Business model innovation worskshop

Business model innovation workshop

Indrek Maripuutwitter.com/indrekmaripuu

Creative Commons Attribution-NonCommercial-ShareAlike 3.0

Unported License.

Why are we here?

To develop new versions of your current business model!

- Brainstorm & analyse - Prioritize and develop

- Decide next steps- Learn new tools

twitter.com/indrekmaripuu

WARNING!It is not a lecture. It is a workshop. You will

be forced to work!

It is not about what worked earlier (case studies etc). It is about what may work in the

future.

You may find it uncomfortable![In fact, I hope you do! Because only then it is

valuable for you!]


Twitter: @indrekmaripuuLinkedIn: http://ee.linkedin.com/in/indrekmaripuu

Indrek Maripuu● Brainstormer.

● Entrepreneur.

● The evangelist of business model innovation.

● Developing a unique ‘innovation farm’ in Southern Estonia.

Clear your mind!

[Let´s take a bit of time to find out what is going on.]

What to you need to say in order to be

completely present today?

Tell it to your neighbour! You have 5 minutes.


1. Business model innovation


@alfrehn have noticed:

Communist Party of China: creativity is natural part in the

development of communism and a central part of the revolutionary ideal.

Vladimir Putin: creativity will drive Russia.

Even Vatikan has its own innovation programs.

...


Do you know this old „proverb“: “No one ever got fired for hiring McKinsey”.

Modern version of it would be: „No one ever got fired for suggestions like: we

have to be more creative.“

There is too much talk about creativity!


Creativity is a ability to look same things as

everyone else, but to see different things.

Our goal today is to learn to see disruptive business models in your industry.


Often we focus on the company that launched a game-changing business model, and forget the

important question: why didn´t others see the same thing?

The problem is not in the knowledge we have or in the stories we have heard, but in how we imagine

utilizing this knowledge.


What do you see?twitter.com/indrekmaripuu

This figure was drawn in 1900 by Joseph Jastrow, american psychologist. The figure can be viewed as a duck or a

rabbit – when the face looks right it is a rabbit; when it looks left it is a duck. You tend to see the whole rabbit or the whole

duck. Not both at the same time. It depends on which animal you select to focus on.

It is exactly same with business models – you choose where you put your focus and

how many different possibilities you see.


So you have sketched a business model? Forget about it!

Nothing is more dangerous than an idea when it’s the only

idea you have.

- Emile Chartier


It is not one HEUREKA moment!It is focused effort to find ideas!

[In order to find a good idea you need lots of ideas!]

Generation[Creative]

DECISIONSynthesis[Rational]?


Usual suggestion is: create multiple versions!

Business Model Canvas is developed by Alexander Osterwalder

.......

Our brain does

not work this

way!


The human brain is lazy! It will only engage if pushed!

Otherwise it will go for the easier way, the well-known path.

[In our case: you just decide you already have a best version of your businessmodel]


What associates with...

... “foot”? 86% - shoe, arm, toe

... “command”? 71% - dicipline, army, obey, officer


Too bad! We use similar patterns


Be careful!Your (and mine) brain is

designed to reognize patterns and draw

conclusions from them.


Habitual thinking!„Who the hell wants to hear actors talk?“Harry M. Warner Warner Bros. 1927

„Heavier than air flying machines are impossible.“Lord Kelvin President Royal Society, 1885


What is the best strategy to

overcome this rational and

creative conflict?

“The illiterates of the 21st century will not be those who cannot read and write but

those who cannot learn, unlearn, and relearn”- Alvin Toffler


In order to push your brain you

need focus & tools!

Your focus is the problem you want to solve, or the idea you want to expand.

We need some creativity tools because we are pretty good at imitating. We are so good that we

barely notice when we are imitating.

2. Ideastorm{Focus & tools}

Nothing is more important to exploration and discovery than the art of asking good

questions.

Good questions set our focus, ignite passion and energy and illuminate solutions that were

previously obscure.

Questions are firestarters!


Focus!Ideas for businessmodel innovation can come

from anywhere. Each of the nine building blocks can be starting point, but all innovations affect

other building blocks.

Four main epicenters:● Resource-driven

● Offer-driven● Customer-driven● Finance driven


Resource-driven

Resource driven innovation originates from an organization´s existing infrastructure or partnership to expand or transform the business model.

Example: Amazon Web Service was built on top of Amazon.com´sretail infrastructure to offer server capacity and data storage space.

Offer-driven

Offer-driven innovation originates creates new value propositions.

Example: Cemex, a Mexican cement maker, promised to deliver cement to job sites within 4 hours (48 was industry standard). This innovation

helped them to grow 2nd biggest cement producer in the world.

Customer-driven

Customer-driven innovation are based on customer needs, facilitatedaccess or increased convinience.

Example: 23andMe brought personalized DNA testing to individualclients – an offer previosly available only to health professionals.

Finance-drivenThis is innovation driven by new revenue streams, pricing

mechanisms or reduced cost structure.

Example: When Xerox invented the 1st paper copier i was priced to high for the market. They changed businessmodel and started to lease

machines and sell copying service.

Now discuss and decide your focus for this workshop!Possible questions to clarify your focus:

● Resource-driven: What new business we can start based on existing infrastructure and / or partnerships?● Offer-driven: What new value we can offer for our clients? ● Customer-driven: To which new customer segments we can create value?● Finance driven: How could we create a game changing cost structure?


Tools!


Before we start...

The rational and creative are always in conflict with

each other. Rationality likes acting according

what our experience tells us, while creativity involves breaking existing rules and

habits.


For this session, please turn off your rational thinking!

[Yes, you are allowed to turn it on later on]


Tool # 1: Brainwriting


BrainwritingGenerate silently at least 3 ideas related to

the question (focus you decided earlier) and write them on the paper. Timeframe: 3 minutes.

Pass the paper to the person on your right.

Read the ideas you received and develop them. If not able to develop just add a new

idea inspired by what you just read. Timeframe: 3 minutes.

Continue this process until the circle is closed.


Tool # 2: daVinci


What you can use tights for?


Now let´s use same methodology for generating ideas for your business

model.

{Now you need your question!}


3. Selection


PrioritizeMap all the ideas based on two criteria:

investment vs business potential.

Inve

stm

ent

Hig

h

L

ow

Low High

Business potential

??

ConceptualizeTake a look at the ideas!Pick up max 8-12 ideas.

Work in teams:(see template on the next slide)

(1) What's positive?(2) What's negative?

(3) What are the needed further steps?(4) Choose 3 best ideas


PLUS:

__________________________________________________________________________________________________________________________________________________________________

INTERESTING:

__________________________________________________________________________________________________________________________________________________________________

MINUS:

__________________________________________________________________________________________________________________________________________________________________

NEXT BOLD STEPS:________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________


4. New business models


Using three best ideas develop three new versions

of your business model!

Remember! Change in one block most probably

affects all the other blocks as well. Be careful!


BAD NEWS!

Your business model

is still just a set of

untested hypotheses!


Untested hypotheses because you haven´t

asked customers!

The most valuable informationcan only be collected on the field. Not behind your desk or in the workshop. Customers are the only relevant judges of your business model.

However, even before you test your model in the market, you can assess its design with following questions by @AlexOsterwalder.

1. How much do switching costs prevent your customers from churning?

The time, effort, or budget a customer has to spend to switch from one product or service provider to another is called “switching

costs”. The higher the switching costs, the likelier a customer is to stick to one provider. F.ex.: Apple’s iPod “thousand songs in a

pocket” was a strategy to get customers to copy all their music into iTunes, which would make it more difficult for them to switch to

competing digital music players.

2. How scalable is your business model?Scalability describes how easy it is to expand a business model without equally increasing its cost base. F.ex.: Facebook create

value for hundreds of millions of users with only a couple of thousand of engineers.


3. Does your business model produce recurring revenues?

When a newspaper earns revenues from the sales at a newsstand they are transactional, while revenues from a subscription are recurring. Recurring revenues have two major advantages: the

costs of sales incur only once for repetitive revenues; with recurring revenues you have a better idea of how much you will

earn in the future.

4. Do you earn before you spend?This one goes without saying. The more you can earn before

spending, the better. F.ex.: Dell assembles computers after the order and managed to decrease inventory costs

5. How much do you get others to do the work?

What could be more powerful than getting others to do the work while you earn the money? F.ex.: IKEA gets us to assemble the

furniture we buy from them.twitter.com/indrekmaripuu

6. Does your business model provide built-in protection from competition?

A great business model can provide you with a longer-term protection from competition than just a great product.

F. ex.: Apple’s appstore.

7. Is your business model based on a game changing cost structure?

Cutting costs is a long practiced sport in business. Some business models, however, go beyond cost cutting by creating value based on a totally different cost structure. Skype, for example, provides

calls and communication almost like a conventional telecom company, but for free or for a very low cost.


Which version (sketch)of your business models

is the best?


Now,prepare

forreal

tests!


Preparation!

● Write down your hypotheses for each of the 9 blocks of the business model.● Come up with ways to test: what are each of the 9 business model hypotheses?● Come up with what constitutes a pass / fail signal for the test (e.g. at what point would you say that your hypotheses wasn’t / was correct)?


Thank you!twitter.com/indrekmaripuu

Business model innovation worskshop

Business

Transcript of Business model innovation worskshop