2. Business Model Innovation (BMI)

Question 1

What is the magic triangle?

Answer 1

It is a way of defining the business model for a company:
- What do you offer to the customer? - Value proposition.
- Why? Revenue model.
- How is value created? value chain.
And in the center: Who? Who is your target customer (segment)?

Question 2

Questions to think about regarding “who?” (customers)

Answer 2

Who are the customers? How do they want to be reached? Which channels to use? Have we segmented our customer base?

Question 3

Questions to think about regarding “why?” (Revenue and cost model)

Answer 3

Which revenue sources should we rely on? How much does each stream contribute to overall turnover? What is the customer’s WTP? How are customer paying now/in future? What are the principal costs? Financial risks?

Question 4

Questions to think about regarding “what?” (Value proposition)

Answer 4

What customer needs can we meet? What problems can we solve? Requirements? Image factors an relationships?

Question 5

Questions to think about regarding “How?” (Value chain)

Answer 5

Decision tools? Processes involved? Useful and useless activities? Logical sequence of steps? Analyse the value chain!

Question 6

What is the model “Razor & Blade”?

Answer 6

When basic products are cheap or even given for free, but then the consumables that are needed are expensive and sold at high margins.
- started with standard oil company in the 1880s, then Gilette was the first after that 1904.

Question 7

4 phases for BMI

Answer 7

1. Initiation - analyse the ecosystem. What are the change drivers and players out there?
2. ideation - adapt the patterns that we have seen others do.
3. Integration - detail the business model with regards to internal and external consistency.
4. Implementation - realize the plan by testing, learning through error, adapting and then introduce in the market.

Question 8

4 generic business models from the process school:

Answer 8

• Asset builders - like BMW, Walmart etc who build, develop and lease physical assets to produce things they sell.
• Service providers - like Accenture who hire employees who provide services and bill the hours.
• Technology Creators - like Microsoft who develop and sell IP such as software, analytics etc.
• Network Orchestrators - like eBay, Uber who create network of peers where they can interact and share in the value creation.

Question 9

Business model: Freemium

Answer 9

Free basic services, but charging for the premium services.

Question 10

Business model: orchestrator

Answer 10

You orchestrate the network and get all players playing right.

Question 11

Business model: power by the hour - Rolls Royce

Answer 11

Don’t sell airplanes but charge the users when they are used in the sky.