Business Model Innovation (PowerPoint PPT Slide Deck)

This PPT slide presents a case study of Dow Corning, illustrating how the company adapted its business model to target low-end customers through a distinct business unit. This strategic shift allowed Dow Corning to explore new market opportunities without undermining its traditional high-margin offerings.

On the left side, the established business model is outlined. It highlights a customer value proposition focused on customized solutions and negotiated contracts, which cater to a more premium clientele. The profit formula relies on high-margin, high-overhead retail prices that support value-added services. Key resources and processes emphasize R&D, sales, and service orientation, indicating a complex operational structure designed for high-touch customer interactions.

Conversely, the right side details the new business unit designed for low-end customers. This model is characterized by a simplified value proposition, offering no-frills, bulk pricing sold directly through the internet. The profit formula shifts to spot-market pricing with lower overhead, enabling the company to maintain profitability despite reduced margins. The focus on high throughput indicates a streamlined operation aimed at efficiency. Key resources and processes are adapted to include an IT system that emphasizes low-cost processes and maximum automation, showcasing a significant departure from the established model.

This analysis reveals how Dow Corning successfully navigated market segmentation by creating a separate unit that meets the needs of a different customer base while preserving its core business. The insights gained from this case can guide other organizations in exploring innovative strategies for growth without compromising existing revenue streams.

This PPT slide addresses the invisible institutional barriers that hinder the adoption of new business models within organizations. It emphasizes that the core understanding of a business model often becomes obscured by entrenched rules, norms, and metrics that exist within a company. These barriers can significantly impede the integration of innovative approaches, as they are deeply rooted in the organizational culture and operational practices.

The slide categorizes these institutional barriers into 3 main areas: Financial, Operational, and Other. Each category lists specific examples of rules and metrics that can obstruct change.

In the Financial section, key metrics such as gross margins, opportunity size, and unit pricing are highlighted. These financial metrics often dictate decision-making and can create resistance to new models that do not align with established financial expectations.

The Operational section includes factors like end-product quality and customer service, which reflect the importance of maintaining existing standards that may conflict with innovative practices. The reliance on established channels and lead times can further entrench existing operational norms.

The Other category encompasses broader considerations like pricing strategies and performance demands. These elements can create additional layers of complexity, as they often tie into individual incentives and brand parameters that may not support new initiatives.

The concluding remark underscores that these institutionalized rules and metrics can lead to stagnation, making it difficult for companies to adapt and thrive in a changing environment. Understanding these barriers is crucial for any organization looking to innovate effectively.

This PPT slide outlines essential components of a business model, emphasizing how the profit formula, key resources, and key processes collectively shape the customer value proposition. At the core, the customer value proposition is defined by 3 critical elements: identifying the target customer, understanding the job to be done, and offering a solution that meets the customer’s needs. This foundational aspect is crucial for ensuring that the business addresses real problems and fulfills significant needs.

The profit formula is highlighted as a pivotal element, detailing how revenue is generated, the allocation of costs, and the margin model necessary to achieve desired profit levels. This segment underscores the importance of understanding financial mechanics, which are vital for sustainable business operations. Resource velocity is also mentioned, indicating how efficiently resources must be utilized to support sales targets.

Key resources are categorized into several areas, including people, technology, equipment, information, channels, and partnerships. This categorization emphasizes the diverse assets that a business must manage to deliver on its value proposition effectively.

Lastly, the slide discusses key processes, which encompass the rules and metrics that guide operational efficiency. This includes defining norms and establishing criteria for investment decisions, which are essential for aligning resources with strategic objectives.

Overall, this slide serves as a comprehensive framework for understanding how various components of a business model interconnect to create value and drive profitability. It provides a clear blueprint for executives looking to innovate or refine their business strategies.

This PPT slide outlines the critical components of key resources and processes essential for delivering value propositions to customers. It begins by defining key resources as the necessary assets, including personnel, technology, and brand, that are vital for fulfilling customer needs. The emphasis is on identifying elements that generate value for both the customer and the organization itself.

Key processes are highlighted as operational and managerial practices that enable companies to consistently deliver value. These processes are recurrent and span various functions such as training, development, manufacturing, and sales. The slide suggests that successful organizations integrate their resources and processes in unique ways to effectively serve their target customers.

Examples illustrate how different industries prioritize distinct resources and processes. For instance, a professional services firm relies heavily on its people, while a packaged goods company focuses on strong branding and effective channel management. This differentiation underscores that it’s not just the individual elements that matter,, but how they interconnect and support one another.

The slide also notes the importance of aligning the value proposition with the profit formula, indicating that these elements must work together to create a sustainable business model. Additionally, it points out that rules, norms, and metrics often emerge later in the development of a business model, emphasizing the need for flexibility in adapting to changes during early stages.

Overall, this slide serves as a strategic reminder of the foundational aspects that companies must consider to ensure effective delivery of their value propositions.

This PPT slide outlines 5 key circumstances that often necessitate a shift in business models, emphasizing the importance of innovation in response to market dynamics. Each circumstance is categorized into opportunities and needs, providing a structured approach to understanding when and why businesses might consider model innovation.

The first circumstance highlights the chance to address disruptive innovations aimed at large customer groups who find existing solutions too costly or complex. This suggests a market gap that can be exploited by simplifying offerings or creating more accessible alternatives. The example of Tata Motors' Nano car illustrates this point, showcasing how addressing affordability can unlock new customer segments.

The second circumstance focuses on leveraging new technologies, either by creating a new business model around them or introducing tested technologies to new markets. The reference to Apple and its MP3 players indicates how innovative applications of technology can redefine market expectations and consumer behavior.

The third circumstance discusses the potential to establish a job-to-be-done focus in industries where such a focus is lacking. This can lead to a more customer-centric approach, as seen with FedEx, which prioritized customer needs over traditional competitive strategies.

The fourth circumstance addresses the necessity of defending against low-end disruptors. The example of mini-mills in the steel industry illustrates how new entrants can threaten established players by offering lower-cost alternatives.

Lastly, the fifth circumstance emphasizes the need to adapt to a shifting basis of competition. Companies must recognize that market definitions and acceptable solutions evolve, as demonstrated by Hilti's response to changing manufacturing costs, which allowed low-end entrants to encroach on their market.

Overall, this slide serves as a strategic guide for executives considering when to innovate their business models in response to various market pressures.

This PPT slide outlines a structured approach to business model innovation, emphasizing 3 critical steps. The first step, "Focus on the Opportunity," stresses the importance of identifying real customer needs rather than fixating on existing business models. This approach encourages organizations to think from the customer's perspective, ensuring that any new model addresses genuine demands.

The second step, "Construct a Blueprint," involves creating a detailed plan that illustrates how the company intends to meet the identified customer needs while ensuring profitability. This blueprint is broken down into 4 essential components: the Customer Value Proposition, Profit Formula, Key Resources, and Key Processes. Each element plays a vital role in shaping a coherent strategy that aligns with market demands.

The final step, "Compare New Model with Existing," requires a thorough analysis of the proposed business model against the current one. This comparison helps determine the extent of changes needed to effectively seize the identified opportunity. It also clarifies whether the existing organization can adapt to the new model or if a separate business unit is necessary.

The slide concludes with a reminder that successful companies inherently fulfill customer needs through effective business models, regardless of whether those models are fully understood. This insight highlights the importance of aligning business strategies with customer expectations to drive innovation and growth.