Module 7 - Emerging Business Models Flashcards
1
Q
What are common drivers of change or environmental dynamism?
A
- Technology
- Increasing stakeholder concern for sustainability
- Emerging markets
2
Q
What 3 ways has technology changed business models?
A
- Automation
- Transformation
- Extension
3
Q
What is automation?
A
Use of technology to do work conventionally performed by humans or to create new products + services without the use of human labour.
4
Q
What is extension?
A
Use of technology to conduct business in new ways (as opposed to replacing existing activities).
5
Q
What is transformation?
A
Use of technology to replace established ways of conducting business with new ones.
Can involve more than just product or service, but organisation or business processes.
6
Q
What are the 3 key impacts of automation, transformation and extension?
A
- new ways of creating + capturing value
- new means of transacting and exchange
- new organisational forms
7
Q
What are examples of software as a service? (SAAS)
A
Email software
Collaboration software (e.g. youtube)
Accounting software
8
Q
What are examples of platform as a service?
A
Object Storage
Runtime
Database
Development Tools
9
Q
What are examples of infrastructure as a service?
A
Virtual machines
Storage
Servers
Networking components
10
Q
In the case study, how did TED use technology to change their business model?
A
Transformation - moving away from physical conferences to an online setting
Extension - leveraged off online product with highly engaged vieres into live conferences, education resources, licensed product and mentorship
11
Q
What is sustainable value innovation?
A
Focuses on creating new markets through business model innovation, to create value for customers and society as a whole, while reducing both economic and environmental costs.
12
Q
What is a business ecosystem?
A
Co-existence and co-evolution of organisations based on their ongoing interactions.
In effect, traditional markets are being replaced by networks.
13
Q
What a 3 types of ecosystems?
A
- Innovation (organisations work together to innovate)
- Platform (single product / service that supports complementary products - e.g. Apple platform)
- Service (exchanges between organisations create value for all parties involved).
14
Q
What is hypercompetition?
A
Competitors evolve, respond and innovate - so quickly that any competitve advantage cannot be sustained.
15
Q
What does a hypercompetitive environment require?
A
Strategy based on a series of disruptive innovations.
Target long term value creation, not short-term competitive advantage.
16
Q
What is a business model?
A
How a business works and the economic logic behind it.
17
Q
What is important when it comes to business models and strategy?
A
Important not to confuse business models and strategy.
Strategy = how it will outperform others or sustain value creation.
Business Model = how the business will operate.
18
Q
What is business model innovation?
A
Changing one or more elements of the business model to create or capture value in a new way.
Design process -> new business model -> adjustment of value proposition -> secure a competitive advantage.
19
Q
What is a business model canvas?
A
Tool that can help management analyse aspects of business to understand existing business models or create new models.
9 elements through which businesses make their product or service.
20
Q
What are the 9 elements of a business model canvas?
A
- Partners
- Activities
- Key Resources
- Value Propositions
- Customer Relationships
- Channels
- Customer Segments
- Cost Structure
- Revenue Streams
21
Q
What is customer co-creation?
A
Where the customer participates in value co-creation
22
Q
What is disruption??
A
Any innovation that brings about substantial change in a market or industry.
23
Q
What are the 2 types of disruption?
A
- Low-end disruption
- New-market disruption
24
Q
What is low-end disruption?
A
Disruption that is low-performance and low-price innovation in existing low-end markets.
e.g. Netflix’s existing video rental by mail model.
Attractive to consumers over-served by the functionality of their current provider.
25
What is new-market disruption?
Serves new markets. Can be a low-performance and low-price, but new markets. (e.g. online stockbroking).
Typically occurs when characteristics of existing product limit number of potential consumers.
26
What are examples of hyperdisruptive business models?
1. Subscription model
2. Free model
3. Freemium model
4. Digital platform model
5. Access-over-ownership model
6. Hypermarket model
7. Experience model
8. Service Ecosystem model.
27
What is a free model?
Collecting and selling personal data or advertising views by offering a free product or service to capture their attention.
Examples: Google, Facebook, free news sites
28
What is the business ecosystem perspective?
Understand how organisations in a industry co-evolve in a mixed state of cooperation and competition for value creation and capture
29
30
What is cross-subsidisation?
Organisation gives a product or service to customers for free, in order to generate sales of a complementary product.
For example - printers are sold cheaply to build demand for high-margin printer cartridges.
31
What is the freemium model?
Extends the free model by adding an optional non-free service.
Example - Spotify, LinkedIn, Dropbox.
32
What is a digital platform model?
A digital marketplace that brings together buyers and sellers directly, in return for a transaction, membership or placement fee.
Examples - Uber, iTunes, ebay, airbnb
33
What is the access over ownership model?
Temporary access to goods + services traditionally only available through purchase.
Included sharing-economy disruptors.
Often works in conjunction with the marketplace model.
34
What is the hypermarket model?
Disrupts by using market power and scale to crush competition, often by selling below cost price.
35
What is the experience model?
Extends an existing product or service by adding an experience component.
Elevates value to customer beyond what is provided by the product or service itself.
36
What is the service ecosystem model?
Disrupts by selling an interlocking and interdependent suite of products and services that increase in value the more products are purchased.
Examples - apple's ecosystem, automated synchronisation across devices.
37
What is a unicorn company?
Small, backed by venture capital, narrowly focused and experienced fast growth.
For example, Uber and Airbnb.
38
Why are unicorn companies considered to have a dual-sided business model?
Target two groups of users -
1. Provider
2. Consumer.
While the service is based on one concept, it is highly customised in practice.
39
What are 4 different types of strategy processes? (CEPS)
1. Classical
2. Evolutionary
3. Processural
4. Systemic
40
What is a classical formulation?
Adopts profit as the principal objective and pursues in a rational, calculating manner.
Rational and analytical means.
41
What is evolution formulation of strategy?
Reflects more of environment, rather than internal planning.
Organisations either adapt to environmental pressure, ke ceases to exist.
42
True or false -
Under an evolutionary approach to strategy, influence of decision makers is weaker and the environment determines success.
True
43
What is a processural formulation of strategy?
Reflects the realities of organisational life, influenced by politics, divergent interests of multiple stakeholders and organisation culture.
44
True or false -
Processural strategy formulation often reflects a compromise between optimal strategy and what can actually be implemented.
True
45
What is the systemic approach to formulation of strategy?
Strategy reflects the internal + external context in which strategy takes place.
Allows for the behaviour of people / institutions / organisations.
46
What is discovery-driven planning?
Planning technique introduced to accommodate uncertainty and gaps in knowledge.
47
Can discovery driven planning be completed by start-ups or mature companies, or both?
Both
48
What is the goal of discovery driven planning?
Learn as much as possible at the lowest cost.
49
Which 4 documents does discovery driven planning rely on?
1. Reverse income statement (model economics of business, then work backwards)
2. Pro forma operations document (outline the activities needed to run the business)
3. Key assumptions checklist, (used to ensure all assumptions are checked and revised as necessary)
4. Milestone planning chart.
50
How does discovery driven planning differ from the traditional rational approach?
Correctness of conventional plan is based on how close outcomes come to projections.
Discovery-driven assumes plans change significantly and parameters are constantly updated.
51
What is an agile approach to new product or service development?
Rapid experimentation and iteration, based on:
- involving customers in the process
- having prototypes and concepts tested early in the process
Often used in fast-changing and hypercompetitive industries.
52
What are some manufacturing techniques that can support design thinking and creating prototypes?
- Computer aided engineering or design (CAE / CAD)
- automated drafting technology
- flexible manufacturing systems
- computer numerically controlled machine tools (CNC)
- 3d printing
- virtual reality
53
What is a lean start-up?
Organisation that aims to be fast, agile, quick-thinking, and quick-acting.
Optimise efficiency early and balance with the need to learn.
54
For a lean start-up, what needs to be balanced?
The need to learn, versus the resources and team required.
55
What is the strategy compass?
Developed by Gans to identify:
- which customers to target
- what technologies to use
- what organisational image to use
- what to position as against competitors
56
True or false -
The strategy compass is not designs for entrepreneurs.
False.
It was designed for entrepreneurial behaviour and innovation.
57
58
What are the two dimensions of the strategy canvas?
Attitudes towards incumbents (collaborate or compete?)
Attitude towards innovation (build a moat or storm a hill?)
59
In the strategy compass, what 4 options are there?
Intellectual property (moat + collaborate)
Value chain (storm a hill + collaborate)
Architectural (moat + compete)
Disruption (compete + storm a hill)
60
What is intellectual property in the strategy compass?
Control innovation, protect proprietary technology.
61
What is architecture in the strategy compass?
New value chain, protect intellectual property.
62
What is disruption in the strategy compass?
Compete with incumbents, take by surprise with fast execution.
63
What is value chain in the strategy compass?
Focus on creating value for partners in the existing value chain.
64
Under the strategy canvas, what choices do start-ups need to make?
Between collaboration + competition
Between protecting intellectual property and collaboration with others/speed to through market.
65
What is meant by business ecosystem?
The community of organisations, institutions and individuals that impact the organisation.
Co-dependies among members.
66
True or false -
The strategy canvas for startups focuses less on the existing business environment and more on the environment it wants to create
True
67
68
What is a value-based strategy or value-capture model?
Identifies and captures where value is generated within this business ecosystem.
Dominate in those areas that create significant customer value.
69
How does the value-added or value-capture model influence an organisation's strategic decisions?
What is needed for investments in capabilities and resources to capture value.
Decisions with competitive or persuasive content.
70
What is competitive intent in the value-capture model?
Investments that increase the maximum value the organisation adds to existing / alternative model.
71
What is persuasive intent in the value-capture model?
Actions for how much value members of the network are willing to give up.
72
What are 3 broad approaches to supply chain innovation?
Fast supply chains - speed + time
Agile - ability to respond better to changes in volume / demand
Lean - eliminating waste.
73
What does RFID stand for?
Radio frequency identification tags
74
What is the innovators dilemma?
Disruptive technologies should be taken seriously
But ... responding to them cannot jeopardise the needs of current customers that provide profit and growth.
75
What are 7 strategies that combat disruption?
1. Block
2. Milk
3. Invest in disruption
4. Disrupt the current business strategy
5. Retreat in a strategic niche strategy
6. Redefine the core strategy
7. Exit.
76
What did Kavadias find that successful business models that use technology relied on?
1. Tech based customisation of the product
2. Closed-loop processes - recycled
3. Asset sharing - access over ownership
4. Usage based pricing
5. Collaborative systems between supply chain participants
6. Agile and adaptive org structures
77
What is a closed-loop process?
Products are reused or recycled
78
What is the block strategy for disruption?
Use all means necessary to inhibit the disruptor.
E.g. patent, copyright infringement, regulatory hurdles.
79
What is the milk strategy for dealing with disruption?
Extracting the most value possible from existing businesses while preparing for the inevitable disruption.
80
What is the invest in disruption model?
Actively investing in a disruptive threat.
81
What is a "distrupt the current business strategy"?
Aggressively competitive strategy that involves launching a new product or service that competes directly with the disruptor.
82
What is the "retreat in a niche strategy" for dealing with disruption?
Involves focusing a profitable niche.
83
What is a "redefine the core" strategy for dealing with disruption?
Involves an entirely new business model.
84
85
What is open innovation?
Approach that promotes more efficient and effective innovation by collaborating on ideas between organisations.
E.g. Tesla relinquished rights to vehicle patents to grow the industry.
86
What is peer-to-peer innovation?
Individuals collaborate in a self-organising way to share knowledge and contribute to a product or service.
87
Open source software is an example of what?
Peer-to-peer innovation.
88
What are social enterprises and benefit corporations?
Organisations that operate for the purpose of creating shared value for all stakeholders.
89
What is the gift economy?
Represents rejection of monetary transactions for labour and resources in favour of gifting.
For example - pay what you wish.
90
"Pay what you wish" is an example of what?
The gift economy.
91
What is the emerging manufacturing paradigm?
Refers to technologies and approaches such as advanced manufacturing.
92
What are features of emerging markets?
- socio-political organisations exert more influence
- infrastructure is poorly developed
- raw materials are plentiful
- low income conditions ... high volume of low margin transactions
- long chain of distribution intermediaries
93
What are strategic capabilities?
Capabilities that are valuable, rare, costly to imitate and non-substitutable, that lead to competitive advantage.
94
What is the traditional resource based view of strategy?
Emphasises protecting and and defending the organisations resources and capabilities from imitation by competitors.
95
True or false:
Rapid and unpredictable environmental changes and market complexity requires companies to generate competitive advantage through knowledge and learning
True
96
97
What is the knowledge-based view of strategy?
Examines dynamic capabilities and dynamic resources.
How resources are developed, how they are integrated within the firm, how they have been addressed.
98
What are organisation routines?
Regular and predictable patterns of activity made up by sequences of coordinated actions by individuals.
99
What is routinisation?
Translation directions and operating practices into capabilities.
Learning-by-doing.
100
When capability as routine occurs, what two outcomes are there a trade-off in?
Efficiency and flexibility.
101
What are dynamic capabilities?
Ability of firms to integrate, build and reconfigure internal and external competencies, to address rapidly changing environments.
102
True or false:
Dynamic capabilities and agile organisations are closely related
True
103
What is the key point of being an agile organisation?
Always responsive --》ready to change --》can adapt its operations and processes quickly to chaning circumstances, opportunities and threats.
104
What 3 things do agile organisations feature?
1. People centred culture, networks of self-managed teams
2. Fast decision cycles
3. Co-create value for all stakeholders
105
True or false -
Agile organisations are based on networks of centrally managed teams.
False.
Agile organisations are based on networks of SELF-MANAGING teams.
106
Which one the below is traditional and which is agile?
1. Iterative, fast decision cycles, non-machine.
2. "A machine", Capability as routine, stability.
1. AGILE ... Iterative, fast decision cycles, non-machine
2. TRADITIONAL ... "A machine", Capability as routine, stability.
107
True or false:
Agile teams are built around specific accountability.
False.
Agile teams are built around end-to-end accountability.
108
What concept describes the following:
Adapt traditional models of strategy development and implementation --》
create a strategic process --》
Where they demonstrate innovative behaviour --》
Create new opportunities, accept higher levels of risk and implement entrepreneurial actions.
Entrepreneurial orientation
109
What does environmental dynamism require organisations to do?
Adapt traditional models of strategy development and implementation --》
create a strategic process --》
Where they demonstrate innovative behaviour --》
Create new opportunities, accept higher levels of risk and implement entrepreneurial actions.
110
111
What is entrepreneurial orientation aligned towards?
Continual identification and generation of new business, to create and sustain competitive advantage.
Aim to be first to market.
112
What are the 3 key dimensions of entrepreneurial orientation?
Innovativeness
Proactiveness
Risk Taking
113
What are the 4 elements of strategic innovation according to Dewit? (SECI)
**Strategising** - identify new basis for competitive advantage
**Entrepreneurial** - identify new markets
**Changing** - adjust organisation structure
**Investing** - funding new resources and capabilities
114
What does intrapreneur mean?
Employees who do for corporate innovation what an entrepeneur does fortheir start-up.
Employees who create new products, services and processes, plus idenitfy business development opportunities.
115
True or false:
Encouraging intrapeneurship can be fostered by providing motiviation and rewards for those staff engaging in it.
True
116
What is the term for the following:
Efforts at innovation, including research and development, are fiercely protected within the organisation to ensure the organisation can capture the value that its efforts create.
Closed innovation
117
What does closed innovation rely on?
Relies on the organisations own resources and capabilities.
Attempts to retain the value created by the innovation for itself.
118
What does pecuniary mean?
Pecuniary = money
119
What is the term for the following:
Distributed innovation based on purposively managed knowledge flows across organisational boundaries.
Open innovation
120
True or false:
Open innovation can consist of both financial (pecuniary) and non-financial
True
121
What does open innovation involve knowledge of?
knowledge of flows between organisations and the value chain
122
123
What is an example of open innovation?
Tesla allowing other car companies to use its patented technology in an effort to accelerate development of the electric car market.
124
What 4 value processes are involved in open innovation?
1. **Value provision** - provide value to other party
2. **Value negotiation** - leverage contribution to ensure benefits are received from participation
3. **Value realisation** - translate the outcomes into value
4. **Value partake** - able to share value with collaborators.
125
With regards to open innovation, what is the term for the below?
Philips provding other organisations with value through access to facilities, knowledge and own research.
Value provision
126
With regards to open innovation, what is the term for the below?
Both collaborators and Philips were able to share in the right to use and benefit from the innovations created.
Value partake
127
True or false:
Participation in open innovation does not require effective governance mechanisms.
False.
Effective governance mechanisms are important to open innovation.
128
What is the term for the below?
Third party that can identify and access external sources of innovation.
Innovation intermediary
129
What is an example of an innovation intermediary?
Innovation hub, shared space intended to foster collaboration amongst an ecosystem.
May include established operators and suppliers, entrepeneurs, start-ups and researchers.
130
What is the term for the following:
Company that provides services, resources, networking, advice and mentorship to start-ups
Business incubator
131
What is the goal of a business incubator?
Help start-ups become viable businesses
132
True or false:
An agile organisation does not have either a stable core or outer organisation
False.
Agile organisations have a stable core, but flexible rest of the organisation.
