Value creation through values in Business Models

August 15th, 2014 by Norbert Haehnel

Business Model Innovation opens up the opportunity to not only transform the value proposition, value architecture or revenue model of an organisation, it is a chance to rethink your human value systems and build businesses that customers love, employees’ value and investors are excited about. Often, particularly in turbulent times, cultural innovation is an imperative for management.

Team and corporate valuesMany books have been written about why organisations should have value systems defined and how you implement values in your core business. Still not all organisation have made this effort and those who did not always manage to live up to those set standards. Surprisingly, Alex’s business model canvas does not have values as a key building block of a business model either.

Effective organizations identify and develop a clear, concise and shared meaning of values or beliefs, priorities, and direction so that every employee understands and can contribute. Those values, once defined, impact every aspect of your organization and of the whole business model. The values must be an integral part of a description of any business model.

In my leadership career I have experienced what difference it can make if you have a leader that takes on the challenge to transform an organisation through values. When I started my work at Microsoft Australia the organisation was at first view a fairly successful subsidiary, achieving its revenue targets and outperforming other subsidiaries in some areas of the business. At a closer look the organisation had issues in areas like customer and partner satisfaction as well as employee retention. The most worrying factor was that departments were fighting each other over resources and a culture of back stabbing was quite common.

Cultural Innovation as a starting point for Business Model Transformation

Microsoft had already values defined that every employee should live up to and display. In reality many of those values were not more than letters on a web site. The company appointed a new Managing Director and with his appointment a cultural transformation journey began. He hired a Consulting firm that was specialized in building “Conscious Businesses” and our organisation transformed within 2 years in an amazingly positive way. Our leadership team, which I was part of, experienced a dramatic change in how we interacted with each other and how we connected our businesses in a much more meaningful and holistic way. Our customer satisfaction increased substantially and our employee health index (a measure of subjective employee satisfaction) became world leading within the company. Read the rest of this entry »

Innovation is about being different

April 15th, 2014 by Patrick Stähler

What is innovation?

Innovation is a strange beast. Most people say innovation is about new technology or bringing new things to the market. Some might think of better processes.

Schumpeter went further and defined it as “The introduction of new goods (…), new methods of production (…), the opening of new markets (…), the conquest of new sources of supply  (…) and the carrying out of a new organization of any industry”. (Source: Innovation Zen)

Innovation is about being different

However, what most of the time is missing, is that innovation has something to do about being positively different from your competitors. When every body in your industry is bringing out new products like in the TV set industry or in the PC industry, then this is no innovation. It is just daily business. You have to do it to survive. It’s a rat race.

Innovation is about being different in a way customers love.

Innovation is about being different in a way customers love.

However, successful innovation is different. Successful innovation is about being different.

Innovation is….

Innovation is when you just offer one telephone handset when your competitor offers 118 devices. Innovation is when you update your one phone only once a year a bit and a major overhaul comes every second year while your competitors bring new devices to the market every months. Innovation is when you see your “telephone” not as a device but as an access gate to whole new world. That’s Apple vs. Nokia. By the way Apple spent only a ninth on R&D than Nokia Read the rest of this entry »

Business Model Innovation and Story Telling: How to get the story right!

March 21st, 2014 by Paul Hobcraft

Framing the business model so it can be quickly but well understood by others is core. So, how do we do it? By Paul Hobcraft

You have come to end of a fairly long week. You have finally finished your Business Model Canvas. Finally you have a working hypothesis of something that is going to challenge some of the existing business models around. You should feel pleased; it took a lot of hard work to get to that point.

Laid out on one piece of paper is something that could have real business value yet although you can see where the dots connect, you begin to wonder if others will see the same compelling value, to invest in it, to back it, to simply support it and encourage you to continue.
Tell Your Story

Completing a business model and identifying its critical parts is only that first step, the hard part is getting it off the ‘drafting board’ and making it something tangible and potentially commercially viable for those around you to engage with.

What is the next step in executing this potential game changing business model

Each new business model needs a compelling story – a narrative..

We really need to learn how to craft a story, to tell the narrative around why your business model idea stands out and is worth other people’s time and consideration. This business model narrative along with your business model you are potentially better placed to test it, to talk about it, to validate it, to make it ‘sing for others’. You are out to get engagement and contributions everywhere, from everyone, as you tell the story, describe your potential new business model you gain from their reaction and improve your understanding of the real need for your idea. Read the rest of this entry »

The abundance of choice. A call for a fresh value proposition: The need for the right choice.

December 20th, 2013 by Patrick Stähler

Ever since we have the Internet everything is abundant. So many information at your fingertip, billions of webpages, millions of articles on Wikipedia, millions of articles at Amazon and other hundred of thousands of specialized ecommerce shops with even more articles. But is more choice always better?

Abundance of choice is today the norm. That is due to the Internet. A physical shop is always limited by its physical space. The Internet knows no limit.

The right choice not more choiceWhen I started my research on business model innovation in 1997 we were pretty much alone in this field. Actually, we had no word to describe the profound changes in industry structures due to the emergence of the Internet at that time. The term business model innovation just popped up in 2000 as a pure academic accident. I just added innovation to business model, a term that emerge in the 1990s and I secured the URL business-model-innovation. Today, Google gives me 190.000.000 hits for the term business model innovation. So you have abundance of sources of information about business model innovation. However, can you use them all?

More choice the better: The value proposition of the first wave of Internet ventures

The first battle cry in e-commerce and on the web was that now people have more choice than ever. More choice, the better was the value proposition. There was no limitation any more. You find any product today on the web in thousands of variations.
Sport Conrad, one of the largest online shops for skis in Europe, Read the rest of this entry »

Business Model Innovation in the EU and beyond

October 14th, 2013 by Patrick Stähler

Business Model Thinking is coming more and more mainstream. On Friday, I was at a workshop sponsored by the EU commission on Business Model Innovation and Policy Making. Here are my takeaways.

Business Model Innovation on the top of the agenda for policy makers

I’m very happy that the topic we started more than 15 years ago will be part of the future innovation policy of the EU. 15 years is a long time for me as a person, but as the business professor Christoph Zott is pointing out in science and policy making 15 years is a short time particularly when you want to introduce new units analysis to understand how firms outperform or create über-returns with (business model) innovation.

Policy making in need for innovation by xkcd

Business Model Innovators as outperformers

While we as entrepreneurs do not care much about measuring the impact of business model innovation on a societal level, the EU or the OECD, that also participated, want to measure each countries performance on business model innovation and then define policies to foster business model innovation on a governmental level.

Most papers presented at the workshop had a strong focus on the technocratic parts of a business model like Value Creation, Value Capture and Value Proposition but were missing the human side to business, the people who run a business, make the difference in innovation but are also the biggest impediments to change.

Pieter Perett and his team from the University of Applied Science Northwestern Switzerland, who organized the workshop, presented their findings that business model innovation make a strong impact on the long-term performance of firms. They use statistical data to identify business model innovators and they try to calculate if there is a über-return for these business model innovators.

Edward Giesen, Head of BMI at IBM, presented their study on business model innovation. They use a different method. Instead of measuring the impact of business model innovation from statistical data, they interview CEOs on the importance of business model innovation, and they see that companies that are consider themselves as business model innovators are outperforming traditional product or process innovators.

Christian Zott, who published one of the first works on business models in 2001 and is a strong advocate for business models, criticized from a scientist point of view the methods to measure the impact of business model innovation. His main point is that business models are often defined too broadly so it is difficult to understand where the real impact was in the business model.

I liked his criticism a lot from a scientist point of view and his focus on rigidity, however his proposal to focus only on the activities might be rigid but then the concept of business models looses its relevancy and its magic to see new boxes, entrepreneurs have never thought of as points of innovation like the revenue model, the value proposition or the Team & Value side of a business.

Where’s the beef?

Hans-Jörg Bullinger, former Head of the German Fraunhofer-Gesellschaft, criticized that the studies are interesting from a scientific point of view, however, they do not help to overcome our technology bias. His call for action was that we need better tools to design business models for entrepreneurs. Of course, I loved his objection, since this is exactly, what we do with the upcoming tool box for entrepreneurs. Read the rest of this entry »

Knowing the Value within your Business Model is vital

July 18th, 2013 by Paul Hobcraft

Knowing where to start in designing a business model or simply just even trying to describe it to others can be difficult. You need to explain its value. The great advantage of explaining this through a business model canvas that looks for value constantly does help. This a guest post by Paul Hobcraft, an Agility Innovation Specialist.

Business Model Canvasfluidminds approach to exploring and explaining the business model does just that- it focuses on focusing the mind on the value within the business model.

The first value point is in the Value Proposition

Naturally we all look to the Value Proposition to explain the business model but like a car you should always look ‘under the hood’ to see the engine and what gives a car its performance. Equally you should stand back from the proposition and ‘take in’ all that makes this up. For a car it is the styling, the design, the promise and what or who is behind it. We look to buy on a given ‘promise of value’ and in having the benefits explained it allows us to believe and ‘see’ the potentials. A business model, well designed and described, does just that. It confirms the (new or existing) value that makes up the new business model.

The value proposition shapes much; it identifies and defines where this business model is providing new offerings that advance on existing benefits to customers. The fluidminds business model canvas seeks out the customer and the customer benefit- it is looking to provide value by identifying where there is a clear fresh, new proposition.

Value Proposition on the Business Model CanvasWe do have to recognize a value proposition is not just looking to resolve the known jobs-to-be-done. In many new business models can be bringing together often fragmented parts of existing offerings and combining them in new ways, or deliberately and completely disrupting existing businesses through adapting new insight, technology advancements or understanding, into new business models. We only need to think of Apple and how it combined different technologies, revolutionary design and applied new materials into stunning, game changing products that changed our thinking of the actual jobs we thought about into totally different ones, which totally undermined existing business value or perceptions. Those become game changers. Read the rest of this entry »

You do not have to be loved by everybody – a great value proposition

May 15th, 2013 by Patrick Stähler

Most people want to be liked or even be loved. But a good value proposition for a firm should not attract everybody but only the ones you intend. And that means that a lot of people might even hate you.

Not everybody needs to love youTake the latest controversy about Abercrombie & Fitch, an American retailer for casual wear. See here (forbes.com), here (Los Angeles Times) or here (Daily Mail, UK).

Abercrombie & Fitch offers no women’s XL or XXL because they don’t want big women to wear their brand. Their value proposition is clear: They want the cool kids as customers. They do not consider big women as cool.

Mike Jeffries is the man behind A&F. In an interview with Salon Magazine in 2006 he told, when asked about the emotional experience in his shops:

“It’s almost everything. That’s why we hire good-looking people in our stores. Because good-looking people attract other good-looking people, and we want to market to cool, good-looking people.”

That is the reason why they offer nothing for big ladies. That is their choice. They discriminate big ladies, but you as customers have the choice as well. You are not forced to buy at A&F. I do not buy at A&F because I do like their attitude. However, they have a value proposition that is clearly distinguished from their competitors. And that is what I like and adore. They stick to their mantra even under severe pressure from the public.

Take other firms, Apple or Zara. They also discriminate. Apple’s Operating System is a closed system and either you take or leave it. At Zara, you also have no extra large sizes.

H&M, Dove: The opposite can be right as well

Interestingly, other firms like H&M or Dove have a different approach to big or natural ladies. H&M offers a H&M+ collection for larger women. Read the rest of this entry »

It’s time to move

May 6th, 2013 by Patrick Stähler

This is an announcement for the subscribers to this blog. In less than two months Google will stop Google Reader. That’s bad but we can’t change it. Unfortunately, over 600 subscribers of this blog still use Google Readers according to our feedburner statistics.

And that is bad. Bad for us, because we loose 600 subscribers that have a huge loyalty to this blog. And bad for you, since you do not get actively informed when we have fresh content. There is only one way to avoid this. You have to move.

  • The fastest way is that you subscribe with your email to the blog. For this service, we use Google Feedburner (hope they keep at least this service). As you know us, we do not publish too many articles so your risk to be spammed is zero. Actually, we look for articles from the community about business model innovation.
  • You move to another RSS reader. There are plenty of articles on the best alternatives to Google Reader like this on from The Verve or from lifehacker.  The best is that you can export your feeds into the new reader easily. Feedly, a favorite of many, has a build-in function to connect with Google Reader and will import all your feeds directly into Feedly. The second alternative is to export your feeds into the new reader. Mashable explains this option. A very clean reader, that is very close to the user experience of Google Reader, is The Old Reader.

So act now!

Hope to see you on another RSS reader or as an email subscriber.

Thank you very much.

Patrick

A request for help

February 1st, 2013 by Patrick Stähler

Dear readers

You might have realized that I have written just a few post in the last months. The reason is very simple. I have teamed up with Thomas Meyer, a young,  unconventional bestseller author, Gottschalk & Ash, a design agency and Wolfsburg AG, an innovation agency to develop a toolbox for entrepreneurs.

The work with Thomas and the others is absolutely stunning but also very time consuming since we do not like to stick to the first best solution but thrive for the best.

And this means a lot of iterations and testing. E.g. we decided to write in a thought provoking, easy to read and funny style, Thomas is well known for. But of course, this irritated our sponsor at the beginning. They expected a semi-scientific work adapted to entrepreneurs. However, we thought there are enough boring books out there so we decided to be different and hopefully better.

Bringing the whole team behind the same ideas and values takes time. However, this is extremely important since otherwise we cannot shoot for the stars. Later the customers have to decide if they like what we have developed. But of course, we have tested the toolbox with a variety of entrepreneurs. We used it with social entrepreneurs at the Hub Zurich. Students at the University of St. Gallen developed stunning ideas that made already an impact in the life of other students. We tested it at the Entrepreneurship Summit in Berlin, etc. All of this takes time, but makes the tool box better. Thanks for all the feedback and ideas we got.

The bad news for most of readers is: The toolbox will be in German. The reason is very simple. Since we are German-speakers and live in German-speaking countries, we believe that we have to give something back. We believe that in Germany, Switzerland and Austria we need more, better and more creative startups. And if we can make a small contribution to this, that would be awesome. It is striking that the first ideas about the business model innovation concept emerged in Switzerland at the end of the 1990s. Alex is also Swiss by the way. It is fun to see an idea spreading worldwide from a country most people expect watches to come from but not management trends.

And since we want to foster entrepreneurship in all parts of society we decided to write in plain and simple German with little Fachvokabular (technical vocabulary). This is pretty tricky and needed a lot of creativity to explain the most essentials ideas in a very understandable language. Particularly, since a business model describes briefly all disciplins of businesses (marketing, sales, operation management, financials, HR, leadership) on a card. That is a challenge.

Your help is needed

So here come the two requests:

  • For all German speakers, if you like the idea about the toolbox, please enter your mail in our list so we can inform you about the progress.
  • The second request goes to all experts in business model innovation, strategic innovation management, customer insights via jobs-to-be done technique or entrepreneurial design. If you would like to contribute to this blog, we would love to hear from you. This blog is not my personal blog, but a blog about business model innovations. We look for cases, though provoking ideas, reflection but not for PR material. The average post has around 3.000-5.000 readers but this depends very much on the topic. Most articles are typical “long-readers” and reference articles that attract a lot of traffic via Google. A typical article is “Who says paper is dead?” with almost 9.000 visitors. And of course, the article will be published under the name of the other.

In the next months we have many challenges ahead with our toolbox. One is that we need a publisher who is willing to accept new business models in the publishing industry like publishing under Creative Commons or finding creative ways to bundle the books for teams. Will be an interesting journey.

Thanks for all your support and ideas.

Cheers Patrick

It’s not the price, stupid. It is the value (proposition)

October 30th, 2012 by Patrick Stähler

We always hear that the customer is not buying because the price is too high. Is the price important?

Of course, most clients will say yes in any survey or in sales negotiation. Actually, there are departments at your clients that know only two words: Too expensive!! Give me rebates! That is the purchasing department and it is their job to negotiate the price of a purchase. However, is this true, that even for B2B customers only the price is important?

Observe the jobs-to-be-done of your customers. Don’t ask the customers

Let’s take an example from RWE, a huge German utility firm. Let’s take the case they need to purchase electronic testing equipment. Nothing fancy, just a plain vanilla device for 30 to 50 Euro. Traditionally, this purchase would be a C category purchase. C means not critically important to the firm and therefore the firm usually shops around among different suppliers for a good price.

So you would assume that price is the decisive criteria for a firm to purchase from you. And yes, if you survey customers what is important in their decision to purchase C goods, the price will be on top.

So, all B2B marketplaces of the late 1990s and early 2000s like Onvia had the value proposition that price of the goods are the most important criteria for the B2B market. So they offered everything economics told them what to do in a price sensitive market: Make auctions, offer pool buying for larger quantities or make requests for proposals.

Not the price of the good is important but the whole cost of purchasing

However, they had to learn the hard way (most disappeared from the market) that this is not the case. Let’s go back to the testing device of 30 to 50 Euro at RWE. Saving an extra 20% on a purchase of 50 Euro is great. But is it just 10 Euro. But the costs for the internal purchasing process can easily be 150 to 200 Euro for the traditional process according to Karl Czech from RWE purchasing. Read the rest of this entry »