Management 2.0: competitive advantage through business model design innovation

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Slide 1: DRAFT VERSION Management2.0: Competitive Advantage through Business Model Design & Innovation Guadalajara, June 2007 Alexander Osterwalder, PhD alex@arvetica.com Slide 2: change is the process by which the future invades our lives -> Alvin Toffler Slide 3: first of all: what are YOUR concerns? (buzz groups) Slide 4: what are YOUR biggest issues and fears you face in strategic management today? Slide 5: where do YOU see the largest opportunities to improve strategic management today? Slide 6: your expectations for today? Slide 7: what is innovation? Slide 8: tell me about the most important innovations in your company Slide 9: types of innovation? Slide 10: technology innovation Slide 11: process innovation Slide 12: product & service innovation Slide 13: business model innovation Slide 14: four levels of innovation business model innovation product & service innovation process innovation technology innovation Slide 15: Business model innovation matters and it is a top priority of CEOs Slide 16: Operating Margin Growth in Excess of Competitive Peers compound annual growth rate over five years [Source: IBM, CEOs are expanding the innovation horizon: important implications for CIOs] Slide 17: Benefits Cited by Business Model Innovators percent of respondents [Source: IBM, Global CEO Study 2006] Slide 18: why talk about business models? Slide 19: how do you describe a business model? Slide 20: without a common language Slide 21: how do you communicate a business model? Slide 22: 1% Strategy 18% Text • Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Cras in tortor. Sed posuere erat. Maecenas pulvinar nulla eu magna. 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Aenean non justo nec magna lobortis volutpat. through inappropriate means Words Slide 23: how do you implement a business model? Slide 24: with outdated methods Slide 25: how do you measure the success of a business model? Slide 26: we don’t Slide 27: how do you change a business model and innovate? Slide 28: we re-invent the wheel Slide 29: what is a business model? Slide 30: business model framework INFRASTRUCTURE OFFER CUSTOMER CORE CAPABILITIES PARTNER NETWORK ACTIVITY CONFIGURATION VALUE PROPOSITION CUSTOMER RELATIONSHIPS DISTRIBUTION CHANNELS CUSTOMER SEGMENTS COST STRUCTURE FINANCE REVENUE STREAMS a business model describes the value an organization offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and sustainable revenue streams [Osterwalder (2004) The Business Model Ontology] Slide 31: case study Slide 32: you become the new owner of a soccer club … Slide 33: describe YOUR club’s business model Slide 34: what value proposition do you offer, to which customer segments? describing how a wealth management bank acquires its clients Slide 35: what value proposition do you offer, to which customer segments? (model) OFFER VALUE PROPOSITION value proposition 1 value proposition 2 … CUSTOMER CUSTOMER SEGMENTS target customer 1 target customer 2 … Slide 36: what value proposition do you offer, to which customer segments? (example) OFFER spectacular offensive football advertising space & high visibility CUSTOMER fans advertisers … … Slide 37: how do you reach your customers? Slide 38: how do you reach your customers? (model) OFFER VALUE PROPOSITION value proposition 1 value proposition 2 … CUSTOMER COMMUNICATION & DISTRIBUTION CHANNELS channel 1 channel 2 … CUSTOMER SEGMENTS target customer 1 target customer 2 … Slide 39: how do you reach your customers? (example) OFFER CUSTOMER stadium & box office spectacular offensive football club owned TV channel mobile phone TV advertising space & high visibility sales force advertisers fans Slide 40: how do you build relationships? Slide 41: how do you build relationships with your customers? (model) OFFER VALUE PROPOSITION value proposition 1 value proposition 2 … CUSTOMER CUSTOMER RELATIONSHIP mechanism 1 mechanism 2 … CUSTOMER SEGMENTS target customer 1 target customer 2 … Slide 42: how do you build relationships with your customers? (example) OFFER CUSTOMER personalized website (ticketing) spectacular offensive football team blog (RSS) … fans Slide 43: how do you earn your money with this business model? Slide 44: how do you earn your money with this business model? (model) OFFER VALUE PROPOSITION value proposition 1 value proposition 2 … REVENUE STREAMS FINANCE CUSTOMER SEGMENTS target customer 1 target customer 2 … revenue stream 1 revenue stream 2 … Slide 45: how do you earn your money with this business model? (example) OFFER ticket sales spectacular offensive football TV channel subscriber fees mobile phone TV subscriber fees advertising space & high visibility advertising revenues advertisers fans FINANCE Slide 46: the big picture (business model) Slide 47: the big picture Partner Network • • • • • • • food & beverages ticketing services promoters ad placement telecom operator TV operator … • • • • • Customer Relationship personalized web profile newsletter team blog (RSS) VIP events with team … Core Capability • play attractive & win games • brand management • video images • channel management • • • • • Activity Configuration team management event management venue management ticketing VIP relationship management • video crew •… Value Proposition • attractive soccer • 360º event (match, dining, shopping) • exclusive VIP lounges • merchandising • renting out stadium •… • • • • • • Distribution Channel stadium POS networks club website (+online TV) club cable TV channel mobile phone TV channel … • • • • • • Target Customer fans (families, etc.) fan groups companies event/concert organizers advertisers … Cost Structure • • • • team & maintenance infrastructure management marketing video Revenue Model • • • • • • Ticket fees & season tickets online TV subscription revenues revenue sharing cable & mobile phone TV renting out stadium for events advertising revenues merchandising revenues Slide 48: value creates revenues Partner Network • • • • • • • food & beverages ticketing services promoters ad placement telecom operator TV operator … • • • • • Customer Relationship personalized web profile newsletter team blog (RSS) VIP events with team … Core Capability • play attractive & win games • brand management • video images • channel management • • • • • Activity Configuration team management event management venue management ticketing VIP relationship management • video crew •… Value Proposition • attractive soccer • 360º event (match, dining, shopping) • exclusive VIP lounges • merchandising • renting out stadium •… • • • • • • Distribution Channel stadium POS networks club website (+online TV) club cable TV channel mobile phone TV channel … • • • • • • Target Customer fans (families, etc.) fan groups companies event/concert organizers advertisers … Cost Structure • • • • team & maintenance infrastructure management marketing video Revenue Model • • • • • • Ticket fees & season tickets online TV subscription revenues revenue sharing cable & mobile phone TV renting out stadium for events advertising revenues merchandising revenues Slide 49: creating value requires infrastructure Partner Network • • • • • • • food & beverages ticketing services promoters ad placement telecom operator TV operator … • • • • • Customer Relationship personalized web profile newsletter team blog (RSS) VIP events with team … Core Capability • play attractive & win games • brand management • video images • channel management • • • • • Activity Configuration team management event management venue management ticketing VIP relationship management • video crew •… Value Proposition • attractive soccer • 360º event (match, dining, shopping) • exclusive VIP lounges • merchandising • renting out stadium •… • • • • • • Distribution Channel stadium POS networks club website (+online TV) club cable TV channel mobile phone TV channel … • • • • • • Target Customer fans (families, etc.) fan groups companies event/concert organizers advertisers … Cost Structure • • • • team & maintenance infrastructure management marketing video Revenue Model • • • • • • Ticket fees & season tickets online TV subscription revenues revenue sharing cable & mobile phone TV renting out stadium for events advertising revenues merchandising revenues Slide 50: infrastructure generates costs Partner Network • • • • • • • food & beverages ticketing services promoters ad placement telecom operator TV operator … • • • • • Customer Relationship personalized web profile newsletter team blog (RSS) VIP events with team … Core Capability • play attractive & win games • brand management • video images • channel management • • • • • Activity Configuration team management event management venue management ticketing VIP relationship management • video crew •… Value Proposition • attractive soccer • 360º event (match, dining, shopping) • exclusive VIP lounges • merchandising • renting out stadium •… • • • • • • Distribution Channel stadium POS networks club website (+online TV) club cable TV channel mobile phone TV channel … • • • • • • Target Customer fans (families, etc.) fan groups companies event/concert organizers advertisers … Cost Structure • • • • team & maintenance infrastructure management marketing video Revenue Model • • • • • • Ticket fees & season tickets online TV subscription revenues revenue sharing cable & mobile phone TV renting out stadium for events advertising revenues merchandising revenues Slide 51: the profit zone Partner Network • • • • • • • food & beverages ticketing services promoters ad placement telecom operator TV operator … • • • • • Customer Relationship personalized web profile newsletter team blog (RSS) VIP events with team … Core Capability • play attractive & win games • brand management • video images • channel management • • • • • Activity Configuration team management event management venue management ticketing VIP relationship management • video crew •… Value Proposition • attractive soccer • 360º event (match, dining, shopping) • exclusive VIP lounges • merchandising • renting out stadium •… • • • • • • Distribution Channel stadium POS networks club website (+online TV) club cable TV channel mobile phone TV channel … • • • • • • Target Customer fans (families, etc.) fan groups companies event/concert organizers advertisers … Cost Structure • • • • team & maintenance infrastructure management marketing video Revenue Model • • • • • • Ticket fees & season tickets online TV subscription revenues revenue sharing cable & mobile phone TV renting out stadium for events advertising revenues merchandising revenues < Slide 52: the process of designing a business model Slide 53: the focus of the business modeler Slide 54: usercentered Slide 55: Nokia: Jan Chipchase Slide 56: creativity & exploration Slide 57: Googleplex Slide 58: interdisciplinary approach Slide 59: Grameen Phone Bangladesh Slide 60: holistic design Slide 61: Apple iTunes & iPod Slide 62: strategic fit Slide 63: Amazon.com Slide 64: the business modeler’s toolbox Slide 65: co-creation Slide 66: ideation Slide 67: visualization Slide 68: prototyping Slide 69: the design process Slide 70: 1. identify interdisciplinary stakeholders -> set-up team Slide 71: 2. understand business environment –> frame problem Slide 72: 3. suspend reality -> ideate Slide 73: 4. bring back reality -> prototype Slide 74: 5. chose suitable design -> decide Slide 75: 6. sketch out projects & workload -> draw implementation plan Slide 76: 7. outline key indicators to follow -> choose measures Slide 77: 8. select the right teams and people -> make responsible Slide 78: 9. execute the plan -> manage implementation & change Slide 79: 10. evaluate, learn and redesign -> manage improvement Slide 80: examples Slide 81: to come… Slide 82: is ! th e! or m f ck elco ba w ed pt om .c fe t p ca ti f ve ra d ar x@ le a Slide 84: Alexander Osterwalder, PhD alex@arvetica.com www.arvetica.com Slide 85: all photos from Flickr under a creative commons license authors indicated in comment page of ppt Slide 86: we co-create Nobody knows your business environment better than yourself. We co-design your strategic vision by building on your knowledge. Through group thinking we find the right answers to the right questions together Having a great vision is not sufficient - implementation counts. We help you reconcile long term views with short term actions. We make strategy everyone's job by translating it into pragmatic and prioritized projects. Change does not happen accidentally it has to be managed. We help you align strategy, people and processes with respect to your organizational culture and values. When you stop learning, you stop competing. We scan the knowledge universe for you, across disciplines and industries. We transfer the best methods, tools and theory in business to your organization. Specific problems require specific skills that you do not necessarily dispose of in-house. Through our interdisciplinary network we connect you with leading domain experts. we operationalize we manage change we build knowledge we connect Slide 87: annexes Slide 88: annex I business model template Slide 89: INFRASTRUCTURE CORE CAPABILITIES PARTNER NETWORK OFFER VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER TARGET CUSTOMER VALUE CONFIGURATION DISTRIBUTION CHANNEL COST STRUCTURE FINANCE REVENUE STREAMS a business model describes the value an organization offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and sustainable revenue streams Slide 90: describing a company’s business model INFRASTRUCTURE CORE CAPABILITIES outlines the capabilities required to run a company's business model PARTNER NETWORK OFFER portrays the network of cooperative agreements with other companies CUSTOMER RELATIONSHIP explains the relationships a company establishes with its customers CUSTOMER TARGET CUSTOMER describes the customers a company wants to offer value to VALUE PROPOSITION VALUE CONFIGURATION describes the arrangement of activities and resources gives an overall view of a company's bundle of products and services DISTRIBUTION CHANNEL describes the channels to communicate and get in touch with customers sums up the monetary consequences to run a business model COST STRUCTURE FINANCE REVENUE STREAMS describes the revenue streams through which money is earned Slide 91: describing a company’s offer OFFER VALUE PROPOSITION value proposition 1 value proposition 2 … Slide 92: describing who a company offers value to OFFER VALUE PROPOSITION CUSTOMER TARGET CUSTOMER value proposition 1 value proposition 2 … target customer 1 target customer 2 … Slide 93: describing how a company reaches its customers OFFER VALUE PROPOSITION CUSTOMER DISTRIBUTION CHANNEL TARGET CUSTOMER value proposition 1 value proposition 2 … distribution channel 1 distribution channel 2 … target customer 1 target customer 2 … Slide 94: describing the relationships a company builds OFFER VALUE PROPOSITION CUSTOMER CUSTOMER RELATIONSHIP TARGET CUSTOMER value proposition 1 value proposition 2 … relationship type 1 relationship type 2 … target customer 1 target customer 2 … Slide 95: describing how a company makes money OFFER VALUE PROPOSITION FINANCE REVENUE STREAM CUSTOMER TARGET CUSTOMER value proposition 1 value proposition 2 … revenue stream 1 revenue stream 2 … target customer 1 target customer 2 … Slide 96: describing what capabilities are required INFRASTRUCTURE CORE CAPABILITIES OFFER VALUE PROPOSITION core capability 1 core capability 2 … value proposition 1 value proposition 2 … Slide 97: describing what activities are required INFRASTRUCTURE CORE CAPABILITIES VALUE CONFIGURATION OFFER VALUE PROPOSITION core capability 1 core capability 2 … activity 1 activity 2 … value proposition 1 value proposition 2 … Slide 98: describing the partners that leverage the business model INFRASTRUCTURE CORE CAPABILITIES PARTNER NETWORK OFFER VALUE PROPOSITION core capability 1 core capability 2 … partner 1 partner 2 … value proposition 1 value proposition 2 … Slide 99: describing the costs of a business model INFRASTRUCTURE CORE CAPABILITIES FINANCE COST STRUCTURE OFFER VALUE PROPOSITION core capability 1 core capability 2 … cost account 1 cost account 2 … value proposition 1 value proposition 2 … Slide 100: annex ii other