePhase 1: InsightsGround 0: PerspectivePhase 5: ExecutionPhase 2: VisualizePhase 3: BuildPhase 4: TestDiagnosis & RedesignTool:Cruising to Profits -The Magnifying GlassTMContents:Scorecard based assessments.MILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 9. 9Cruising to Profits Business Transformation ProcessDriver of changePhase 1: InsightsGround 0: PerspectivePhase 5: ExecutionPhase 2: VisualizePhase 3: BuildPhase 4: TestDiagnosis & RedesignStep 1:Define identity and DNAStep 2:Commercial health checkStep 3:Business model building blocksAnalyze each BM componentReview departments / functions against BM componentsObtain all relevant data by activity / departmentCross-Analysis: ProfitabilityProductivityEffectivenessDecompose business model (BM)Tool:Cruising to Profits -The Magnifying GlassTMCruising to Profit -The ThermometerTMPredictive AnalyticsContents:Scorecard based assessments.VPRSKAKRCSCRKPKCCSMILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 10. Phase 1 allows you to:Gain deep insights into how your identity and business model translates into:Profitability, Productivity, EffectivenessIdentify profit and revenue leakage, customer attritionPerform a deep segmentation of your customer baseWhy do your customers travel?What are they interested in, or what do they do out-path?Conduct hybrid segmentation, e.g.:What combinations of experiences can enhance the customers experience overall?10Cruising to Profits Business Transformation ProcessDriver of changePhase 1: InsightsGround 0: PerspectivePhase 5: ExecutionPhase 2: VisualizePhase 3: BuildPhase 4: TestDiagnosis & RedesignTool:Cruising to Profits -The Magnifying GlassTMCruising to Profit -The ThermometerTMPredictive AnalyticsContents:Scorecard based assessments.VPRSKAKRCSCRKPKCCSMILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 11. In Phase 2 you will be able to:Generate new ideas that will create incremental revenue streamsEnvision different ways of what the company can be and offerFormulate and picture different business models aroundThe unique characteristics of your building blocks that fulfil a strategic purposeHow the building blocks are arranged to solve the customers problemsHow to create an irresistible value proposition for those customers11Cruising to Profits Business Transformation ProcessDriver of changePhase 1: InsightsGround 0: PerspectivePhase 5: ExecutionPhase 2: VisualizePhase 3: BuildPhase 4: TestDiagnosis & RedesignMILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 12. 12Cruising to Profits Business Transformation ProcessDriver of changePhase 1: InsightsGround 0: PerspectivePhase 5: ExecutionPhase 2: VisualizePhase 3: BuildPhase 4: TestDiagnosis & RedesignTool:Cruising to Profits -The ThermostatTMPredictive AnalyticsContents:Scorecard based assessments.VPRSKAKRCSCRKPKCCSEvaluate alternative patternsApply current commercial dataAlign business model componentsStep 4:Business Models PatternsIdentify current patternAlign business functionsSelect 1-3 scenariosSales & MarketingDistributionTechnologyProductPricing & RMLoyaltyOPSTalentGuiding Principles: Each Building Block has Departmental TouchpointsIdentify Inconsistencies and Remove Destructive PatternsMILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 13. 13Cruising to Profits Business Transformation ProcessDriver of changePhase 1: InsightsGround 0: PerspectivePhase 5: ExecutionPhase 2: VisualizePhase 3: BuildPhase 4: TestDiagnosis & RedesignTool:Cruising to Profits -The ThermostatTMPredictive AnalyticsContents:Scorecard based assessments.VPRSKAKRCSCRKPKCCSKnown needs of non- customersIdentify unknownsStep 5:Business model designUnmet needs of customersSales & MarketingDistributionTechnologyProductPricing & RMLoyaltyOPSTalentGuiding Principles: Each Building Block has Departmental TouchpointsIdentify Inconsistencies and Remove Destructive PatternsBrainwave techniqueThink post(visual thinking)Activity storiesCustomerempathy mapTest driveScenariosDeep customer insightsPeriphery marketsMILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 14. 14Cruising to Profits Business Transformation ProcessDriver of changePhase 1: InsightsGround 0: PerspectivePhase 5: ExecutionPhase 2: VisualizePhase 3: BuildPhase 4: TestDiagnosis & RedesignBusiness model trend analysisStrategic planning toolsApply Blue Ocean methodStep 6:Strategy TestCompetitive environmentMulti-Divisioncheck upGlobal application validationStep 7:StorytellingCustomers problemviewDeliveryviewEmployeeviewInvestorviewMILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 15. 15Cruising to Profits Business Transformation ProcessDriver of changePhase 1: InsightsGround 0: PerspectivePhase 5: ExecutionPhase 2: VisualizePhase 3: BuildPhase 4: TestDiagnosis & RedesignStep 8:DeliveryStep 9:Leading ChangeAppoint Departmental Change AgentsCreate Multi- Disciplinary Change Design TeamsDevelop Business PlansAppoint Chief Integration LeaderDesign New OrganizationBuild Change & Delivery ProcessSimulate and Produce Quick WinsStep 10:DiagnosisMILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 16. Cruising to Profits Business Transformation ProcessDriver of changePhase 1: InsightsGround 0: PerspectivePhase 5: ExecutionPhase 2: VisualizePhase 3: BuildPhase 4: TestDiagnosis & RedesignThe business model will evolve:Competitive environment forces it toLessons learned need to be incorporatedAdapt and modify in response to market reactionSet up the management structure to continuously monitor and assess progressAssess scorecardsAssess performance against scenariosAssess governance performanceModify building blocksRerun and implementMILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 17. NotesThis was the first level of granularity.There are 5 levels.Beyond that, there are 2 more levels of granularity that are tailor-made together with the customer to reflect their DNA. The unique identity, skills and personalities are at play at that level of detail and cannot be driven by us. It should not. We are a resource.MILLENNIUM AVIATION, INC. 2014 / CRUISING TO PROFITS 17