Trends & Business Innovation Course Notes PDF

Introduction U C L L - Trends & Business Innovation Jens Mortier jens.mortier@thevaluehu b.be © 2024 The Value Hub®, all rights reserved. Successfu … invest in an ecosystem that l focuses on fl...

Introduction U C L L - Trends & Business Innovation Jens Mortier jens.mortier@thevaluehu b.be © 2024 The Value Hub®, all rights reserved. Successfu … invest in an ecosystem that l focuses on flexibility and reusability. companie … shift from a project to a s… product approach. … build their operating model on hybrid product teams. © 2024 The Value Hub®, all rights reserved.  Key focus areas for a digital Digital Ambition department Digital Products Digital Ecosystem Digital Capabilities © 2024 The Value Hub®, all rights reserved. We are proud to create value for our customers across different sectors © 2024 The Value Hub®, all rights reserved. Facts & Figures about The Value Hub 45+ ISO 9001 & ISO ambitious team members and 27001 counting we deliver high-quality services. +540 years Best Workplace of combined digital innovation The Value Hub is awarded the title experience in our team of “Best Workplace 2024” > 90% Bewire of our team is certified as Scrum We are proud to be part of Master and/or Product Owner Bewire Group © 2024 The Value Hub®, all rights reserved. Our path to becoming Invest in people. We invest in the growth of our people and help Belgium’s Best them develop their hard & soft skills during every phase of their career. Workplace Work hard. Play harder. Our culture is built on working closely together as a team, while finding the perfect work-life balance. Love your job. Our people love doing what they do. Our team’s expertise and attitude makes the difference for our clients. What do you expect from this course? © 2024 The Value Hub®, all rights reserved. Goals of this course Being able to reason about and discuss the following statements and questions: ➔ Trendwatching: for a company this is a story of life and death. ➔ Business innovation: buzzword or discipline? ➔ Building a playbook of business innovation tactics. ➔ How to organise for continuous business innovation? © 2024 The Value Hub®, all rights reserved. Structure of the class Theoretical Worksho Company classes ps Assignment © 2024 The Value Hub®, all rights reserved. Planning of the sessions Date Session type Topic 02/10/2024 13:00 - 16:00 Theoretical class Introduction, Business Model Innovation & Trend Watching (1) 16/10/2024 14:00 - 17:00 Theoretical class Trend Watching (2) & Portfolio Management 23/10/2024 13:00 - 15:00 Workshop Trend Watching Workshop 21/11/2024 15:30 - 18:30 Theoretical class Business Design & Business Model Disruptions (1) 27/11/2024 13:00 - 15:00 Theoretical class Business Model Disruptions (2) & Business Model Shifts (1) 04/12/2024 13:00 - 15:00 Theoretical class Business Model Shifts (2) 11/12/2024 14:00 - 16:00 Theoretical class Capability mapping & Roadmapping 18/12/2024 14:00 - 17:00 Workshop Business Game © 2024 The Value Hub®, all rights reserved.  An assignment, why?! ? Understand how Understand how Learn to combine real companies trends & business creativity and knowledge to come reason and innovation is put to with organise for practice recommendations business innovation © 2024 The Value Hub®, all rights reserved.  The assignment’s result You deliver a slide deck that you will present during your oral exam. The slide deck covers at least the following topics regarding a certain company: ➔ Overall company information (Name, location, organisation structure, products & services, size, …) ➔ Overall financial situation of the company ➔ What trends are relevant for this company? How does this company treat those trends? ➔ What business model innovation(s) does the company pursue? ➔ How did they adapt the company to spot trends and realise business model innovation(s)? ➔ What recommendations do you have? Which trends should this company add to its radar? Which business model innovations do you think the company should focus on? © 2024 The Value Hub®, all rights reserved. The assignment in practice After this class, contact your peer students and form groups of 5 students. Next, one person of each group will register online who the group members are and which company they choose. First come, first served. You can either search yourself for a company or choose one of the following companies: © 2024 The Value Hub®, all rights reserved. The course’s evaluation Deliverable Deadline Scoring Preparatory interview questionnaire 22/11/2024 20% (on time & quality of the questionnaire) General findings overview 13/12/2024 5% if on time Final slide deck 27/12/2024 25% on contents & quality of the slide deck Oral exam - 30% on open questions 20% on assignment presentation & insights © 2024 The Value Hub®, all rights reserved. Business Innovation U C L L - Trends & Business Innovation Jens Mortier jens.mortier@thevaluehu b.be © 2024 The Value Hub®, all rights reserved. Busine Innovati ss on © 2024 The Value Hub®, all rights reserved. Busine Mod Innovati ss el on © 2024 The Value Hub®, all rights reserved. What is a business model? © 2024 The Value Hub®, all rights reserved.  The essence of a business model A business model defines how a company’s activities result in captured value: Willingness To Pay (WTP) Valu ➔ What is the Willingness To Pay (WTP) in our e market? Creat ed ➔ What value do we create? ➔ How do we capture our created value? Pric e Value Captur ed Cost © 2024 The Value Hub®, all rights reserved.  An example from the beer industry The used numbers are fictitious. ➔ A can of Jupiler ➔ A can of Cara Pils ◆ WTP = 2 ◆ WTP = 0,80 EUR EUR ◆ Cost = 0,40 ◆ Cost = 0,01 EUR EUR ◆ Value created = 1,6 ◆ Value created = 0,79 EUR EUR ◆ Price = 1,65 ◆ Price = 0,39 EUR EUR ◆ Value Captured = 1,25 ◆ Value Captured = 0,38 EUR EUR © 2024 The Value Hub®, all rights reserved.  The essence of a business model A business model defines how a company’s activities result in captured value: Willingness To Pay (WTP) Valu ➔ What is the Willingness To Pay (WTP) in our e market? Creat ed ➔ What value do we create? ➔ How do we capture our created value? Pric e Value Captur ed Cost © 2024 The Value Hub®, all rights reserved. A lot of frameworks exist © 2024 The Value Hub®, all rights reserved. A lot of frameworks exist Willingness To Pay Value Created Value Captur ed Price Cost Value Captured © 2024 The Value Hub®, all rights reserved. What is innovation? © 2024 The Value Hub®, all rights reserved. What is innovation? The introduction of new things, ideas or ways of doing something. - Oxford Learner’s Dictionaries A new idea, method or device ; A novelty ; The introduction of something new - Merriam-Webster © 2024 The Value Hub®, all rights reserved. Example: product innovation ➔ The introduction of a product in a new market ➔ A market is the combination of a customer segment and a solution ➔ A new market is a combination of ◆ A new solution in an existing customer segment ◆ An existing solution in a new customer segment ◆ A new solution in a new customer segment © 2024 The Value Hub®, all rights reserved. Putting it together: what is a business model innovation? © 2024 The Value Hub®, all rights reserved. The business innovation framework. © 2024 The Value Hub®, all rights reserved. Trend Watching & Portfolio Management U C L L - Trends & Business Innovation Jens Mortier jens.mortier@thevaluehu b.be © 2024 The Value Hub®, all rights reserved. Intro & definitions Trendwatching & Portfolio Management - Part 1 © 2024 The Value Hub®, all rights reserved. What do you associate with trendwatching? © 2024 The Value Hub®, all rights reserved. A trend is an emerging pattern, shift or disruption. © 2024 The Value Hub®, all rights reserved. Trendwatching is… ➔ the action of closely identifying & monitoring trends in a certain context that can be behavioural, technological, economical, industry related, … ➔ having a clear methodology and toolset to effectively and efficiently discover those patterns and translate them intro trends ➔ organising and prioritising trends to define their impact on the organisation’s model ➔ providing meaningful insights to strategize © 2024 The Value Hub®, all rights reserved. Why do you think trendwatching is relevant? © 2024 The Value Hub®, all rights reserved. Trendwatching is important because… ➔ we live in a VUCA world where it mostly is diffi cult to make sense of weak signals ➔ we need a structured approach to inform strategic decision-making in a chaotic environment ➔ we need to be prepared for (sudden) changes in the organisation’s environment ➔ to continuously identify growth opportunities and act upon them ➔ … © 2024 The Value Hub®, all rights reserved. A distinction in the size of trends Fad Trend Megatren s s ds © 2024 The Value Hub®, all rights reserved. Think of a Fad, Megatrend and unknown one yourself © 2024 The Value Hub®, all rights reserved. A distinction in the size of trends Why making a distinction? Fad Trend Megatren s s ds © 2024 The Value Hub®, all rights reserved. A distinction in the size of trends Why making a distinction? ➔ To make a choice in which ones to invest ➔ De-risk investments by making well founded choices ➔ Searching evidence to predict tendency Fad Trend Megatren s s ds © 2024 The Value Hub®, all rights reserved. A distinction in the context of trends Consumer Industry Technological trends trends trends Societal and cultural Economic and Market trends Trends © 2024 The Value Hub®, all rights reserved. Within the context of your group, search for 5 trends. © 2024 The Value Hub®, all rights reserved. Place each trend on the following scale: Fad Trend Megatren s s ds © 2024 The Value Hub®, all rights reserved. For each trend: give an example of an organisation for which it is relevant and why. © 2024 The Value Hub®, all rights reserved. How did you handle each part of the exercise? © 2024 The Value Hub®, all rights reserved. Should every organisation analyse trends in every context? © 2024 The Value Hub®, all rights reserved. Trendwatching capabilities Trend Trend Portfolio identificati managem managem on ent ent Which patterns and Which trends are Which initiatives are trends are relevant to our we going to emerging? organisation? undertake with what priorities? © 2024 The Value Hub®, all rights reserved. Trend Identification Trendwatching & Portfolio Management - Part 2 © 2024 The Value Hub®, all rights reserved. Qualitative v. quantitative techniques Qualitative Quantitative ➔ Based on non-numerical, subjective data ➔ Based on structured, often numerical, points objective data points ➔ Use of methods as interviews, focus ➔ Use of statistical methods groups, expert opinions, observations, … ➔ Scalable and precise approach ➔ Rich contextual insights, flexible and ➔ Very dependent on size and quality of adaptive data sets ➔ Subjectivity and bias, time- consuming As input for quantitative analysis to explore new Interesting to spot patterns and trends in existing areas or to validate and understand the why behind data and to verify whether there is statistical quantitative insights. evidence for qualitative results. © 2024 The Value Hub®, all rights reserved. Trend identification techniques Trendwatching Social Media Tools analysis Big Data & Conferenc Data es Analytics © 2024 The Value Hub®, all rights reserved.  Social media analysis ➔ Can be done both on a macro level, given a certain topic, customer segment, region, … as on the level of an organisation ➔ On macro level: sentiment analysis, search analysis, behavioural analytics, … ➔ On organisation level: engagement, reach, sentiment analysis, … ➔ A very broad market of suppliers of solutions © 2024 The Value Hub®, all rights reserved.  Big data & analytics ➔ Organisations gather data points, both internal as enrichments, in large data warehouses or data lakes ➔ Data is being used in order to discover trends, do predictions and make reports ➔ Combination of data engineering and statistical skills ➔ Different technologies exist on the warehousing, reporting and analytics level © 2024 The Value Hub®, all rights reserved.  Conferences ➔ Conferences aim to bring trends and innovations in a certain area to large audiences ➔ Organisations attend conferences that are relevant to their industry, region, strategy, … ➔ Examples are Gartner Symposia, Forrester, The Next Web, … © 2024 The Value Hub®, all rights reserved.  Trendwatching tools trends.google.com trendwatching.com © 2024 The Value Hub®, all rights reserved. From The Invincible Company (2020) © 2024 The Value Hub®, all rights reserved. Trend Management Trendwatching & Portfolio Management - Part 3 © 2024 The Value Hub®, all rights reserved. Trendwatching capabilities Trend Trend Portfolio identificati managem managem on ent ent Which patterns and Which trends are Which initiatives are trends are relevant to our we going to emerging? organisation? undertake with what priorities? © 2024 The Value Hub®, all rights reserved. Link between trends and business model Foresight Industry forces Market forces Macro-economic forces © 2024 The Value Hub®, all rights reserved.  ➔ What are competitors doing? Are there relevant entrants / substitutes? Industry forces ➔ Which dynamics play with our suppliers? ➔ What industry trends are at play? ➔ Have typically impact on the backstage part of our business model © 2024 The Value Hub®, all rights reserved. ➔ Which needs & demands exist / arise in our market segments? Market forces ➔ Which market issues / imperfections exist? E.g. switching costs ➔ What are customers and customers of customers expecting? Which trends at play? ➔ Typically impact the frontstage of the business model © 2024 The Value Hub®, all rights reserved. ➔ Which global market conditions exist? ➔ What trends are at play on the capital markets, commodity markets? ➔ Have an impact on the entire business model Macro-economic forces © 2024 The Value Hub®, all rights reserved.  Foresight ➔ Regulatory, technological and socioeconomic trends ➔ Two-dimensionally categorised ◆ Relevance / impact ◆ Probability ➔ Can impact the entirety of the business model ➔ Starting point for scenario planning © 2024 The Value Hub®, all rights reserved.  Scenario planning Silver workers Decreasing Increasing ➔ Starting from trends and foresight, develop different scenarios ➔ Typically, a scenario is developed by selecting a set of factors (=trends) and give them a certain set variable (= foresight) Scenario Scenario Everything remote ◆ Factors (trends): silver workers, remote work ◆ Set variable Remot Silver workers: Increasing / Decreasing e Remote work: Everything remote / Back to the office work ➔ Which are the interesting scenarios worthwhile Back to the Scenario Scenario exploring? office ◆ Probability ◆ Belief / vision © 2024 The Value Hub®, all rights reserved. Philips Scenario Planning example https://www.youtube.com/watch?v=5FGmZ8h66Zc © 2024 The Value Hub®, all rights reserved. Portfolio Management Trendwatching & Portfolio Management - Part 4 © 2024 The Value Hub®, all rights reserved. How would you translate trends into initiatives? © 2024 The Value Hub®, all rights reserved.  Three Horizons of Growth High expected return Launch XaaS offering Offer financial Horizon 1: 50% of our effort services Horizon 2: 40% of our Expand effort sales in France Horizon 3: 10% of our effort Penetrate high end The key is: AND-reasoning market Make deliveries more efficient Expand horizontal partnerships Horizon Horizon Horizon Lo w expected 1 2 3 return Low High Risk risk © 2024 The Value Hub®, all rights reserved.  Three Horizons of Growth Horizon 1 - Improving Horizon 1 initiatives are typically in order to grow and improve (= exploit in portfolio map) existing products or services Assess existing products or services periodically Examples of assessment Eff ort to acquire new leads angles Ability to retain existing clients Costs to offer this services Level of quality of this service Price level of this service © 2024 The Value Hub®, all rights reserved.  Three Horizons of Growth Horizon 2 - Learning In horizon 2 initiatives learning is key We need to gather the things we still need to learn (known unknowns) For each known unknown, determine How crucial is this learning for the success of the initiative? How unknown is this element for us? Do we have totally no experience or do we already have some answers? © 2024 The Value Hub®, all rights reserved.  Three Horizons of Growth Horizon 3 - Discovering Horizon 3 initiatives help us discover new worlds Start from already existing competencies: what are we already good at? For these initiatives, we have a lot of unknown unknowns, so we need to make the unknowns known Which low eff ort initiatives can we start to discover our horizon 3 ideas? © 2024 The Value Hub®, all rights reserved.  Three Horizons of Growth High expected return Launch XaaS offering Offer financial services Expand sales in The aim is to let initiatives move France from right to left Penetrate high end market Make deliveries more efficient Expand horizontal partnerships Horizon Horizon Horizon Lo w expected 1 2 3 return Low High © 2024 The Value Hub®, all rights reserved. The Portfolio Map © 2024 The Value Hub®, all rights reserved. The KODAK case Trendwatching & Portfolio Management - Part 5 © 2024 The Value Hub®, all rights reserved. What were your main findings concerning Kodak? © 2024 The Value Hub®, all rights reserved. What were the main reasons for their failure in the camera business? © 2024 The Value Hub®, all rights reserved. If you were the management team of Kodak: what options do you have to avoid failure? © 2024 The Value Hub®, all rights reserved. Create a portfolio of these options. © 2024 The Value Hub®, all rights reserved. Trendwatching capabilities Trend Trend Portfolio identificati managem managem on ent ent Which patterns and Which trends are Which initiatives are trends are relevant to our we going to emerging? organisation? undertake with what priorities? © 2024 The Value Hub®, all rights reserved. The business innovation framework. © 2024 The Value Hub®, all rights reserved. Trends Workshop U C L L - Trends & Business Innovation Jens Mortier jens.mortier@thevaluehu b.be © 2024 The Value Hub®, all rights reserved. Context ➔ You are hired as a team of consultants to support your client company in looking for growth opportunities ➔ They are a good player in their market with a lot of focus on ability to execute ➔ They value a structured approach over a chaotic search ➔ They want to have an overview of possible initiatives, interesting market trends or business model trends in a prioritised way ➔ Use your imagination © 2024 The Value Hub®, all rights reserved. Deliverables ➔ Trend identification (1 slide) ➔ Trend management (1 slide) ➔ Portfolio with Three Horizons of Growth (1 slide) © 2024 The Value Hub®, all rights reserved. Timing Item Timing Introduction 13:00 - 13:10 Desk research & group work 13:10 - 14:20 Presentation & Feedback 14:20 - 15:00 © 2024 The Value Hub®, all rights reserved. Tools ➔ Course material ➔ Trendwatching.com (see QR code or search on Limo) ➔ Google Trends (https://trends.google.com/trends/) ➔ The entire internet © 2024 The Value Hub®, all rights reserved. Business Model Disruptions U C L L - Trends & Business Innovation Jens Mortier jens.mortier@thevaluehu b.be © 2024 The Value Hub®, all rights reserved. The business innovation framework. © 2024 The Value Hub®, all rights reserved. Link to portfolio management Disruptive Business Models © 2024 The Value Hub®, all rights reserved. Link to portfolio management Appreciate GREEN FIELD business model © 2024 The Value Hub®, all rights reserved.  Three types of disruptions Frontstage Backstage Profitformula disruptions disruptions disruptions A radical change in who is A radical change in how A radical change in how targeted and how WTP is value is created value is captured generated © 2024 The Value Hub®, all rights reserved.  Frontstage disruptions Market Channel kings Gravity creators explore rs Change how you reach and Make it difficult for customers to Create or unlock new or acquire a large number of leave or switch to competitors underserved markets through customers through innovative innovative value propositions channels © 2024 The Value Hub®, all rights reserved. Market explorers Drive WTP New value proposition Create or expand market Capture value Capture expanded revenue © 2024 The Value Hub®, all rights reserved.  Market explorers Mobility Free New value solution to get supercharging proposition you from A to stations B Drive WTP Environmentall Create or y conscious, expand wealthy market consumers Capture value Capture expanded Car revenue sales © 2024 The Value Hub®, all rights reserved.  Market explorers Existing webshop New value infrastructure Cloud based proposition webservices Drive WTP Create or Scaling web expand application market producers Capture value Capture Pay-as-you-g expanded o subscription revenue model © 2024 The Value Hub®, all rights reserved.  Market explorers New value Affordable fast proposition fashion Drive WTP Create or Mass market expand fashionistas market Capture value Capture Affordable expanded prices, mass revenue sales © 2024 The Value Hub®, all rights reserved. Channel kings (New) value proposition Customer segment Create value Innovative direct channel Create value © 2024 The Value Hub®, all rights reserved.  Channel kings Premium, (New) value easy-to-brew proposition coffee Create value Disintermediated super markets Innovative Beautiful, neat Webshop direct channel stores Create Direct customer access value Mass & Customer premium segment market © 2024 The Value Hub®, all rights reserved.  Channel kings Partner Adaptable opportunities (New) value customer & proposition platform transformation s Create value Partner Partner Innovative license initiated direct channel reselling projects Create value Customer B2B market segment © 2024 The Value Hub®, all rights reserved. Gravity creators Drive WTP Lock in switching costs (New) value proposition Sustainable Value Captured Increase customer lifetime value © 2024 The Value Hub®, all rights reserved.  Gravity creators Programmable (New) value operating proposition system Drive WTP Applications Lock in Specialised locked to switching software operating costs developers system Sustainable Value Captured Increase Long-lasting Recurring customer customer license lifetime value relationships sales © 2024 The Value Hub®, all rights reserved.  Gravity creators (New) value Videogames Console proposition Drive WTP Lock in Console switching lock-in costs Sustainable Value Captured Increase Long-lasting customer customer Game lifetime value relationships sales © 2024 The Value Hub®, all rights reserved.  Backstage disruptions Activity Resource castles Scalers differentiat Create or own key resources ors Find new ways to scale a that are difficult to copy Radically innovate on performed business model where others activities and how they are fail to do so combined to deliver value © 2024 The Value Hub®, all rights reserved. Resource castles Create value Proposition that depends on resource Drive Hard to copy WTP resource “Monopolist” pricing strategies © 2024 The Value Hub®, all rights reserved.  Resource castles Hard to copy Driver resource community Create value Proposition Real-time that depends traffic on resource navigation Drive WTP “Monopolist” User Advertising pricing base revenue strategies network effects © 2024 The Value Hub®, all rights reserved.  Resource castles Hard to copy Hosts Renters user resource user base base Create value Proposition Property that depends rental on resource platform Drive WTP “Monopolist” User Commission pricing base revenue strategies network effects © 2024 The Value Hub®, all rights reserved.  Resource castles Intellectual Hard to copy property & resource patents Create value Proposition Best that depends in-category on resource products Drive WTP “Monopolist” Premium pricing pricing strategies © 2024 The Value Hub®, all rights reserved.  Resource castles Hard to copy Apple Brand resource Create value Proposition Apple Product that depends Family on resource Drive WTP “Monopolist” Premium pricing pricing strategies © 2024 The Value Hub®, all rights reserved. Activity differentiators Disruptive activity configuration Lower costs Disruptive cost structure © 2024 The Value Hub®, all rights reserved.  Activity differentiators Disruptive Standardisatio Assembly line Decent activity n & low-cost production worker wages configuration goods Lower costs Reduced Disruptive production cost structure costs Car sales by workers © 2024 The Value Hub®, all rights reserved.  Activity differentiators Disruptive Own Own Own software Customer activity warehouse & customer implementatio trend spotting configuration logistics service n Lower costs Reduced Focus on Disruptive overhead capital cost structure costs building Fast time to market of innovative services © 2024 The Value Hub®, all rights reserved.  Activity differentiators Disruptive Design for Sustainable Repair activity durability manufacturing & configuration recycle Lower Ability to costs penetrate specific market Premium pricing Disruptive Higher activity cost structure costs © 2024 The Value Hub®, all rights reserved. Scalers Third party performed activities Partners and third parties Third party owned resources © 2024 The Value Hub®, all rights reserved.  Scale rs Third party Transport & performed Assembly activities Partners and DIY third parties Customers Third party Transport owned means resources © 2024 The Value Hub®, all rights reserved.  Scale Develop diving rs courses & methodologies Third party Provide performed courses activities and training SSI Partners and trainer third parties centres (licensed) Third party Training owned venues, pools, resources … © 2024 The Value Hub®, all rights reserved.  Scale Branding, training, rs operations development Third party Operate performed burger activities restaurant Partners and McDonald’s third parties franchisees Third party Burger owned restaurants resources © 2024 The Value Hub®, all rights reserved.  Profit formula disruptions Revenue Cost Margin masters differentiat differentiat ors ors Achieve significantly higher Find innovative ways to capture Build a game-changing cost margins than competitors by value and increase prices structure in a disruptive way driving the wedge between value captured and cost © 2024 The Value Hub®, all rights reserved. Revenue differentiators Value proposition Innovative pricing or monetisation © 2024 The Value Hub®, all rights reserved.  Revenue differentiators Car sale Value Vehicle Options as proposition connectivity a service Recurring, Innovative subscription pricing or based monetisation revenue © 2024 The Value Hub®, all rights reserved.  Revenue differentiators Value Razor blade Razor (bait) proposition (hook) Lock-in Innovative Recurring pricing or razor monetisation blade buys © 2024 The Value Hub®, all rights reserved.  Revenue differentiators Free music Value Paid ad-free subscription proposition subscription (freemium) Create Convert customer freemium base customers Innovative Free Premium price pricing or subscription subscription monetisation © 2024 The Value Hub®, all rights reserved.  Revenue differentiators Free Value multiplayer Collectibles proposition game (subsidised) Create player In-app base purchases Innovative In-app pricing or Free to purchases monetisation play © 2024 The Value Hub®, all rights reserved. Cost differentiators Cheaper activities Cheaper assets Disruptive cost structure © 2024 The Value Hub®, all rights reserved.  Cost differentiators Creating a Learning software Cheaper material platform i.o. activities created by building teachers schools Cost of Pay of Disruptive software i.o. teachers is cost structure cost of variable, not buildings fixed Cheaper No teachers on assets payroll © 2024 The Value Hub®, all rights reserved.  Cost differentiators Cheaper Short Secondary activities turnaround airports Disruptive Low cost airline cost structure structure Standardised Cheaper Freelance Boeing assets pilots 737-200 fleet © 2024 The Value Hub®, all rights reserved. Margin masters Lovemark brand Differentiated Customer value segment proposition Manageable Higher end costs price © 2024 The Value Hub®, all rights reserved.  Margin masters Lovemark No cheap feeling for brand customers Customer Mobile segment customers Focus on Differentiated Affordably differentiating value luxury factors for proposition luxury Higher end High margin price per room Eliminate Low Manageable services for Own room construction costs mobile construction costs of customers hotels © 2024 The Value Hub®, all rights reserved.  Margin masters Lovemark High brand brand value Customer High-end tech segment enthusiasts Differentiated High-end Quality of value smartphone apps and proposition content Higher end High-priced price smartphones Manageable Cost effective costs production © 2024 The Value Hub®, all rights reserved. Key takeaways The larger you want to create the value captured, the more broad the implications become, e.g. the Margin Masters business models Mostly, a business model (innovation) is a combination of different disruptions altogether There is a lot of value in understanding how companies innovate their business models and apply it in other industries or organisations © 2024 The Value Hub®, all rights reserved. The business innovation framework. © 2024 The Value Hub®, all rights reserved. Still any questions? © 2024 The Value Hub®, all rights reserved. Business Model Design U C L L - Trends & Business Innovation Jens Mortier jens.mortier@thevaluehu b.be © 2024 The Value Hub®, all rights reserved. The business innovation framework. © 2024 The Value Hub®, all rights reserved. Link portfolio management & Business Design © 2024 The Value Hub®, all rights reserved. Link portfolio management & Business Design © 2024 The Value Hub®, all rights reserved. Link portfolio management & Business Design © 2024 The Value Hub®, all rights reserved. Business design loop Ideat e The goal is to generate possibilities in terms of business models The input is your intuition or insights from earlier testing phases Design Sprints are an excellent methodology to put this into practice © 2024 The Value Hub®, all rights reserved. Business design loop Link to Design Sprint Business Model Intuition Innovations & Disruptions Test results Options or Alternatives © 2024 The Value Hub®, all rights reserved. Business design loop Prototy pe From the ideation phase: make a selection of business models to continue Define the business model in the form of a prototype, highlight the changes or additions you made You can make use of the lean canvas, BMC, value proposition canvas, … © 2024 The Value Hub®, all rights reserved. Business design loop Link to Design Sprint Business Model Intuition Innovations & Disruptions Test results Options or Alternatives Lean Canvas or BMC © 2024 The Value Hub®, all rights reserved. Business design loop Asse ss Before starting the actual testing loop, do a small scale assessment of the prototype For each perspective of the business model, ask challenging questions Recommended to include some people who weren’t involved in the creation of the prototype Implement the feedback in the business model prototype © 2024 The Value Hub®, all rights reserved. Business design loop Link to B M C Do we Do we own key resources that are How large already difficult to copy? and have attractive is access to the market? these customers? Are customers willing to pay Is the cost structure realistic? these prices? © 2024 The Value Hub®, all rights reserved. Business design loop Link to Design Sprint Business Model Intuition Innovations & Disruptions Test results Options or Alternatives Lean Canvas or BMC © 2024 The Value Hub®, all rights reserved. Test loop Hypothesi ze We want to make the most important risks explicit We do this by defining hypotheses or assumptions that are underlying our business model There are four types of hypotheses that can be distinct: desirability, feasibility, viability and adaptability Finally we prioritise the hypotheses © 2024 The Value Hub®, all rights reserved.  Test loop Four types of hypotheses Feasibility - Which risks / unknowns do we see concerning our ability to execute this business model? Desirability - Which assumptions did we make concerning the pains and needs of the customers? Viability - Which assumptions did we make on the WTP of customers? Which risks / unknowns do we see concerning the cost structure? Adaptability - Which risks / unknowns do we see concerning the ability to adapt perspectives of the business model in a changing environment? © 2024 The Value Hub®, all rights reserved.  Test loop Prioritise hypotheses Focu Crucial - How critical is the hypothesis / s assumption / risk for the succes of the business model? Unknown - How many insights or evidence do we already have on this hypothesis? © 2024 The Value Hub®, all rights reserved.  Test loop Experime nt Start with the "focus hypotheses” The conception of experiments is a creative process because of a trade-off : cost v. strength of evidence Run multiple experiments across time © 2024 The Value Hub®, all rights reserved.  Test loop Experime nt 1 Go cheap and fast in the beginning 2 Increase the strength of 2 evidence over multiple experiments 3 Reduce uncertainty as much 1 3 as possible before building something Go cheap and fast in the beginning © 2024 The Value Hub®, all rights reserved. Test loop Lear n From the experiments, we try to gather evidence Evidence can be either weak or strong Translate evidence into insights: which support or hypotheses, which refute them? Evidence that is neither is classified as unclear What is our confidence level of the insights? © 2024 The Value Hub®, all rights reserved. Test loop Evidence strength Opinions v. Facts What people say v. What people do Lab settings v. Real-world settings Small scale v. Large scale Wea Stro k ng © 2024 The Value Hub®, all rights reserved. Back to the bigger picture © 2024 The Value Hub®, all rights reserved. Back to the bigger picture © 2024 The Value Hub®, all rights reserved. How do we decide? © 2024 The Value Hub®, all rights reserved. How do we decide? Higher expected return After ideating we get more confidence in the business model. Therefore, we can decide to continue testing it. PERSEVE RE IDEAT E Less innovation risk © 2024 The Value Hub®, all rights reserved. How do we decide? Higher expected return After some experimenting we PIVO have found evidence that T undermines some aspects of the business model. We therefore decide to alter significant aspects of the business model. Less innovation risk © 2024 The Value Hub®, all rights reserved. How do we decide? Higher expected return If pivoting doesn’t provide evidence that supports the RETIR E model, it can be wise to kill or retire the idea. Less innovation risk © 2024 The Value Hub®, all rights reserved. How do we decide? Higher expected return If we see a lot of potential in an idea, but our company cannot pursue it, SPINO we can decide to create a UT spin-off from the company. Less innovation risk © 2024 The Value Hub®, all rights reserved. How do we decide? Higher expected return Some ideas can be very high promising, but we don’t want to further develop the model INVES T ourselves, we can decide to acquire a player or technology. Less innovation risk © 2024 The Value Hub®, all rights reserved. How do we decide? SC AL Higher expected E return If we feel we have sufficiently proven the adaptability, viability, feasibility and desirability of the model, we can decide to scale it towards the exploit phase. Less innovation risk © 2024 The Value Hub®, all rights reserved. How do we decide? SC AL Higher expected E return INVES T SPINO UT PIVO T RETIR E PERSEVE RE IDEAT E Less innovation risk © 2024 The Value Hub®, all rights reserved. The business innovation framework. © 2024 The Value Hub®, all rights reserved. Still any questions? © 2024 The Value Hub®, all rights reserved. Business Model Shifts U C L L - Trends & Business Innovation Jens Mortier jens.mortier@thevaluehu b.be © 2024 The Value Hub®, all rights reserved. The business innovation framework. © 2024 The Value Hub®, all rights reserved. Leaving a declining business model to shift towards a competitive one © 2024 The Value Hub®, all rights reserved.  Four types of shifts Value Proposition Frontstage Backstage Profit formula Shifts shifts shifts shifts A shift in the way A shift of who is targeted A shift in how value is A shift of how profits are WTP is generated for and how value is created made in terms of revenue customers delivered and costs © 2024 The Value Hub®, all rights reserved.  Value proposition shifts From product to From low tech to high From sales to service tech platform The shift from building / buying The shift from basic, labor- The shift from pipeline and selling products to intensive value propositions business to platform business providing a recurring service toward technology based value propositions © 2024 The Value Hub®, all rights reserved. From product to service Product related Product Customer activities segment Product related Sales channel resources Product related Product sales cost © 2024 The Value Hub®, all rights reserved. From product to service Product related Product Customer activities segment Service provisioning Service Product related Sales resources channel Service delivery Service resources channels Product related Product sales cost Customer Cost of service Recurring revenue acquisition costs © 2024 The Value Hub®, all rights reserved.  From product to service The D’Ieteren example Car assembly Cars Retailers & importing activities Financing activities Financial services Factories, Indirect channel workers, … Financial services Financial skilled through retailers people Factory cost Car sales More elaborate Recurring financial Higher wages acquisition revenue © 2024 The Value Hub®, all rights reserved. From low tech to high tech Low tech Low tech value Customer activities proposition segment Low tech Low tech resources channel Low tech cost Low tech revenue © 2024 The Value Hub®, all rights reserved. From low tech to high tech Low tech Low tech value Customer activities proposition segment High tech activities High tech value proposition Low tech Low tech resources channel Tech skills & High tech channel resources Low tech cost Low tech revenue Tech related costs High tech revenue (e.g. OPEX) © 2024 The Value Hub®, all rights reserved.  From low tech to high tech The Netflix example Shipping Movies by Film & mail enthousiasts logistics Streaming platform development Content streaming platform DVD inventory Website Software & Online streaming network engineers Inventory, DVD rental shipping sales & content Streaming Higher wages subscriptions © 2024 The Value Hub®, all rights reserved. From sales to platform Value chain Sales value Customer activities proposition segment Customer base Sales channel Value chain Sales revenue costs © 2024 The Value Hub®, all rights reserved. From sales to platform Value chain Sales value Customer activities proposition segment Platform activities Second platform value proposition Additional customer segment Platform partners Customer base Sales channel Additional Platform channel customer base Value chain costs Sales revenue Platform costs Additional platform revenue © 2024 The Value Hub®, all rights reserved.  From sales to platform The bol.com dropshipping example Webshop Online product Consumers operations sales Retailer management Dropshipping services Retailers Retailers Webshop Webshop Retailer platform Platform channel Webshop costs Online sales Limited additional costs Dropshipping commissions © 2024 The Value Hub®, all rights reserved.  Frontstage shifts From niche to From B2B to B2(B2)C From low to high mass market touch The shift from servicing a The shift from a supplier that is niche market to reach a invisible to the customer The shift from broader market. towards a brand that matters to standardised to the customer. customised value propositions © 2024 The Value Hub®, all rights reserved. From niche to mass market Niche Niche value Niche market marketing proposition Niche brand Specialized channels High-price revenue © 2024 The Value Hub®, all rights reserved. From niche to mass market Niche Niche value Niche market marketing proposition Mass marketing Mass market value Mass market proposition Niche brand Specialized channels Mass channel High-price revenue Mass marketing costs Lower price higher volume revenue © 2024 The Value Hub®, all rights reserved. From niche to mass market The TED example TED talks video Invite-only TED Invite-only production conference influencers Mass marketing Global intellectually Open TED talks curious individuals Staff Invites Website Mass market brand Conference Sponsoring & logistics Conference fees Mass marketing Free streaming costs © 2024 The Value Hub®, all rights reserved. From B2B to B2(B2)C B2B Marketing B2B Value B2B Customer Proposition segment B2B Channels B2B Marketing B2B Sales costs © 2024 The Value Hub®, all rights reserved. From B2B to B2(B2)C B2B Marketing B2B Value B2B Customer Proposition segment B2C Marketing B2C Value Consumers (B2C) Proposition B2B Channels B2C Channel B2B Marketing B2B costs Sales B2C Marketing B2C Revenue costs © 2024 The Value Hub®, all rights reserved. From B2B to B2(B2)C The Intel Inside example Chip Chips as a PC production component in Manufacturers activities a PC End-customer marketing campaign High-quality PC buyers perception of PCs Intellectual B2B Sales force Property Co-branded PCs Production Sales to PC costs manufacturers B2C marketing Name recognition (indirect buy) © 2024 The Value Hub®, all rights reserved. From low to high touch Standardised Standardised Mass / Customer operation low touch value automated segment proposition relationship Quantity based revenue model © 2024 The Value Hub®, all rights reserved. From low to high touch Standardised Standardised Mass / Customer operation low touch value automated segment proposition relationship Human intensive High touch activities relationship High-touch value Alternative proposition customer segment Quantity based revenue model Increased labor Premium price costs driven revenue © 2024 The Value Hub®, all rights reserved. From low to high touch The Thermomix example Thermomix demos Demos & Cooking and classes classes High end product Non-experienced and guidance cooks Thermomix advisors Labor costs Premium pricing © 2024 The Value Hub®, all rights reserved.  Backstage shifts From dedicated to From Asset Heavy to From closed to multi-usage Asset light open innovation resources The shift from a business with The shift from a closed approach The shift from using a resource high CAPEX to more variable to building value propositions to for one value proposition to re- costs an open approach using it for a different value proposition © 2024 The Value Hub®, all rights reserved. From dedicated to multi-usage resources Activities Value Customer proposition segment Resource Channel Resource cost Revenue © 2024 The Value Hub®, all rights reserved. From dedicated to multi-usage resources Activities Value Customer proposition segment New activity New value New customer proposition segment Resource Channel Resource New channel Resource cost Revenue New activity cost New revenue © 2024 The Value Hub®, all rights reserved. From dedicated to multi-usage resources The 58 Gin example Gin production Boutique Gin B2C and bars Sanitiser production Pharmacies and Hand sanitiser supermarkets Distillery Wholesale retailers Distillery Sales force Production Gin costs sales Setup costs Hand sanitiser sales © 2024 The Value Hub®, all rights reserved. From Asset Heavy to Asset light Build & Value Customer maintain proposition segment assets Owned assets CAPEX Revenue © 2024 The Value Hub®, all rights reserved. From dedicated to multi-usage resources Build & Value Customer maintain proposition segment assets Service provisioning Value proposition Reaching new Partner asset improvements customer segments Owned assets Creating new channels CAPEX Revenue Variable cost Scaling revenue © 2024 The Value Hub®, all rights reserved.  From dedicated to multi-usage resources T