TTMG 5103 Module Innovation and business models

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TTMG 5103 Module Innovation and business models

• Pulak Choudhury
• TIM Program, Carleton University
• June 19, 2009

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Agenda

• Objectives
• What will be learned
• What can be done
• Innovation
• Necessity of innovation
• Innovation strategies
• Innovation facts
• What is not innovation
• What is innovation should do/should be
• Business model
• Business model design process
• Business model innovation
• Three step roadmap
• Business model innovation matters
• Ex1 AMIES
• EX2 NOKIAs all-you-can-eat
• EX3 - SHAZAM
• Innovation and business model
• Moment of truth

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Objectives(1)

• What will be learned
• A detailed view of the innovation
• Alchemy of business model
• Relationship between innovation activities and
  business model innovation
• A new way of doing business - with new values,
  vision, strategies, system and structures

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Objectives(2)

• What can be done
• How to spark the disruption
• Maximize the reach of the technology and an
  comprehensive value network
• Identify and improve your business model

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Agenda

• Objectives
• What will be learned
• What can be done
• Innovation
• Necessity of innovation
• Innovation strategies
• Innovation facts
• What is not innovation
• What is innovation should do/should be
• Business model
• Business model design process
• Business model innovation
• Three step roadmap
• Business model innovation matters
• Ex1 AMIES
• EX2 NOKIAs all-you-can-eat
• EX3 - SHAZAM
• Innovation and business model
• Moment of truth

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Innovation

• Innovation is the ability to come up with
  something new that somehow facilitates a task or
  endeavour
• Innovation is purposeful and should be the result
  of an occurrence, a need or an event
• Innovation is progress

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Necessity of innovation

• To grow the business
• To address a particular target market where they
  see a major competitive threat or opportunity
• To reinvent the business model for a tougher
  economic environment
• Innovation seems to be the key to success in
  product development

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Agenda

• Objectives
• What will be learned
• What can be done
• Innovation
• Necessity of innovation
• Innovation strategies
• Innovation facts
• What is not innovation
• What is innovation should do/should be
• Business model
• Business model design process
• Business model innovation
• Three step roadmap
• Business model innovation matters
• Ex1 AMIES
• EX2 NOKIAs all-you-can-eat
• EX3 - SHAZAM
• Innovation and business model
• Moment of truth

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Innovation strategies

• Inventive
• First to market
• Doesnt necessarily lead to success

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Innovation strategies

• Adaptive
• Not the first but the best
• Can work but can fail in industries with short
  product life cycles or network effects

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Innovation strategies

• Economic
• Low cost producer
• Usually requires lots of manufacturing innovation

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Innovation strategies

• Innovative applications
• Creative use of existing technologies

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Innovation facts

• What is not true about innovation
• being innovative can be a costly venture for a
  business
• Innovation means reinventing the wheel
• Big ground-breaking ideas or technological leaps
  forward
• The outcome of RD department or smart people

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Innovation facts

• What innovation should be
• Making changes to the established way of doing
  things, which can result in a new product
• Planned and managed as a core business process
  covering all parts of a business
• Be done at a fraction of its previous cost and
  with quick, powerful results

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Agenda

• Objectives
• What will be learned
• What can be done
• Innovation
• Necessity of innovation
• Innovation strategies
• Innovation facts
• What is not innovation
• What is innovation should do/should be
• Business model
• Business model design process
• Business model innovation
• Three step roadmap
• Business model innovation matters
• Ex1 AMIES
• EX2 NOKIAs all-you-can-eat
• EX3 - SHAZAM
• Innovation and business model
• Moment of truth

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Business model

• A business model describes the value an
  organization offers to various customers and
  portrays the capabilities and partners required
  for creating, marketing, and delivering this
  value and relationship capital with the goal of
  generating profitable and sustainable revenue
  streams
• Business model is a broad-stroke picture of how
  an innovative concept will create economic value
  for the ultimate user, for the firm and its
  shareholders and partners

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Business model contd.

• Considers the infrastructure required to move the
  product/service to the market in a manner that it
  both easy and convenient for customers and
  profitable for the firm

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Business model design process

• Identify interdisciplinary stakeholders -gt set-up
  team
• Understand (business) environment gt frame
  problem
• Suspend reality -gt imagine
• Bring ideate to reality -gt prototype
• Chose suitable design -gt decide
• Execute -gt project portfolio
• Evaluate, learn and redesign -gt manage
  improvement

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Agenda

• Objectives
• What will be learned
• What can be done
• Innovation
• Necessity of innovation
• Innovation strategies
• Innovation facts
• What is not innovation
• What is innovation should do/should be
• Business model
• Business model design process
• Business model innovation
• Three step roadmap
• Business model innovation matters
• Ex1 AMIES
• EX2 NOKIAs all-you-can-eat
• EX3 - SHAZAM
• Innovation and business model
• Moment of truth

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Business model innovation

• Innovation does not always rests in the
  technology or product or service, but in the
  business model itself
• Business innovation refers to the creation, or
  reinvention, of a business itself
• Think outside-of-the-box
• Can we describe it ? No? we need to discuss it
• Can we discuss it ? No? because is no common
  language
• Can we improve it ? No? we do not have the proper
  tools
• implement it

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Business model innovation
Figure 4 areas need to looked at while
innovating a business model
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Business model innovation
Figure 9 building blocks of business model
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Three step roadmap

• Begin by considering the opportunity to satisfy a
  real customer need
• Construct a blueprint for how your company will
  fulfill that need profitably
• Compare that model to your existing model to
  determine how much change will be required to
  capture the new opportunity

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Business model innovation matters (1)

• AMIES st.
• Fisrt gives away song for free
• Number of download started to incrase
• So AMIESs startd to charge and increase
• Business model innovation
• New talent discovery
• New distribution channels
• Increased revenue streams

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Agenda

• Objectives
• What will be learned
• What can be done
• Innovation
• Necessity of innovation
• Innovation strategies
• Innovation facts
• What is not innovation
• What is innovation should do/should be
• Business model
• Business model design process
• Business model innovation
• Three step roadmap
• Business model innovation matters
• Ex1 AMIES
• EX2 NOKIAs all-you-can-eat
• EX3 - SHAZAM
• Innovation and business model
• Moment of truth

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Business model innovation matters (2)

• Nokia launching all-you-can-eat music service
• Pay a monthly service
• Listen as much as you want
• Business model innovation
• Building a new platform
• Leveraging a brand
• Recurring revenues

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Business model innovation matters (3)

• Shazam SMS
• You hear a tune you like but dont know the title
  or artist..
• Dial a number
• Hold your phone to the speaker
• Get the title and artist by SMS
• Business model innovation
• Productive innovation
• New channels
• New revenue streams (communication, SMS charges,
  sales commission)

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Innovation and business model

• Innovation is needed to spark the disruption
  where a new business model is then needed to
  maximize the reach of this innovation and to
  evolve an comprehensive value network to support
  it
• Innovation needs to be linked to strategy and the
  business planning process
• Innovation without a proper business model is
  like a Missile looking for a target

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Mistakes we make

• Businesses tends to stay in their conservative
  box and not become more creative
• Sometimes we hold up innovation by concentrating
  on the wrong thing at the start
• Sometimes its because of the anchors and frames
  of the way we do things

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Moment of truth

• Discussions
• Comments

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Agenda

• Objectives
• What will be learned
• What can be done
• Innovation
• Necessity of innovation
• Innovation strategies
• Innovation facts
• What is not innovation
• What is innovation should do/should be
• Business model
• Business model design process
• Business model innovation
• Three step roadmap
• Business model innovation matters
• Ex1 AMIES
• EX2 NOKIAs all-you-can-eat
• EX3 - SHAZAM
• Innovation and business model
• Moment of truth

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Lessons learned (1)

• Dont focus on the business model at the outset
  but instead concentrate on the value they create
• Work on useful things
• Solve problems
• Create value

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Lessons learned (2)

• Make something that is worth while and people
  will pay you for it
• Figure out what youre good at making and then
  make them well. You will make money as a result.

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References

• Johnson, Mark, Christensen, Clayton, Kagermann,
  Henning. Reinventing your business model, Harvard
  Business Review, December 2008
• http//www.slideshare.net/Alex.Osterwalder/busines
  s-model-innovation-matter

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• Knowing in advance how youre going to make money
  from snake oil may sound like you have a business
  model what you have is snake oil. And thats the
  problem you need to concentrate on first, the
  fact that youre not creating anything of value.
• Fedex right turn