1. business and industrial

v.camp: Business Model Development & Innovation
(P)Re-Think Your Business Model
Introduction
Training
Oct 21st/22nd , Rot
Relevance & Objectives
mindset
process
Business Model
Development & Innovation
team
The Business Model Development & Innovation Approach
What is it Built Upon?
Our Coaching Experience
Our Research
 Various internal coaching projects
(e.g. SAP Store, Supplier Info Net,
HANA Cloud, CityApp)
 Some external coaching projects
(e.g. Roche, T-Systems)
 4 years of coaching
 Trainings (‘v camp’)
 6 years of research
 20+ scientific publications
 10 finalized / on-going PhD theses
mindset
process
Collaboration with SAP’s
Communities
 Design Thinking
 Business Model Innovation /
Generation
 Lean / Agile
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Business Model
Development & Innovation
team
Other’s Research & Shared
Experience
 Thought Leaders on Business Model
Innovation (e.g. O. Gassmann, H.
Chesborogh, A. Osterwalder, M.
Johnson)
 Thought Leaders on Lean Start-Up,
Customer Development (e.g. S.
Blank, E. Ries, B. Cooper, A. Maurya)
3
The Business Model Development & Innovation Approach
When and Why to be Used?
New product
(or service)
New business
model (BM)
mindset
process
Existing product
(with limited
success)
Business Model
Development & Innovation
Improved BM
team
Adapted BM
Ensure / optimize economical viability ….
… for all kinds of products …
… based on the appropriate BM
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4
BMDI Complements Existing Innovation Approaches with
a Focus on Economic Viability for the Optimal Solution
Design Thinking
(Lean) Software
Engineering
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Business Model
Development &
Innovation (BMDI)
5
Business Models:
Definition & Description
mindset
process
Business Model
Development & Innovation
team
Business Model Definition
1
The business model abstracts the complexity of a company (or business unit)
by reducing it to its core elements and their interrelations. Thus, it specifies the
core business logic, in particular aspects relevant for its competitive advantage.
2
The business model describes how value is created, delivered and captured.
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7
Business Model Description
Network View
Partner Network
My Company
My Customers
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Customer Network
My Partners
Competition
My Competition
8
Business Model Description
Enterprise View
How?
What?
Who?
Value Creation
Competition
Value Capture
Why?
My Company
My Customers
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My Partners
My Competition
9
Enterprise View = Osterwalder Canvas
Sources: www.businessmodelgeneration.conm (A. Osterwalder / Y. Pigneur)
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10
A Well-Known Example: McDonald’s
Network View
Partner Network
Customer Network
Competition
Pizza
restaurant
Brand / Licence
Products/Equipment
Service
Providers
Revenue
Franchisees
Concept
Revenue
Revenue
Services
Spreading
the brand
Brand awareness
Revenue
Branded
Suppliers
Revenue
Revenue
Fast food
Revenue
Coffee culture
(Mc Café)
Local
Suppliers
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Revenue
Sandwiches
Branded
Products
My Customers
Fast food
Coffee culture
(Mc Café)
Revenue
Quality food
products
My Company
Fast food
Consumers
Coffee
culture
Revenue
My Partners
My Competition
11
A Well-Known Example: McDonald’s
Enterprise View
Branded
Suppliers
Standardized
processes
Consumers: ONE global
customer experience
Efficient supply chain &
logistics
Fast Food /
Coffee Culture
Experience
Brand-focused
marketing
Local
Suppliers
Brand
Franchising concept
Franchisees: (Longterm) contracts
Consumers
Franchisees: Global
Brand & Marketing
Equipment, Recipes,
Furniture, Layout,
Support provided
Consumers: Shops,
Advertising, Coupons
Franchisees: Direct
Cannel
Stable quality
Franchisees
Low -wages
Service
Providers
My Company
Consumers: Brand,
Loyalty Programs,
Family Attractions
High efficiency and stability
Direct revenue from consumers
Economies of scale
Brand allows for price premium
Low-wages
Revenue from Franchise Restaurants (Profit
Share, Fees)
My Customers
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My Partners
My Competition
12
Extensions of the Network View
Specifics of Complex Business Models

Multi-sided business models: These models only work, if it’s
ensured that each entity in the customer network receives
sufficient value as an incentive for participation.


Business models with network effects: These models only
work, if it’s understood where and why network effects occur
and how they have to be leveraged to build and sustain
critical mass.
Alliances: These models only work, if the joint business
model as well as all the individual ones make sense from
the stakeholders point of view.
My Company
My Customers
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My Partners
My Competition
13
Behind the Value Proposition is Your Product
What You Want to Accomplish with Your Value Proposition
Your Product or Service should
be developed in a way that you:

Address the customer needs
to the largest possible
extend

Maximize your unique value
proposition (by leveraging
your unfair advantages)

Minimize the competitors’
unique value proposition (by
circumventing their unfair
advantages)
Customer
Segment
Me
My Customers
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My Partners
Your
Competitors’
Unique Value
Proposition
Your Unique
Value
Proposition
Common
Value
Proposition
This has to be done per
customer segment (and
competitor group, if necessary)
My Company
Competitor
Group
Your Overall
Value
Proposition
My Competition
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Analyzing All Influencing Factors
Building a Value Proposition That Fits
Problem /
Solution
Fit
My Company
Customer Segment: ABC
Competitor Group: XYZ
Problem / Task
Alternative Solutions
Job(s) to be done
Key Features
Gains & Pains
Unfair Advantages
Unique Value Proposition
Overall Value Proposition
Unique Value Proposition
Gain Creators / Pain Relievers
Unfair Advantages
Solution
Key Features
My Customers
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My Partners
Market /
Solution
Fit
My Competition
15
Business Model Development & Innovation:
Approach, Process & Methods
mindset
process
Business Model
Development & Innovation
team
Business Model Development & Innovation
Our Definition and Approach
An iterative process resulting in a suitable business model adding economic value to the
company.
Current Business Model
or Baseline
Future
Business Model
Influencing Factors
Innovation / Transformation
Verification
Piloting
Analysis
Execution & Scaling
Design
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17
Business Model Development & Innovation
An Iterative Approach – Not A Sequential Process
Iterations can be done in the sequence and to the extend that is required by the individual
project.
Analyze &
Improve
Test &
Verify
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Challenge &
Change
Evaluate &
Decide
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Business Model Development & Innovation
It’s Not Just a Process. It’s a Mindset.
Visionary
Customercentric
Analytical
Mindset
Adventurous
Open
When you aim for business model innovation, the right mindset is as important as
the right process and methodology.
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Business Model Development & Innovation
It’s Not Just a Mindset. It’s a Team Effort.
First of all you need a core team, representing all key functions and competencies.
Diversity matters!
In addition, make sure you can access all relevant experts internally and externally, you know
your stakeholders, and you have sufficient backing by promoters.
Core Team
Stakeholders
Sponsors
Experts
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Business Model Development & Innovation
For Success All Elements Have to Come Together
Team
Process
Mindset
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21
Level of Uncertainty & Need for Assumptions
How to Use the BMDI Approach
Close to Core
Market
Far from Core
The usage of the BMDI approach is significantly influenced by the level of uncertainty both on
the solution and on the market side. Even established companies have to act rather like startups, if they operate under a high level of uncertainty. In this case they have to make a lot of
assumptions to build a business models and will need many iterations to reduce uncertainty
throughout the process. Nevertheless, the desired (or required) degree of innovativeness is
independent from the level of uncertainty.
Close to Core
Level of
uncertainty /
Need for
assumptions
Number of
iterations
Role of existing
business
models
Degree of
innovativeness
High
High
Inspiration
Low - High
Low
Low
Guideline
Low - High
Far from Core
Solution
Sources: R. Stacey, 2002; B. Nagji and G. Tuff 2012
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When and Where to Start?
How to Use the BMDI Approach
The BMDI approach can be utilized both for new (to be developed) solutions and for existing
ones. In the first scenario, even though there is no business model in place, mostly the
project team has a lot of ideas and assumptions regarding the different elements, that should
be documented and used as a base line for the BMI project. In the latter case the current
business model needs to documented as a starting point.
Type of solution
Typical triggers
Business model
New solution
Ensure economical viability,
outperform competition,
opportunities in the market
Needs to be developed; First
ideas and assumptions are
used as a starting point
Existing solution
Limited economical success,
inappropriate business model
(e.g. acquired) , changes in
market environment
Needs to be improved;
Current business model is
used as a starting point
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Don‘t Re-Invent the Wheel
How to Use the BMDI Approach

Findings from the literature:

90% of all new business model innovations are
re-combinations of existing business models.

Companies can adopt business models
pioneered in one space into another.

Many re-usable business models are described in
literature and by commercial providers.

No matter if you act under low or high uncertainty
and no matter if you go for rather incremental or
rather disruptive innovations: Existing business
models should always be leveraged – be it as a
guideline or just as an inspiration.

Learn from others. However, understand and
adapt, do not just copy.
Sources: Gassmann et al., 2012; Johnson, 2010; Chatterjee, 2013; Teece, 2010; McGrath, 2010; Breuer , Ketabdar , 2012; Zott, Amit, Massa, 2010 (referring to: Timmers, 1998;
Tapscott et al. 2000 ; Applegate, 2001; Rappa, 2001; Weill & Vitale, 2001 )
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24
Thank You!
Contact information:
mindset
uli.eisert@sap.com
process
Business Model
Development & Innovation
team