Seven faces of Business Model Innovation

CANVAS – CHAPTER 1

1. Seven faces of Business Model Innovation

a) The senior executive: Establish a new business model in an old industry.

b) The intrapreneur: Help to take advantage of the latest technological developments with the right business model.

c) The entrepreneur: Respond to unsatisfied customer needs and build new business models around them.

d) The investor: Invest in companies with the most competitive business model.

e) The consultant: Help clients to question their business models and conceive and build new ones.

f) The designer: Find the right business model to launch an innovative product.

g) The conscientious entrepreneur: Achieve a social and economic change through innovative business model.

2. The business model canvas

A business model describes the rationale of how an organization creates, delivers and captures value.

The 9 building blocks

1. Customer segments: An organization serves one or several customer segments.

In order to satisfy customers a company can group them into distinct segments with common needs, behaviors and other attributes.

An organization must make a conscious decision about whxich segments to serve and which to ignore. Once this decision is taken, a business model can be carefully designed around a strong understanding of customer needs.

Customer groups represent separate segments if:

-Their needs require and justify a different offer.

-They require different types of relationships.

-They have different profitabilities.

-They are willing to pay for different aspects of the offer.

Types of customer segments

a. Mass market: Companies don’t distinguish between different customer segments. The value preposition, customer relationships and distribution channels focus on a large group of customers with similar needs and problems.

b. Niche market: Attend to specific and specialized customer segments. The value preposition, customer relationship and distribution channels are tailored to the specific requirements of the niche market.

c. Segmented: Some business models distinguish between market segment with slightly different needs and problem.

d. Diversified: A company with a diversified customer business model serves two unrelated customer segments with very different needs and problems.

e. Multi-sided markets: Serve two or more interdependent customer segments.

2. Value preposition: It seeks to solve customer problems and satisfy needs.

It describes the bundle of products and services that create value for a specific customer segment. Is the reason why a customer chooses to one company over another.

Some value prepositions may be innovative and represent a new offer. Others may be similar to existing market offers but with added features and attributes.

Elements that contribute to create value

a. Newness: Some value prepositions satisfy a new set of needs that customers previously didn’t perceive because there was not a similar offering.

b. Performance: Improving product or service performance has been a common way to create value.

c. Customization: Tailoring products and services to the specific needs of individual customers or customer segments creates value.

d. Getting the job done: Value can be created by helping a customer to finish certain jobs.

e. Design: A product may stand out because of superior design. In some industries design can be an important part of the value preposition.

f. Brand: Customers may find value in the simple act of using and displaying a specific brand.

g. Price: Offering similar value at a lower price is a common way to satisfy the needs of price-sensitive.

h. Cost reduction: Helping customer to reduce costs is an important way to create value.

i. Risk reduction: Create value by reducing the risks that customers incur when they purchase products or services.

j. Accessibility: Making products and services available to customer who previously didn’t have access to them is another way to create value.

k. Usability: Makes things more easy to use can create a substantial value.

3. Channels: Value prepositions are delivered to customer by communication, distribution and sales channels.

It describes how a company communicates and reaches its customers segments to deliver value proposition.

Functions of channels:

Inform to customers about company´s products and services.

Allow customers to purchase specific products and services.

Deliver a value preposition to customers.

Provide a post-purchase service to customers.

Types of channels

Find the right mix of channels to reach customers is crucial to bring the value preposition to the market.

a. Partner channels: Lead to lower margins, but they allow an organization to expand its reach and benefit from partner strengths.

b. Owned channels: Have higher margins but can be costly to start up and to operate.

Channel phases

1. Awareness: How do we increase awareness about our company´s products and services?

2. Evaluation: How do we help customers to evaluate our organization’s value preposition?

3. Purchase: How do we help customers to purchase specific products and services?

4. Delivery: How do we deliver a value preposition to customers?

5. After sales: How do we provide post-purchase service to customers?

4. Customer relationship:

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