Concepts are all well and fine, but what do these business
model innovation concepts potentially do for you? I want to
share some questions designed to help you apply what you
have been reading to your existing business.
What is your current business model?
If you offer many products and services, you may have more
than one. Understanding how you operate now will make it
easier to think about how you can improve upon the present.
In thinking about this question, you will find it helpful
to focus first on what benefits customers get from what you
provide. Also, consider what benefits the customers'
customers get through to the end user of the product or
service. In thinking about benefits, remember that
customers always want more and at a lower price. How does
your business model accomplish that for them?
As an example, let's consider the Folger's coffee business
at Procter & Gamble. That business is an industry leader in
providing coffee-based products to allow consumers to have
a tasty, comforting beverage at home that may or may not
stimulate them with caffeine. The products are sold
primarily through supermarkets, discounters, and warehouse
clubs.
Compare that with the Starbucks coffee business. Starbucks
primarily provides high-quality coffee and tea products
through a service in complex prepared forms in coffee bars
to also provide an enjoyable experience. The company
further offers roasted coffee beans as a product for tasty
experiences at other coffee bars and eat-away-from home
locales as well as for consumers to brew at home, so that
customers can always have the good-tasting products they
prefer.
The companies have two different business models that
provide different products, differing amounts of
experience, in different ways, and mostly in different
locations. Notice, however, that Folger's could have
innovated with the Starbucks business model before
Starbucks even existed as a company. The model already
existed in Europe, which is what helped stimulate the
Starbucks model.
Had Folger's done so, there would probably be only one
business model now in the industry. Interestingly, the two
businesses have started to compete directly with each
other's business models by offering prepackaged
coffee-based beverages that are manufactured and
distributed by others into normal beverage outlets.
What were the last five business models before the current
one?
Understanding the evolution of how you got to where you are
today often provides valuable insights into what new
business models would be most attractive in the future. The
forces that made those innovations work may still be around
today, or may have only been slightly changed.
Has your company had a process aimed at developing improved
business models?
New business processes almost always emerge from a
deliberate process of innovation. If your company has yet
to establish such a process, chances are higher that you
have a substantial backlog of opportunities for desirable
new business models.
If you have had or do have such a process, does it look at
business model innovation separately from product and
technological innovation?
Many companies see new products and technologies as the
only ways to provide increased benefits to customers and
end users. As the coffee discussion suggested, it can be
easier to add more value by turning a product into a
service than it is to focus only on improving the product
itself.
For example, General Food's Maxwell House division had
introduced flavored coffees conceptually like what you get
in a coffee bar in the early 1970s. Few would argue that
the taste and experience of these canned items are a match
for what is offered at a Starbucks or a coffee bar using
Starbucks products. Without a separate focus on new
business models (that may include new products and
technologies), you are probably missing most of your
opportunities.
When was the last time your company changed its business
model?
If the answer is more than two years ago, the odds favor
there being a current opportunity to implement an improved
business model.
How many times has the business model changed in your
industry in the last ten years?
If the answer is less than three times, there is probably
untapped potential for a new business model now.
How expensive is it for you to develop and test a new
business model?
The answer differs a lot from industry to industry. If the
costs are low, then you have very high potential to develop
an improved business model. You will face few internal
hurdles to doing the necessary early experimentation.
Conversely, if the costs are high, you will probably need
to create an improved way to develop business models that
is less expensive.
How risky is it for you to develop a test a new business
model?
For some companies, reputation is so important, for
example, that it is difficult to even test new things until
they are almost perfect. In other industries, working with
crude prototypes is the expectation.
What do you lose if your business model experiment fails in
all of the predictable ways that it could? If not very
much, what are you waiting for?
If much is at stake, consider ways to reduce the amount at
risk or the visibility of your flops. Early experiments
should be expected to create "learning" rather than
solutions, so you need to have a way to get your learning
on the cheap.
Copyright 2008 Donald W. Mitchell, All Rights Reserved
----------------------------------------------------
Donald Mitchell is chairman of Mitchell and Company, a
strategy and financial consulting firm in Weston, MA. He is
coauthor of seven books including Adventures of an
Optimist, The Irresistible Growth Enterprise, and The
Ultimate Competitive Advantage. You can find free tips for
accomplishing 20 times more by registering at:
====> http://www.2000percentsolution.com .
No comments:
Post a Comment