9/26/16 - Business Model Innovation

What has lower odds of success, but high payoff if successful?

New product/market development and BMI

What is business model innovation

New value proposition to consumers and new way to deliver value propositions

What is Christensen's Disruptive Innovation?

Old companies move up to profitable segment which leaves gaps for new entrants

Integrated Business model

-bundle innovations and products together -have control of entire value chain -need internal development and commercialization strategy

What is a good business model?

1. Captures value with consumers 2. Achieves advantageous cost and risk structures 3. Good value proposition

Barriers to imitation

1. Complicated because of particular processes, resources, and systems needed to make it work 2. level of opacity - so that competitors don't know how it works/attracts consumers 3. Cannibalization

New Delivery System + New Value Proposition

BMI

What is a business model

Design or architecture of value creation and delivery

What is the role of discovery, learning and adaption in business model innovation?

Experimentation is key Need to see business model as provisional since in time, it will need to adapt to new tech and organizational innovations

Example of business model: Subscription

Get a set service/product for a certain period of time; relies on renewals

Example of business model: Razor-razor blade model

It is revenue model, where you price the razors cheaply, while charging more for the consumables (razor blades themselves)

New Delivery System + Existing Value Proposition

Market Development

Existing Delivery System + Existing Value Proposition

Market penetration

Existing Delivery System + New Value Proposition

New Product Development

Why do companies do market penetration?

See immediate profit growth (but that is short run) less risky have expertise

What is the value of innovation in a business model

Value of a company is their ability to innovate or create small improvements to their current business model More radical the innovation, more challenging the revenue architecture

Example of business model: sponsorship

With sports for instance, leveraging the team and players: -onfield = create brand authenticity/association -off field = use it to sell

outsource/pure licensing model

need strong IP rights

Example of business model: freemium

service is free, may or may not be supported with ads; eventually with large enough consumer base, offer a premium priced value added services