Paper 2

Question 1

How many percent of innovation investment is spent on business models?

Answer 1

American Management Association study determined that no more than 10% of innovation investment. At global companies is focused on developing new business models.

Question 2

Two problems with new growth that bring business model innovation:

Answer 2

• Lack of definition: Very little formal study has been done into the dynamics and processes of business model development
• Few companies understand their existing business model well enough – the premise behind its development, its natural interdependencies, and its strengths and limitations

Question 3

companies need a road map:

Answer 3

• First is to realize that success starts by not thinking about business models at all, it starts with thinking about the opportunity to satisfy a real customer who needs a job done
• Second step is to construct a blueprint laying out how your company will fulfill that need at a profit.
• Third is to compare that model to your existing model to see how much you’d have to change it to capture the opportunity

Question 4

Business model 4 interlocking elements:

Answer 4

• Customer value proposition (CVP)
• Profit formula
• Key resources
• Key processes

Question 5

Job:

Answer 5

fundamental problem in each situation that needs a solution

Question 6

The profit formula

Answer 6

The profit formula is the blueprint that defines how the company creates value for itself while providing value to the customers

• Revenue model: Price x Volume
• Cost structure: direct costs, indirect costs, economies of scale
• Margin model: given the expected volume and cost structure
• Resource velocity: how fast we need to turn over inventory, fixed assets, and another asset

Question 7

Key resources:

Answer 7

• People
• Technology
• Products
• Facilities
• Equipment
• Channel

Question 8

Key processes:

Answer 8

Successful companies have operational and managerial processes that allow them to deliver value in a way they can successfully repeat and increase in scale.
-	Training
-	Development
-	Manufacturing
-	Budgeting
-	Planning
-	Sales
-	Service
Key processes also include a company’s rules, metrics and norm

Question 9

What do key resources and -processes describe?

Answer 9

Key resources and key processes describe how that value will be delivered to both the customer and the company.

Question 10

Five strategic circumstances that often require business model change:

Answer 10

• The opportunity of 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 complicated for them
• The opportunity to capitalize on a brand-new technology by wrapping a new business model around it
• The 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