business model innovation Flashcards
business model
the architecture of how a firm creates and captures value by offering customers a solutions to get a job done
meaning “job”
an important customer need or problem that needs a solution
how new solutions are offered through a new business model
either by leveraging new technologies or by utilizing existing technologies in creative ways
reasons for a new business model
to seize an opportunity to offer a better solution to the customer job
to respond to competitors who acted on such opportunities
ways to seize an opportunity to offer a better solution to the customer job
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
strategic circumstances requiring a business model change
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
steps of business model transformation
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
two questions to ask when considering business model transformation
what is the reason for business model transformation
which components will be transformed
a new value proposition
a new offering to the customers that goes beyond current solutions in at least one meaningful dimension for doing the customer job
three dimensions of customers jobs
price (cheaper solution)
utility (greater satisfaction)
convenience (easier access)
A new profit formula
business model can enhance competitiveness by bringing a new profit formula and changing revenue and cost items
3 components of a profit formula
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)
new key resources
to better leverage new resources
what resources are needed for the success of the business model?
focus of key resources
focus is on the key elements that create value for the customer and the company and how those elements interact
new key processes
to redesign key processes
what processes are critical for the success of the business model?
management as VRIN resource
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
risks of changing the current business model
organizational resistance (inertia)
risks of losing current customers
risk that the new model will not work
risk of not changing the current business model
losing competitiveness
solution to the business model transformation dilemma
dual business models
challenge of operating dual business models
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
two factors in operating dual business models
strategic relatedness and potential conflicts
meaning strategic relatedness
how much can the two models share strategic assets of the company?
(R&D, market knowledge, supplier/distribution network, brand reputation)
what does strategic relatedness determine?
how important the exploitation of synergies between the two business models will be
meaning potential conflicts
different requirements of each business model from organizational assets
(organizational processes, R&D decisions, customer markets)
