1: Business Models

Question 1

3 components that must be covered by any BM def:

Answer 1

• Value Proposition = Nutzenversprechen zum Kunden
• Value Creation n Delivery = how you produce n distribute the VP
• Value Capture = how you monetize

Question 2

A BM describes… (in 3 verbs)

Answer 2

how a Co Creates, Captures n Delivers value.

Question 3

business models: summary

Answer 3

It describes the main logic of a company’s business activities.

Question 4

A BM articulates…

Answer 4

…a value proposition for customers, or more VPs for various types of customers… by answering 4 Qs.

Question 5

4 Qs defining a BM, w their As?

Answer 5

1. what is product? & how to position it?
   
   • VALUE PROPOSITION
2. Who is target customer?
   
   • MARKET SEGMENT(S)
3. How to create Value proposition? & how to produce it? & how to config supply chain? 4 As:
   
   • VALUE CHAIN structure n support assets for creation n distribution
   • COST STRUCTURE n profit potential
   • firm POSITIONS WITHIN VALUE NETWORK linking suppliers to customers
   • COMPETITIVE STRATEGY for advantage vs rivals
4. How to generate revenue?
   
   • REVENUE MECHANISM

Question 6

value proposition =

Answer 6

The value proposition describes the benefits a firm promises to deliver its customers.

Question 7

BM canvas (3+1+3)+2elements:

Answer 7

key partners

key activities + key resources COST STRUCTURE

Value proposition

Cust. rel. n sales + channels REVENUE STREAM

Cust segment

Question 8

What is BM innovation?

Answer 8

Change of at least 2 of 4 dimensions of BM
Egs: Ikea, Tomtom, eBay

Question 9

How does BM innovation happen most frequently?

Answer 9

90% via recombination, creative imitation of BM elements. Only 10% of innovators create totally new BMs.

Question 10

4 i steps how BM innovation can be done

Answer 10

STRUCTURED PROCESS: iNiDiNtiMpl

1. initiation = analyse curr BM
2. ideation = challenge n compare thru analogies w other BMs, eg 55 patterns, but w/o reinventing the wheel
3. integration = check BM consistency, ie examine the 4 BM Qs for org fit
4. implementation (-> careful iterative cycles, w focus on 3 success factors n 5 pitfalls)

Question 11

3 BM success factors (2+1)

Answer 11

data:
1- get qualitative data
2- get quantitative data
soft factors:
3- pay attention to soft factors

Question 12

5 BM innovation rules to avoid pitfalls 3+2

Answer 12

approach rules:
1- overcome “not invented here” syndrome

2- try only 1 new BM at a time

3- don’t focus on short term Key Performance Indicators

other people:
4- have Mgmt commitment

5- communicate clearly

Question 13

(1+)3 main strategies to innovate BMs:

Answer 13

1- create (rare)

+ c.tr.l:
2- combine

3- transfer

4- leverage

Question 14

BM innovation iterative cycle in 3 steps?

Answer 14

1- create new BM

2- build pilot

3- test pilot

GO TO 1-

Question 15

Why do established Cos lose edge?

Answer 15

Too busy serving curr clients:
Today’s success is enemy of tomorrow’s

Question 16

The 3 myths on innovation n reality

Answer 16

MYTHS Innovation requires:

1- totally new ideas (eg Apple, Amazon, EBay)

2- big budgets (eg Cisco vs AT&T)

3- great tech… good but neither enough nor essential (Google, Amazon, EBay)

REALITY: Innovators recombine (reinvent BM thru learning from others) while pioneers often die

Question 17

Why do most innovation attempts fail?

Answer 17

70% attempts fail due to mismanaged soft factors,
thru Mgmt misbehaviour n org resistance

Question 18

Why innovation needed?

Answer 18

Key factor to stay competitive n defeat path dependency

Question 19

How does innovation happen in a market? in 3 bursts

Answer 19

In 3 bursts, on:
1- product

2- process

3- BM

Question 20

Unicorn? def in 2 numbers

Answer 20

Co founded < 5Y, valued > 1 bln

Question 21

How IT has been driving BM innovation, in 3 phases

Answer 21

Since 1995 w internet: boom of driving new BMs based on IT

1. since 1995 w Internet as new biz infrastructure
2. since 2005 w web2.0, ie users add value
3. now w Internet of things: things add value

Question 22

Business trends created by IT: 3

Answer 22

CI.RS.A:
1- Customer Integration (processing own transactions)
2- Runtime Services (contact after sales to notify, retain, upsell…)
3- Analytics to analyse n measure behaviour

Question 23

Pattern 2-sided market…
w 2 properties

Answer 23

• • is market w 2 or more types of clients different n interdependent, eg StaffFinder
• • has big network externalities
• • is natural monopoly in each labour market region

Question 24

MY EXTRA: 1- Digitisation <> 2 Digitalisation

Answer 24

1- moving info from non-digital to digital medium
2- restructuring a domain of social life around digital communication n media infrastructure

Question 25

Big benefit of digitisation is…

Answer 25

eliminating “media breaks”

Question 26

dominant design:

def=

associated with…

Answer 26

• Dominant design describes the main traits of an offering, which emerged as standards and thus are expected by customers.
• associated with peak of product, process, BM innovation.

Question 27

Breakeven point (simplified) = as an equation w 3 quantities

Answer 27

Revenues - (fixed + variable costs) = 0

Question 28

Most important diff bw CAPEX n OPEX costs for digital Cos?

Answer 28

While CAPEX describes upfront costs, OPEX describes on-going costs

Question 29

CAPEX vs OPEX def.

Answer 29

costs f setup (eg f a plant) vs running costs f operating it

Question 30

“SW is eating the world” 8 Examples

Answer 30

1. • train tickets vending machines
2. • personal trainers
3. • secretaries
4. • physical models vs simulations
5. • engine (emissions, performance) mgmt
6. • maps
7. • books
8. • watches …

Question 31

SW 1.0 vs 2.0 : 3+2 dims of chg + 1 Q

Answer 31

• PHILLS?***
• distribution:*
• *I**nstalled on premises > software as a service
• *P**orting > platform independence
• *L**ong release cycles > daily
• ops:*
• *H**igh operation costs > low
• *L**ow scalability > high
• open Q:*
• *S**ecurity: still high w encryption?

Question 32

4=2+2 factors to create VP:

Answer 32

int:
VALUE CHAIN structure n support assets for creation n distribution

COST STRUCTURE n profit potential

ext:
firm POSITIONS WITHIN VALUE NETWORK linking suppliers to customers

COMPETITIVE STRATEGY for advantage vs rivals