Business model
innovation workshop
Indrek Maripuu
twitter.com/indrekmaripuu
Creative Commons
Attribution-NonCommercial-ShareAlike 3.0
Unported License.
Video:
http://youtu.be/QoAOzMTLP5s
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Why are we here?
To develop new versions
of your current
business model!
- Brainstorm & analyse
- Prioritize and develop
- Decide next steps
- Learn new tools
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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!]
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Indrek Maripuu
● Brainstormer.
● Entrepreneur.
● The evangelist of
business model
innovation.
● Developing a unique
‘innovation farm’ in
Southern Estonia.
Twitter: @indrekmaripuu
LinkedIn: http://ee.linkedin.com/in/indrekmaripuu
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.
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1. Business model
innovation
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@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.
...
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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!
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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.
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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.
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What do you see?
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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.
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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!]
?
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Generation
[Creative]
Synthesis
[Rational]
DECISION
Usual suggestion is: create multiple versions!
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Ou t wor
no way!
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Business Model Canvas is developed by Alexander Osterwalder
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]
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What associates with...
... “foot”?
86% - shoe, arm, toe
... “command”?
71% - dicipline, army, obey, officer
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Too bad!
We use
similar
patterns
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Be careful!
Your (and mine) brain is
designed to reognize
patterns and draw
conclusions from them.
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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
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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
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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!
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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
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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´s
retail 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, facilitated
access or increased convinience.
Example: 23andMe brought personalized DNA testing to individual
clients – an offer previosly available only to health professionals.
Finance-driven
This 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?
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Tools!
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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.
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For this session, please turn off your rational
thinking!
[Yes, you are allowed to turn it on later on]
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Tool # 1: Brainwriting
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Brainwriting
Generate 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.
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Tool # 2: daVinci
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What you can use
tights for?
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Now let´s use same methodology for
generating ideas for your business
model.
{Now you need your question!}
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3. Selection
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Prioritize
Low
?
High
Investment
Map all the ideas based on two criteria:
investment vs business potential.
Low
?
High
Business potential
Conceptualize
Take 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
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PLUS:
MINUS:
INTERESTING:
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NEXT BOLD STEPS:
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4. New business
models
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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!
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!
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Untested hypotheses
because you haven´t
asked customers!
The most valuable information
can 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.
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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.
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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.
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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.
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Which version (sketch)
of your business models
is the best?
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Now,
prepare
for
real
tests!
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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)?
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Thank you!
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