Full article: [[Mark W. Johnson, Clayton Christensen, and Henning Kagermann, “Reinventing your business model”|/static/files/MBI/Module%208/Reinventing%20your%20business%20model.pdf]], Harvard Business Review, December 2008, pages 51-59.
* Breakthrough, game-changing products rarely emerge from established business
* That's because radical new products usually needs a new business model
* It's possible to transcend the problem if you can:
** ''Understand your existing model at a granular level, so that you are in a position to reinvent it''
** ''Come up with a great way to help people get an important job done''
A [[Business Model]] consists of four interlocking elements that, taken together, create and deliver value:
* ''Customer Value Proposition (CVP)''
* ''Profit formula''
* ''Key resources''
* ''Key processes''
A good process for business model innovation consists of the following steps:
1) Start with a ''strong customer value proposition''. Think about major customer pains
2) ''Construct a profit formula'' that allows you to deliver value to your company. Start with a goal for total profits and work back from there
3) ''Compare the model'' to your current one. Determine whether the new business model could be created from the existing organization.
Companies can often innovate within their existing business model. When is it time to change it? Some help in the next bullets:
* If potential customers are shut out of a market because existing solutions are too expensive or too complicate for them
* If an existing technology can be offered in a totally different customer value proposition (Apple with the iPod)
* If a tested technology is brought to a radically different market.
* If a solution can be offered where no solution existed before
* If an incumbant needs to fend off low-end disrupters (the Tata Nano cheap car will be a thread for existing manufacturers)
* If the [[Treshhold features|Customer benefits]] become more demanding.
Companies should not pursue new business models unless they are confident that the opportunity is large enough to justify the effort. The following questions may help identifying if this is the case:
# Can you nail the job with a focused, compelling customer value proposition?
# Can you devise a model in which all the elements - the customer value proposition, the profit formula, key resources and processes - work together to get the job done in the most efficient way possible?
# Can you create a new business development process?
# Will the new business model disrupt competitors?

In case you want to break an existing business model, often this model is not clearly documented or visible. You may stumble upon the following existing norms, rules and metrics:
|Financial|Operational|Other|h
|Gross margins|End-product quality|Pricing|
|Opportunity size|Supplier quality|Performance demands|
|Unit pricing|Owned versus out-sourced manufacturing|Product development life cycles|
|Unit margin|Customer service|Basis for individual rewards and incentives|
|Time to break even|Channels|Brand parameters|
|Fixed costs investments|Lead times||
|Net present value calculations|Throughput||
|Credit items||
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businessmodelling_public
created
Sun, 12 Sep 2010 12:38:19 GMT
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dirkjan
modified
Sun, 12 Sep 2010 12:38:19 GMT
modifier
dirkjan
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Article
creator
dirkjan