New Business Models

12 June 2007

2

Opening thoughts

• Frank discussion

• Diversity

• Summary and contact list

• Introductions

9th breakfast seminar

First one here at Duke’s Hotel

3

Age of Discontinuity

Disco

ntin

uity

Acceleratio

n

Ch

ang

e

‘00 - ‘12?‘84 – ‘02 ‘64 – ‘87Post-War

Stab

ility

Globalisation

Technology

Business Model Innovation

Infrastructure Development

Human Capital Growth

Historical Development• Simultaneous multiple changes;

shifting frames of reference

• Growing ambiguity; shrinking certainty

• Opportunity window opens and closes very quickly

• Low margin for error, growing performance demands

New models for strategy and leadership needed

4

What Can Happen at a Discontinuity

• Everybody headed in roughly the right direction.

• Multiple tools and systems to ensure this is so: business plans, performance management systems, reporting structures, etc.

• Tools aren’t perfect, so relies heavily on informal systems, workarounds, and individual initiative.

• Lack of clarity about what the right direction is.

• Formal systems become counterproductive; informal systems and workarounds get overloaded or break down.

• Unless addressed, organisational performance can decline dramatically.

5

Thought-to-Action Cycle

Context

Clarify: See the current situation, how it is changing, and what that means. Identify the predictable futures that might come as a result and ways to influence which occurs.

Identity / Journey

Align: Select specific goals to be reached, actions to be used to reach them, and boundaries on those actions.

Practices

Act: Conversations, symbolic actions, writing, presentations, formal decisions, habits and other activities that shape what happens.

6

Business Model Overview

Suppliers

Business infrastructure

(IT systems, equipment, facilities)

Control system

(management structure, performance metrics, culture, purpose, “core group”, etc.)

• Goods / services

• Labour

• Capital

• Direct

• Indirect

“Public goods” infrastructure

(legal, transport, communications, waste disposal, etc.)

External control system

(legal / regulatory, public opinion, etc.)

CustomersSellAdd valueSource

7

Suppliers Customers

“Public goods” infrastructure

External control system

Business infrastructure

Control system

SellAdd valueSource

Pressure Points

Continuing time pressure

Customer knowledge

growing

Proliferation of channels / advisors

Environmental and other externalities

become internalised

Regulators press for transparency and

fairness

Liquidity is everywhere

Suppliers can be from

anywhere

Employees more

demanding

Public infrastructure

goes “user pays”

Infrastructure costs become variable, barriers to entry

drop

More inclusive (mission-based) strategies, rather than

oppositional (competition-based)

Control systems overmatched by

complexity / uncertainty

Core value gets

commoditised

Suppliers go direct

8

Suppliers Customers

“Public goods” infrastructure

External control system

Business infrastructure

Control system

SellAdd valueSource

Control System: Optimising the Value / Money Flow

Value delivery

Money Flow

Customer Surplus:

Strategic barrier

Supplier Surplus:

Strategic barrier

Today

Finer detail

• Increasing frequency, finer granularity

• Understand strategic surpluses in more detail

Bigger picture

• Holistic view of system (Big Numbers)

• Extract more information across transactions

Today

9

Core Value Gets Commoditised – Internet Retailing

Huh?

What’s this?

10

Core Value Gets Commoditised – Internet Retailing

• 10% of revenue now from services – sees as major strategic move for future

• Used to be seen as a weak point, major source of customer complaints

Also:

• Plan to sell through Wal-Mart and other resellers

• Expanding own-branded stores

11

Core Value Gets Commoditised – High Street Retailing

Price competitive commodity

product

Up-sell opportunities

Link to out-sourced services

12

Core Value Gets Commoditised - Media

13

Core Value Gets Commoditised - Media

Community

Community

Community

Community

14

Proliferation of Channels / Advisors

£1BN estimated market cap

Traditional insurers and intermediaries trying to

figure out how to respond

15

• What can you do when your most significant revenue source goes away?

• How do you respond when your customers seem to know more than you - even about your own business?

• How can you use seemingly negative trends to break out of a stale positioning?

16

Contact Information

London Office:

+44 20 7349 7140

Suite 105

132 - 134 Lots Road

London SW10 0RJ

www.menkus.net

For more information, please email us on:

newclients@menkus.net

Specialist Support for Business Leaders

Clarify Align Act