Business Model Innovation Workshop: Gent 2/2/2017

Business Model
Innovation
Best practices to succeed step by step
Chris Delvaux
& Bryan Cassady
#commercialinnovation

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Objectives and Agenda
Objectives tonight Agenda
Introduce the ideas of business model
innovation and show it is easier than you
think to get started (and maybe harder
than you think to finish it right)
19:00 – 19:30 An introduction to the St.
Gallen’s business model innovation methods
19:30 – 20:30 Working in groups applying
These methods to your business
20:30 – 21:00 7 Keys to succeed step
by step and Q&As

Who we are?

About
Bryan Cassady
A passionate believer in anyone’s ability to Innovate,
build new businesses.
If things are not working…it is usually the system.
10 Starts-ups, 1 lower, 8 winners, 1 TBD.
8 Years coaching, teaching (KU Leuven/Solvay), supporting
Innovation.
Innovation Engineering, Lead European Innovation Academy.
Trainer: Lean start-up, Business model canvas, Innovation
systems.
Works with > 200 companies per year,
supporting 8-12 with execution.

About
Chris Delvaux
Chris Delvaux has over 15 years of experience as a
senior consultant.
He is specialized in go-to-market optimization, business
model innovation and service design.
He facilitates and coaches teams in commercial transformation
projects from the analysis to the results.
He works strategically AND pragmatically.
He has worked for clients such as Baxter, Nashuatec (Ricoh),
DVV Insurance, Associated Weavers, Stihl Benelux.
He has been trained to work with the Business
Model Navigator in the University of St. Gallen,
Switzerland

Sustainable, Profitable Growth
What?
How? Who?
Business Model
Innovation
Outcome Driven
Innovation
Methods
Innovation Engineering
Lean Start-up
Experts with
a “Do” Focus
Plus an international
network

When do customers ask for our help?
When they are working harder
Than even before
But the results are not following

Why start with business
model innovation?
First there was
a focus on:
Then there was: Now companies need:
VALUE
INNOVATION BUSINESS MODEL
INNOVATION
THE goal: Meaningful, Unique, Sustainable and Profitable

In future, competition will
takes place not between
products or companies, but
between business models
Gary Hamel

The St. Gallen’s Business
Model Navigator explained

What is the difference between the business
model canvas and the Business Model Navigator?
Business Model Canvas: Business Model Navigator:
Conceptual model
Identification of business
model components
Address interrelations
and interdependencies
Design patterns – recipes –
templates
Descriptions and examples of
successful and proven
business model
Fostering the systematization
and reuse of knowledge
Re-combinations
similarity / confrontation

Canvas, simplified
to enhanced creativity

Now, Let’s Make it Even
Easier With an Example

An application at
a well-known
company: Uber

The Traditional Taxi Business
Mostly in city centers, airports & points of interest
Cab license needed for operation
Centralized cab office to provide information on travel requests
Transportation to specified location
To be found at specific locations, on-demand or in the streets
Fixed monthly sum to be paid to office
Higher fare prices to reach quotas and make profit
What
Who (and their problem)
How (dramatic difference)
Value creation (Why)
Key challenges
What: How to enter new locations
Who: Non-users
How: Quality of service
Value: High fixed costs
People in need for quick short-distance transportation

But HOW did Uber innovate?

A place to write down your ideas…

To Find out, let’s see
Which Patterns Were Used

# 37 Peer to Peer

#26 Leverage Customer Data

#14 Experience Selling

#41 Revenue Sharing

UBER’s Business Model
Conventional cab-taker Unwilling/unwanting to pay excessive
Fees for poor service
Platform that connects independent drivers and customers
looking for transportation / No owned cars
On demand, cashless & transparent transportation Easy-to-use
app with integrated payment, tracking and customer services
Costs kept low as solely platform provider / Revenue-sharing
formula: 80% of fare to driver, 20% to Uber
What
Key challenges
What else can they do ?

UBER Value!
In major US markets,
46% of taxi rides are UBER
At a market cap of
$ 66 billion valuation
greater than all US taxi
companies

The process of Business
Model Innovation

7 Steps with their methods and ours
Initiation
“Define BM”
Ideation
“Similarity
Confrontation”
Integration
“fit it all together”
Implementation
“Realize the plan”
Gap Analysis
“if this business failed”
Low cost idea selection
“Quick prototyping, paper testing”
Alignment systems
“Stories, Blue Cards”
System driven
Commercialization
“The ABCs method”
1
7
6
5
4
3
2
Today we’ll see steps 1-5

ARE YOU
READY
FOR A
TASTER?

A plan for the rest of tonight
Write up your business model
Alone (5)
Everyone (10)
Work in Groups (40)
3-5 volunteers present their challenges and
we get into groups
Clarify and look for Gaps (10)
Look for inspiration / Gather ideas (15)
Test ideas (5)
Re-work (5) and ready to present (5)

Organizing your thoughts…
What
Key challenges

An Example: Smartends
What
Key challenges
Low power, long distance IOT solutions.
From concept to market
Companies with an application
they can not deliver
Only execution
Re-usable solutions
Revenue sharing /
share of value created
Who: will anyone admit they can’t deliver
How: How better than in-house
Value: They would prefer to pay consulting

An Example: Associated Weavers
What
Key challenges
Tufted, trendy and value-for-money broadloom
carpet. Marketing services / support.
Medium/high qualities.
To specialist flooring distributors -Problems
1.Declining market in favor of laminate / parquet
2. Misconceptions 3. Online sales? ‘You should
FEEL carpet’ 4.Space (shops)
Strong R&D department, Development of
‘marketing concepts’ and marketing/sales tools
(for the distributor-customer), precut carpet tiled
form
Medium/high end qualities, No DIY, smart-
marketing(‘re-packaging of existing ranges’),
‘package deals’, exclusivity, support with
marketing/sales tools & concepts
What: Other services and ‘packages’
Who: Other target groups (end customers,…) and relationship
(customer intimacy)
How: continue to be better for innovation (R&D),
marketing tools & concepts (Marketing department)
Value: how compensate for the losses a falling currency (Brexit
; import taxes, Uk is a major market)

Who has a business
model challenge they
would like to share?

Choose a workgroup based on
the business model most
interesting for you.

Work in Groups
1. Clarify and look for Gaps (10)
2. Look for inspiration / Gather ideas (15)
3. Test ideas (5)
4. Re-work (5) and ready to present (5)

What is the business?
What is the challenge?

Clarify and look for Gaps (10) Complete this table
What
Key challenges
The most important question
«If this business failed
why did it fail»

Step 2: Look for inspiration / Gather ideas (15)
Choose 6 pattern cards that fit challenges
(e.g., who, what , why)
Read all 6 - One person reads the cards aloud
to the others in the group
Look for inspiration
Throw out 2 or 3
Similarity principle
Confrontation principle

Putting your ideas on paper
What
Key challenges
What
Orig. NEW

Step # 3: Test ideas (5)
Each person needs to present one card to another
person in another group
2 questions
Do the changes deliver on the challenge (a meaningful solution)
Is the way it is done unique?

2 big questions
How much do you like each
of the following ideas?
How new and different are
each of the following ideas?
Dislike a lot
Dislike a lot
Like a lot
Like a lot
26,000 New product Introductions
70% of success (Meaningful/Unique)

A million dollar formula…
.6* Meaningful + .4* Unique =
The best predictor of success
Cut-off = 6 or better

Re-work and ready to present
Choose a presenter (he / she will
make decisions)
What did you learn?
Agree on changes (or at least
try to)
Update your presentation

Presentation
The challenge +
what you changed (and why)

8 keys to real success

Most business mode innovation fails
Due to failure to change behaviors
source: McKinsey&Company #commercialinnovation
An unfounded belief in the
brilliance of ideas
Interest, but no commitment
to action
No action = no behavioral change
WHY?

St. Gallen's
suggestions
One business model at a time
Clearly define needs for changes
Think long term – change takes time
Top management commitment

Our suggestions
Validate Jobs to be done
Cycles to make ideas better
(and better)
Focus on the drivers of
Innovation
Don’t forget commercialization

Where you know what
you are doing for who…
you’re halfway there…

You’ve probably heard,
“They don’t buy drills..
they want holes”

Meet Hilti
The Established Industry business model
Construction firms need drills
to handle performances
Different requirements in
Respect to various treated
Materials and operations
Selling single drills
Remedial maintenance is
Mostly provided by
Independent providers
High one-time payment for
Every sold drill
Tools wholesales
Commercial agents who
target purchasing
departments

Especially bigger
construction firms, which
need stable high quality and
permanent availability
Drill Fleet Management:
availability of right tool at
right time and right location
Rather than selling the drills, a
leasing system is implemented
Direct targeting of the users
on the ground by new problem
focused sales team
Full maintenance everywhere
through Hilti Centers
Subscription fees
No high one-time investment
cost for customers
Full service allows for distinctly
higher returns for Hilti

Cycles to get ideas
better and better
The best organizations have systems
in place to promote fast learning
cycles and decision making
Lean start up:
Build, Measure, Learn,
Decide, Repeat! #commercialinnovation

Cycles are the engine of progress

The real difference between
winners and losers
Build, Measure Learn
Build further
Execute and
deliver
Water things down
Everyone happy

Focus on the drivers
of innovation
Meaningfully
Unique Ideas!
Explore Stimulus
Drive out Fear
Leverage Diversity

How…
Things like the exercise
we did
Hire different people
Bring weird people in
Get out of the building
Clarity of purpose
Let people know it is
a learning process

The world’s simplest formula…
Explains why you can’t forget commercialization
The Quality
of Ideas
Execution Value* =
Most Valuable Commercial Approach:
• A/B – test with ‘Ambassadors’
• Go / No-Go
• Learning cycles
• Stepwise implementation

A simple acronym (ABCs)
to explain best practices

The ABCs of Innovation
This is a system-based approach
That focuses on building ideas up
to 6x faster while reducing risks
30-80%
1. Getting clear alignment to start.
2. Creating the right culture built
around and openness for innovation.
3. World class training tools and
methods to build internal capabilities
4. A time driven program with
“moments of truth” and many cycles
of idea improvement

The ABCs in Practice
Objectives
Process
Alignment
A new business / business model in 12 weeks
A weekly learning cycle every week for 10 weeks
A 2 day management meeting to agree «what and why»
Plus basic training
2 weeks
10 weeks
Alignment Every Monday… what next now
Build ideas Every Friday… a brain-storming session (with new external people)
Communicate One person writes up the ideas/ Another lists the death threats
Check Real-time research
External experts to validate/ give feedback on all ideas
Systems Identify death threats/ work on death threats
Kill all weak ideas where death threats not resolved in 2 weeks
An 10 minute standing meeting every morning
Write and document work done each week

Moving forwards
Share ideas with your team
(discuss what we did here)
Commercial / System Driven Innovation
Actions
Resources
How we can help
The Video: http://tiny.cc/BMIvideo
Article (St. Gallen's)
http://tiny.cc/BMIarticle
Buy BMI Cards / Book
http://tiny.cc/BMIprod
Innovation Alignment
Getting started
Keeping things going
This / other workshops
An Innovation Assessment
Innovation support
Chris Delvaux
Chris@thrustteam.be / +32476 52 49 52
Bryan Cassady
Bryan@fast-bridge.com / +32 475-860-757

HANDOUTS

TAXI / UBER example
What
Value creation (why)
What
Value creation (why)
Conventional cab-taker Unwilling/unwanting
to pay excessive
Fees for poor service
Platform that connects independent drivers
and customers
looking for transportation / No owned cars
On demand, cashless & transparent
transportation Easy-to-use
app with integrated payment, tracking and
customer services
Costs kept low as solely platform provider /
Revenue-sharing
formula: 80% of fare to driver, 20% to Uber
Key challenges
What else can they do ?
NewOrig.
People in need of quick short-distance
transportation
Mostly in city centers, airports & points of
interest
Cab license needed for operation
Centralized cab office to provide Information on
travel requests
Transportation to specified location
To be found at specific locations, on-demand or
in the streets
Fixed monthly sum to be paid to office
Higher fare prices to reach quotas and make
profit

Business Model Innovation Workshop: Gent 2/2/2017

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