business model innovation

Question 1

business model

Answer 1

the architecture of how a firm creates and captures value by offering customers a solutions to get a job done

Question 2

meaning “job”

Answer 2

an important customer need or problem that needs a solution

Question 3

how new solutions are offered through a new business model

Answer 3

either by leveraging new technologies or by utilizing existing technologies in creative ways

Question 4

reasons for a new business model

Answer 4

to seize an opportunity to offer a better solution to the customer job
to respond to competitors who acted on such opportunities

Question 5

ways to seize an opportunity to offer a better solution to the customer job

Answer 5

potential customers who are currently not well served by existing solutions
current customers may be needing better solutions for their jobs
new technologies bring new possibilities to serve current and potential customers

Question 6

strategic circumstances requiring a business model change

Answer 6

opportunity to address through disruptive innovation the needs of large groups of potential customers who are shut out of a market entirely (because existing solutions are too expensive or too complicated)
opportunity to capitalize on a brand-new technology by wrapping a new business model around it or to leverage a tested technology by bringing it to a new market
opportunity to bring a job-to-be-done focus where one does not yet exist
the need to fend off low-end disrupters
the need to respond to a shifting basis of competition

Question 7

steps of business model transformation

Answer 7

diagnose the problem
see if it can be solved with a new business model
see if necessary resources are available for the new business model
if both yes transform the business model accordingly

Question 8

two questions to ask when considering business model transformation

Answer 8

what is the reason for business model transformation
which components will be transformed

Question 9

a new value proposition

Answer 9

a new offering to the customers that goes beyond current solutions in at least one meaningful dimension for doing the customer job

Question 10

three dimensions of customers jobs

Answer 10

price (cheaper solution)
utility (greater satisfaction)
convenience (easier access)

Question 11

A new profit formula

Answer 11

business model can enhance competitiveness by bringing a new profit formula and changing revenue and cost items

Question 12

3 components of a profit formula

Answer 12

revenue item (per-use fee, subscription fee, no fee advertisement model)
cost items (suppliers, inventory, distribution, R&D, direct costs, indirect costs, economies of scale, margin model, resource velocity)
profit logic (revenue > costs)

Question 13

new key resources

Answer 13

to better leverage new resources
what resources are needed for the success of the business model?

Question 14

focus of key resources

Answer 14

focus is on the key elements that create value for the customer and the company and how those elements interact

Question 15

new key processes

Answer 15

to redesign key processes
what processes are critical for the success of the business model?

Question 16

management as VRIN resource

Answer 16

understands how new technologies can be used for greater customer value
can predict current and future customer priorities
constantly evaluates and revises business model components

Question 17

risks of changing the current business model

Answer 17

organizational resistance (inertia)
risks of losing current customers
risk that the new model will not work

Question 18

risk of not changing the current business model

Answer 18

losing competitiveness

Question 19

solution to the business model transformation dilemma

Answer 19

dual business models

Question 20

challenge of operating dual business models

Answer 20

to balance the benefits of keeping the two business models seperate while at the same time integrating them enough so as to allow them to exploit synergies with one another

Question 21

two factors in operating dual business models

Answer 21

strategic relatedness and potential conflicts

Question 22

meaning strategic relatedness

Answer 22

how much can the two models share strategic assets of the company?
(R&D, market knowledge, supplier/distribution network, brand reputation)

Question 23

what does strategic relatedness determine?

Answer 23

how important the exploitation of synergies between the two business models will be

Question 24

meaning potential conflicts

Answer 24

different requirements of each business model from organizational assets
(organizational processes, R&D decisions, customer markets)

Question 25

what does potential conflicts determine?

Answer 25

whether a separation strategy would be especially beneficial or not

Question 26

strategies of dual business models

Answer 26

separation strategy (low relatedness - high conflict)
integration strategy (high relatedness - low potential conflict)
phased separation strategy (low relatedness - low conflict)
phased integration strategy (high relatedness - high conflict)

Question 27

seperation strategy

Answer 27

the bigger the conflicts between the business models and the lower the possibility to share synergies, the more appropriate seperation

Question 28

determinants of success of separation strategy

Answer 28

high degree of autonomy to make financial and operational decisions
differentiated budgetary and investment policies
insider CEO
development of its own culture
parent keeps a watch over the strategy of the unit
cooperation between the units is encouraged through common incentive and reward systems

Question 29

question of separation strategy

Answer 29

what activities in our value chain do we separate and what activities do we keep integrated?

Question 30

determinants of success of integration strategy

Answer 30

careful not to suffocate the new business with the firm’s existing policies
leverage the strength of the traditional business model without suffocating
treating the new business model as a opportunity to increase involvement, old models and assumptions will be set aside, and the task is approached in a proactive, strategic manner

Question 31

phased separation strategy

Answer 31

building the new business inside the organization to leverage the firm’s existing assets and experience before separating it into an independent unit

Question 32

Challenge of phased separation strategy

Answer 32

to get the two businesses to exploit any synergies between them while keeping the new business model protected from the existing business

Question 33

phased integration strategy

Answer 33

to separate the business models for a period of time and then slowly merge the two models to minimize the disruption from the conflicts

Question 34

challenge of phased integration strategy

Answer 34

to keep the new business model protected from the mindsets and policies of the existing business while trying to exploit synergies between the two businesses

Question 35

tactics to prepare businesses for phased integration

Answer 35

separate the business unit but ensure compatible IT infrastructure
ensure common value and culture by insisting that employees from both units have regular contact and similar experiences with managers