Business Model Innovation in Practice. Case Studies

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3 Business Model Innovation in Practice Case Studies

4 5 Types of Innovation Product/Service Innovation Process Innovation Marketing Innovation Organisational Innovation Business Model Innovation

5 Business Model Innovation Wells Fargo American Express Nokia

6 Practical Application The business model canvas can be used when: Reviewing existing business models e.g. Established business Creating a new business model e.g. New start-up Changing a business model within a division

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8 Dell Computers The personal computer market had become very competitive by the late 1990s IBM, HP, Toshiba were dominating the market for PCs For Dell to be competitive they needed to make massive changes Dell focused on the concept of the value of time How could the company minimise inventory and bring new products to market quickly

9 Dell Computers Dell s business model was modified by focusing on the following components: Direct customer relationships Direct sales Customer segmentation for sales and service Build-to-order production

10 Business Model Case Study Traditional indirect distribution of PCs Suppliers PC Maker Distributor Retailer Reseller Integrator Final Customer Suppliers Dell s direct distribution channel Dell Final Customer

11 Dell Computers The business model innovation implemented by Dell provided the following advantages: Increased market share for personal computers Ability to deliver a made-to-order customised PC quickly to the customer 3 to 4 days Increased client satisfaction Reduced cost through minimising inventory Increased profit by utilising a direct sales strategy

12 Innovative Business Concepts After 10 years working at the Australian Institute for Commercialisation it was time to start a business Focus was a consulting business in innovation and commercialisation services Where do I start?

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14 KEY PARTNERS Other consultants Investors & Venture Capitalists Technical specialists (e.g. market research etc) Channel partners (e.g. government, industry bodies, mastermind groups) KEY ACTIVITIES Sales process & pipeline Direct marketing Telephone/Meetings Presentations Networking Partnering KEY RESOURCES Intellectual capital, knowledge, skills & experience Branding & profile Tools, processes & methodologies Outsourcing VALUE PROPOSITION Solving complex problems for clients through innovative solutions Growth through business innovation Commercialisation services IP management and path to market advice Facilitation & education Coaching & mentoring CUSTOMER RELATIONSHIPS Personal relationship (one to one) management Client maintenance process Adding value CHANNELS Existing networks Direct marketing Partnering with other consultants Tenderlink gov tender sites Referrals and word of mouth CUSTOMER SEGMENTS Start-ups & SMEs Medium-Large enterprises Government agencies CRC s & ROs Firms in the following sectors: o Health/ Biotech o Agriculture o IT o Clean technology o Science & technology o Mining/ Engineering o Manufacturing COST STRUCTURE Minimal and lean The Lean Start Up concept Mainly for marketing & promotion, telephone, travel (MV & parking), tools, printing, network meeting fees, internet, outsourcing Eventually rent for premises (start with virtual office) Virtual assistant admin, telephone sales, diary management REVENUE STREAMS Initial Target $250,000 Revenue sources: o Specific consulting projects o Monthly retainers o Delivering presentations and workshops o Medium to long term contract placement o Coaching & mentoring o Board positions o Success fees and equity in business

15 Identify Key Business Opportunities Business Opportunities Register Timeframe Opportunity Description Source Action Status Value Immediate UQ Business School BD for the professional certificate in research commercialisation Damian Hine 15/05/13 Commercialisation Bootcamps development & facilitation 09/05/13 Meeting with Damian Hine. Teaching opportunity available immediately. Active $21,000 Immediate pd Training Become a trainer for pdtraining Don Fairweather 11/06/12 Received a reply that there were no positions Closed $6000 per month available and that I needed to have a Cert IV TAE 27/05/13 Sent CV and impactful application letter Send CV and an impactful cover letter to Don Immediate Innovation Australia Board Position Board member position in Canberra Innovation Australia 10/05/13 Submitted online application Completed $2000 per month Immediate Food Innovation Precinct Board member position in Canberra Innovation Australia 23/05/13 Submitted online application Completed $2000 per month Immediate Woods Grain consulting Advice on the anti-microbial project Angus Woods Completed numerous projects 19/06/13 Received counter offer 11/06/13 Sent through marked-up changes of Contract 21/05/13 Received Consultancy Contract from Angus 13/05/13 Waiting for contracts 8/5/13 terms of engagement Have a discussion week of 5/5/13 Active $10,400 Immediate Anti-microbial Tea Tree Oil based gel - Stage 1 Commercialise Tea Tree Gel for Bacterial Vaginosis Immediate Anti-microbial Tea Tree Oil based gel - Stage 2 Commercialise Tea Tree Gel for Bacterial Vaginosis Steen from Novasel Steen from Novasel 16/06/13 Commercialisation Plan delivered 27/05/13 Proposal Accepted and work started 21/05/13 Met and scoped project. Proposal prepared and sent Provide consulting rates and plan of engagement Oct 13 Trip to India to visit Cadilla Stages 2 and 3 completed 19/06/2013 Steen requested quotation for Stages 2, 3 and 4 Immediate Tenderlink Tenderlink Tenders Tenderlink Website Register on Tenderlink Completed Immediate Athletic Greens Investigate securing rights to Athletic Greens for Craig Ballantyne, ETR Active Asia Pacific region Develop my own Super Green product Contacted affiliate but not interested in promoting product in Australia 15/06/13 Nicole gave me the affiliate contact for Athletic Greens 28/05/13 Second sent to Craig Ballantyne 15/05/13 Contact Craig Ballantyne via and ask the question Completed $6,200 Completed $9,000 Licensing opportunity Immediate AIM Opportunities Consultant/Trainer for AIM AIM CEO Contact Vivienne for a meeting/discussion Pending $2,000 per workshop Immediate Department of SB Facilitator work Robyn Reeve I have been written into their proposal. Completed $3,700 per workshop Return telephone call

16 Next Steps 90 Day Action Plan Date Due to be Completed 1. Build client database through networking and affiliate marketing programs Ongoing 2. Develop an Ascending Transaction Model to build clients and drive conversion 31/01/14 3. Productise my business offerings into packaged products 31/01/14 4. Develop and implement a marketing campaign every quarter 30/10/13 5. Measure and evaluate the effectiveness of the first campaign 30/11/13 6. Convert prospects into delighted customers through attribution of value 30/11/13 7. Identify and implement an integrated administration system, including finance 30/12/14 8. Investigate different online business systems 28/02/14 9. Identify outsourcing services for the different admin and financial functions 31/01/ Design and implement a website with blog and social media 31/01/ Choose and register URL and web hosting service 31/01/ Write website and blog content and upload 31/01/ Review the value proposition and the Why? for the business 31/01/ Develop a clear and differentiated elevator pitch 31/01/ Improve the Innovative Business Concepts story 30/01/ Review Innovative Business Concepts branding 31/03/14

17 Conclusion Every business has a business model We often don t give business models much thought Business models are the key method for articulating value creation (and profit!) Business model innovation is an option for everyone

18 Business Model References Drucker, P. F. (1994). The theory of the business. Harvard business review, 72(5), Magretta, J. (2002) Why Business Models Matter HBR Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

19 References Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.