TTMG 5103 Module Innovation and business models Pulak Choudhury TIM Program, Carleton University June 19, 2009

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 – NOKIA’s all-you-can-eat EX3 - SHAZAM Innovation and business model Moment of truth Lessons learned References

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

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

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 – NOKIA’s all-you-can-eat EX3 - SHAZAM Innovation and business model Moment of truth Lessons learned References

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

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

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 – NOKIA’s all-you-can-eat EX3 - SHAZAM Innovation and business model Moment of truth Lessons learned References

Innovation strategies Inventive First to market Doesn’t necessarily lead to success

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

Innovation strategies Economic Low cost producer Usually requires lots of manufacturing innovation

Innovation strategies Innovative applications Creative use of existing technologies

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 R&D department or smart people

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

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 – NOKIA’s all-you-can-eat EX3 - SHAZAM Innovation and business model Moment of truth Lessons learned References

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

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

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

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 – NOKIA’s all-you-can-eat EX3 - SHAZAM Innovation and business model Moment of truth Lessons learned References

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

Business model innovation Figure: 4 areas need to looked at while innovating a business model

Business model innovation Figure: 9 building blocks of business model

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

Business model innovation matters (1) AMIES st. Fisrt gives away song for free Number of download started to incrase So AMIES’s startd to charge and increase Business model innovation  New talent discovery  New distribution channels  Increased revenue streams

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 – NOKIA’s all-you-can-eat EX3 - SHAZAM Innovation and business model Moment of truth Lessons learned References

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

Business model innovation matters (3) Shazam SMS You hear a tune you like but don’t 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)

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’

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 it’s because of the anchors and frames of the way we do things

Moment of truth Discussions Comments

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 – NOKIA’s all-you-can-eat EX3 - SHAZAM Innovation and business model Moment of truth Lessons learned References

Lessons learned (1) Don’t focus on the business model at the outset but instead concentrate on the value they create Work on useful things Solve problems Create value

Lessons learned (2) Make something that is worth while and people will pay you for it Figure out what you’re good at making and then make them well. You will make money as a result.

References Johnson, Mark, Christensen, Clayton, Kagermann, Henning. Reinventing your business model, Harvard Business Review, December

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