Page 6 - Management

Using Core Competencies to Create INCORPORATING GOALS AND BOUNDARIES INTO
New Businesses at Infineum BUSINESS MODEL EXPERIMENTATION
In this excerpt from its business model generation template, Infineum built its
Infineum, an enterprise based in Oxfordshire, United
goals and boundaries into the business model experimentation process by divid-
Kingdom, with about 1,600 employees that conducts ing entries into three groups: “desirable,” “discussable” and “unthinkable.”
business in more than 70 countries, is another or-
Customer
ganization that has used the business model Type and What Is Value Chain Profit
experimentation process. Infineum is one of the lead- Position Need Sold Role Model
B2B – Two Enhance
ing formulators, manufacturers and marketers of Steps or Customer Product Value Chain Product
Element
petroleum additives for the fuel and lubricant indus- More From Process Solution Integrator Sales
End User Efficiency
try, and its customers are oil and fuel marketers. Desirable
Improve
Infineum’s goal in the business model experimenta- Customer
Product
tion process was to leverage its product technology Performance
and know-how and create a list of profitable new op-
Facilitate
portunities that fit with its core competencies. B2B – Customer IP Licensing/ Upstream
Close to Royalties
Since Infineum wished to hold to a strong inter- End User Product Sale Supplier
Design
Discussable
personal sales model in any initiative it pursued, we Integrated Value Chain
locked down the “How we sell” switch and did not Product/ Element Fee
Service Partner for R&D
consider alternative sales methods. In addition, the Solution
company’s goals and boundaries were built into the
Manufacture
process by dividing entries under each category into Business-to- End Pure Refiner Brokering
Consumer Service
three groups: “desirable,” “discussable” and “unthink- Product
Unthinkable
able.” (See “Incorporating Goals and Boundaries into (out of bounds)
Financial Trader or
Business Model Experimentation.”) End User Solution End Provider Distribution
Given those requirements, within each category
each option was considered according to its overall
merits. Infineum identified a number of new oppor- yearly) for work resulting in meeting R&D targets.
tunities, two of which we will now describe in more This fee was charged on the basis of value to the OEM
detail. Both went from inception to commercializa- in meeting technical challenges, rather than bearing
tion within 18 months, a time frame that is unusual in any relationship to the cost of the R&D, and as such
an industry as asset-intensive as petrochemicals. can be considered as the direct monetization of the
value of the R&D work. The second element involved
Rethinking what we sell. The first example in- licensing the necessary know-how to the OEM and
volves additives for the lubrication of high-precision charging royalties linked to the OEM’s use of that
instruments like cameras and robotics. Identifying a know-how, based on the OEM’s unit sales. Revenue
commercialization opportunity for this market pre- from these elements, together with the sales price of
sented two special challenges to Infineum’s existing additives sold to the OEM, created three distinct in-
business model. First, the amount of lubricant re- come streams, which led to a viable business model
quired per instrument is extremely small, so selling for Infineum that was also acceptable to the OEM.
the product by the ton, as Infineum usually did, was
not appropriate. Second, Infineum was working Changing places. The second example shows
closely with one particular original equipment man- what can happen when you look at different roles
ufacturer, which wanted to treat the offerings as a your company might play in the industry value
trade secret, whereas Infineum would have normally chain. Infineum normally sold diesel and heavy-
sought patent protection for its intellectual property. fuel-oil additives to refineries, with a value
To address these challenges, a new business model proposition based on a combination of high levels
was devised having two key new elements in the “What of technical performance, lowering costs and a re-
we sell” and “How we profit” categories. The first ele- sponsive supply chain to deal with fuel-specific
ment was to charge a regular fee (typically, twice requirements. In the new business opportunity, ad-

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