1. Innovation Business Models
PMI Heartland

2. Outcomes Learning Objectives
Describe how organizations create, deliver and capture value
Model how the value delivery process occurs in a service and/or product oriented business
Analyze the innovation process and how innovation influences customer value proposition
Design a reiterative process for analyzing value delivery and business sustainability

3. Innovation-Business Model The Connection
Two Forms of Innovation
Technical Innovation
Products, Services, Process (Production)
Administrative Innovation
Relationships, People, Tasks, Policies Procedures (Organizational Setting)
In both cases, outcomes is to improve efficiency and effectiveness for the end user

4. There are two types of Innovation
Incremental innovations
Focus on exploiting the potential-adding to or modifying to improve user experience
Radical innovations
Breakthrough products…nascent

5. Opportunity Opportunity has four key characteristics Attractive
Durable
Timely
Anchored in a product, service or business that creates or adds value to the end user
We find opportunities by observing trends, solving problems or finding gaps in the market place
Why discuss this before looking at the Model…key to understand this to understand value….the customer value and the curiosity of the model in understanding business process

6. The Business Model Canvas

7. Business Model
A business model describes the rationale of how an organization creates, delivers, and captures values.
Business model shows how the company intends to make money.

8. Four Main Areas of Business
Customers
Offer
Infrastructure
Financial Viability

10. 9 Building Blocks Customer Segment ( CS) Value Proposition ( VP)
An organization serves one or several customers segments
Value Proposition ( VP)
It seeks to solve customer problems and satisfy customer needs with value propositions ( offers)
Channels ( CH)
Value propositions are delivered to customers through communications, distribution, and sales channels

11. 9 Building Blocks ( cont.)
Customer Relationships ( CR)
Customer relationships are established and maintained with each customer segment
Revenue Stream ( R$)
Revenue streams result from value propositions successfully offered to customers
Key Resources ( KR)
Key resources are the assets required to offer and deliver the previously described elements

12. 9 Building Blocks (cont.)
Key Activities ( KA)
By performing a number of key activities
Key Partnerships ( KP)
Some activities are outsourced and some resources are acquired from outside the enterprise
Cost Structure ( C$)
The business model elements result in the cost structure.

13. Smart Door Lock Model

14. Customer Segments Customer groups represent a separate segment if:
Their needs require and justify a distinct offer
They are reached through a different distribution channel
They require different types of relationships
They have substantially different profitability's
They are willing to pay for different aspects of the offer

15. Different Types of Customer Segments
Mass Market
Niche Market
Segmented
Diversified
Multi-Sided Platform ( multi-sided market)
Micro Precision Products- Automotive, Medical and Watch industry
Diversified are two Different bases- Amazon going from hard copy to online sales.

16. Value Propositions What value do we deliver to the customer?
Which one of our customer’s problems are we helping to solve?
Which Customers needs are we satisfying?
What bundles of products and services are we offering to each customer segment?

17. Value Propositions
Newness: Satisfying an entirely new set of needs that customers previously didn’t perceive because there was no similar offering
Cell Phones
Green Funds
Performance: Improving a product or service.
PC’s
Automobile
Customization: Tailoring products and needs to customer

18. Value Propositions “Getting the job done”—Rolls Royce Airline Engines
Design: Fashion and Consumer Electronics
Brand/Status: Rolex to underground brands
Price: Nano, Tata,
Cost Reduction: Salesforce
Risk Reduction:
Accessibility: Mutual Funds, NetJets
Convenience/Usability: iTunes/iPods

19. Non Profit Model

20. Charting this part of your business
Format
Start today with Customer Segment/Value Proposition