Eship 3 Summary
Chapter X-X
Timo Verkade
,Week 38
- Learning goal 1
- Learning goal 2
- Learning goal 3
Paper: Reinventing your business model
Why is it so difficult for established companies to pull of the new growth that business model
innovation can bring?
- They don’t understand their current business model well enough to know if it would suit a
new opportunity or hinder it
- They don’t know how to build a new model when they need it
- Very little formal study has been done into the dynamics and processes of BM innovation
Companies need a roadmap
1. Realize that success starts by not thinking about business models at all (but about
opportunity to satisfy a real customer who needs a job done).
2. Construct a blueprint laying out how the company will fulfill that need at a profit.
3. Compare that model to your existing model to see how much you’d have to change it to
capture the opportunity.
Business model definition
1. Customer value proposition (CVP) (most important is precision, how perfectly it nails the
customer job to be done). Think of the common barriers (insufficient funds, skill, time, etc.)
2. Profit formula
3. Key resources
4. Key processes
When significant changes are needed to all 4 elements of the existing model, a new business model is
needed.
5 strategic circumstances that often require business model change
1. Opportunity to address the needs of large groups of potential customers who are shut out of
market (because solutions are too expensive or complicated) through disruptive innovation.
2. Opportunity to capitalize on a brand-new technology by wrapping a new business model
around it (Apple and MP3 players) or the opportunity to leverage a tested technology by
bringing it to a whole new market.
3. Opportunity to bring a job-to-be-done focus where one does not yet exist (FedEx focusing on
speed and reliability over UPS).
4. The need to fend off low-end disrupters.
5. The need to respond to a shifting basis of competition.
“Pursuing a new business model that’s not new or game-changing to your industry or market is a
waste of time and money.”
,Answering “yes” to all four greatly increases the odds of successful execution:
1. Can you nail the job with a focused, compelling customer value proposition?
2. Can you devise a model in which all 4 elements work together to get the job done in the
most efficient way possible?
3. Can you create a new business development process unfettered by the often negative
influences of your core business?
4. Will the new business model disrupt competitors?
Dow Corning changing the business model of silicone-based products and technical services
Bob Higgins sums up the importance and power of business model innovation this way: “I think
historically where we [venture capitalists] fail is when we back technology. Where we succeed is
when we back new business models.”
,
Chapter X-X
Timo Verkade
,Week 38
- Learning goal 1
- Learning goal 2
- Learning goal 3
Paper: Reinventing your business model
Why is it so difficult for established companies to pull of the new growth that business model
innovation can bring?
- They don’t understand their current business model well enough to know if it would suit a
new opportunity or hinder it
- They don’t know how to build a new model when they need it
- Very little formal study has been done into the dynamics and processes of BM innovation
Companies need a roadmap
1. Realize that success starts by not thinking about business models at all (but about
opportunity to satisfy a real customer who needs a job done).
2. Construct a blueprint laying out how the company will fulfill that need at a profit.
3. Compare that model to your existing model to see how much you’d have to change it to
capture the opportunity.
Business model definition
1. Customer value proposition (CVP) (most important is precision, how perfectly it nails the
customer job to be done). Think of the common barriers (insufficient funds, skill, time, etc.)
2. Profit formula
3. Key resources
4. Key processes
When significant changes are needed to all 4 elements of the existing model, a new business model is
needed.
5 strategic circumstances that often require business model change
1. Opportunity to address the needs of large groups of potential customers who are shut out of
market (because solutions are too expensive or complicated) through disruptive innovation.
2. Opportunity to capitalize on a brand-new technology by wrapping a new business model
around it (Apple and MP3 players) or the opportunity to leverage a tested technology by
bringing it to a whole new market.
3. Opportunity to bring a job-to-be-done focus where one does not yet exist (FedEx focusing on
speed and reliability over UPS).
4. The need to fend off low-end disrupters.
5. The need to respond to a shifting basis of competition.
“Pursuing a new business model that’s not new or game-changing to your industry or market is a
waste of time and money.”
,Answering “yes” to all four greatly increases the odds of successful execution:
1. Can you nail the job with a focused, compelling customer value proposition?
2. Can you devise a model in which all 4 elements work together to get the job done in the
most efficient way possible?
3. Can you create a new business development process unfettered by the often negative
influences of your core business?
4. Will the new business model disrupt competitors?
Dow Corning changing the business model of silicone-based products and technical services
Bob Higgins sums up the importance and power of business model innovation this way: “I think
historically where we [venture capitalists] fail is when we back technology. Where we succeed is
when we back new business models.”
,
