Page 4 - Management

New Business Models by Changing One Variable.”) A BUSINESS MODEL DEVELOPMENT TEMPLATE
Working out what elements should be in a busi- The questions that help to shape a business model represent a series of
decisions, each of which has a set of possible outcomes. This template
ness model — and then examining different
lays out various possible outcomes within the business model structure.
combinations of them — can be a rapid and robust
way to explore the possibilities of business model in- What
Who should customer What How will Where
novation. This process has the potential, for instance, be our need offering the customer should we How will
target should we will satisfy access our operate in we earn
to uncover combinations that are common in other customer? fill? that need? offering? the chain? a profit?
industries but not in your own. In fact, deliberately What How Value Chain How We
Customer Job
applying analogies from other industries (for exam- 1 1 We Sell We Sell Role Profit
1 1 1 1
ple, what if a company became the NetJets of What How Value Chain How We
Customer Job
agricultural equipment or the Dell of automobiles?) 2 2 We Sell We Sell Role Profit
2
2
2
2
can be highly fruitful. It may also highlight links that
How How We
create a “systemic” level of competitive advantage in Customer Job We Sell Profit
3 3 3 3
the business concept — much as Apple did with the
agreements it made with record labels to distribute
songs through its iTunes online music site. Alterna-
GENERATING NEW BUSINESS MODELS
tively, the business model innovation process can
BY CHANGING ONE VARIABLE
uncover opportunities to more comprehensively ful- Changing even just one variable — in this case, “What is sold” for an airline
fill a customer need than any current competitors do. business — can result in a substantially different business model.
A quick run-through of simple combinations of
Customer How It Value Chain Profit What
high-level strategic questions can produce a wide Type Need Is Sold Role Model Is Sold
range of potential business models. But each of the Obtain Through Premium, Incumbent
Casual Service Carrier like
questions could be examined in more detail in a Traveler Ground Travel Provider ... Select Seat American
Transport Agent on Plane Airlines
systematic way to yield deeper insight into some
Online Low-cost, Discount
specific aspect of the business. For example, rather Business Reserve via Broker ... General Carrier like
Hotel
Traveler Provider Seating on Southwest
than brainstorming various alternatives for the Rooms Website Plane
“What we sell” category, a company could break the Fractional Fractional
Emergency Facilitate Fee for Ownership
category down into its constituent parts and ask a Traveler Air Travel ... Seat Ownership Company
of Plane
series of additional questions such as: like NetJets
•Should we sell a product or a service? Chartered
... ... ... Aircraft Charter
•Should it be standard or customizable? Usage Service
•Will its benefits be tangible or intangible?
•Will we sell a generic or branded offering?
•Should it be a durable or a consumable? sumer will need to purchase new ones frequently.
We have often found it useful to visualize such Such realizations dramatically reduce the number
choices as switches, or levers, which can be flipped of options that must be explored.
one way or the other. (See “Exploring Offering Op- What’s more, there are likely only a handful of
tions in More Depth,” p. 88.) You could engage in a ways that any of these questions can be practically ad-
similar exercise to systematically explore potential dressed while remaining consistent with the mission
4
variations in the way a customer might gain access to of the organization and its “goals and bounds” —
an offering or the way a customer might pay for it. that is, what the organization is willing, and not
willing, to do. Some answers form a more natural
Narrowing the Choices path to making the business more efficient or better
Despite what one might think, these choices are not able to deliver the existing value proposition. Some
infinite. In working through possible combinations will lead to models that are more feasible to imple-
of variables, it becomes clear that some are inher- ment than others, given the company’s existing
ently interrelated. For example, if the offering is a competencies and its ability to develop new ones.
durable good like a car, it is unlikely that the con- In fact, it is possible to use this approach to delib-

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