Post on 13-May-2015
Inspiration from business model classics
Kimmo KoivistoCEO, Tellyo
Who is this Kimmo Koivisto?
Today• Tellyo
Co-founder and CEO• Teho-Opisto
Co-founder and board member
Before• Vectia
Management consultant• Nokia
Research strategy• Helsinki university of Technology
3
Tellyo converts 2nd screen to a smart TV remote for spontaneous discovery, interaction and sharing
@TellyoTV
Who is this Kimmo Koivisto?
Today• Tellyo
Co-founder and CEO• Teho-Opisto
Co-founder and board member
Before• Vectia
Management consultant• Nokia
Research strategy• Helsinki university of Technology
Agenda
• What is business model
• Why business model matters
• Classic cases for inspiration
Agenda
• What is business model
• Why business model matters
• Classic cases for inspiration
”A business model describes the rationale of how an organization creates, delivers, and captures value”
Agenda
• What is business model
• Why business model matters
• Classic cases for inspiration
Business model innovators outperform traditional
innovators
Startups are about inventing radical business models
Incumbents fail because of:
1) CEOs don't really want a new business model
2) Product is king. Nothing else matters
3) Cannibalization is off the table
4) ROI hurdles are too aggressive for fledgling models
5) Rogues and renegades get no respect
Agenda
• What is business model
• Why business model matters
• Classic cases for inspiration
Where to look for innovative business models?
Business model innovation directions
Earnings logic
Earnings logic: Case JC Decaux
Where to look for innovative business models?
Business model innovation directions
Earnings logic Low cost
Low cost: Case Ryanair
Low cost: Case Ryanair
Where to look for innovative business models?
Business model innovation directions
As a serviceEarnings logic Low cost
As a service: Case Hilti
High-quality tools
Manufacturing & Distribution
One-time investment + hard-to-predict service
fees
Traditional Business
Tools when needed and with service guarantee
Inventory, replacement and service process
management
Predictable continuous cost
Hilti Fleet Management
Customer value
proposition
Processes
Procurement
Small batches of tools to individual contractors
Management-level sales of long-term service
contractsSales
R&D, low-cost manufacturing Warehousing & ITResources
Low margins, high inventory turnover
Increased cost of capital but higher margins, montly payments
Profit
Sources: Johnson et al. (2008) www.hilti.com
Where to look for innovative business models?
Business model innovation directions
Standardization
As a serviceEarnings logic Low cost
Standardization: Case Minute Clinic
Where to look for innovative business models?
Co-creationBusiness model
innovation directions
Standardization
As a serviceEarnings logic Low cost
Co-creation: Case ThreadlessLeveraging the Love• All products are designed, rated
and marketed by community members
• Engages creators, critics, joiners and spectators
• Valuable return on time spent
• No advertising, no professional designers, no retail distribution, no salespeople – low overhead, high margins
Where to look for innovative business models?
Co-creationBusiness model
innovation directions
Standardization
Long tail
As a serviceEarnings logic Low cost
Long tail: Case Amazon
HeadHit items, the few
that dominate
Sale
s
Products
Long tailNon-hit items, unique items in relatively low quantities
An example of a power law graph showing popularity ranking
Reference: Anderson, C. (2006). The Long Tail: Why the Future of Business is Selling Less
of More
Demand shifts towards niches with high availability of choice and when there is large population and negligible distribution and stocking costs
Where to look for innovative business models?
Co-creationBusiness model
innovation directions
Standardization
Long tail Network effect
As a serviceEarnings logic Low cost
Network effect: Case Bell telephone
Potential calls between phones
1 10 n
Network effect: Case personalized publications
Content creation (# shared articles) is stimulated to
add platform value
Readers, who are the most price sensitive, are subsidized to drive demand
The integrator facilitates the process and captures part of the created value
Increased demand for the created
contentHigher demand lowers prices and allows variety on printed
media
Higher subsidizing
increases demand
INTEGRATOR
Wider reach and more granular targeting
CONTENT CREATORS
PRINT SHOPS
READERS
More readymade content available for publications.
Advertisers are charged as their demand grows more strongly in
response to growth in the user sideEstablished
practices increase ad
sales
ADVERTISERS
Where to look for innovative business models?
Co-creationBusiness model
innovation directions
Standardization
Long tail Network effect
Your starting point here…
As a serviceEarnings logic Low cost
Key take aways
Startups are about innovating radical business models
Take lessons from other industries
All elements of the model must fit together