Build Better Business Models

Presented by Nick Niemann at RETSO Refocus

Transcript

1. BREAK IT AND MAKE IT -- HOW TO SUCCESSFULLY TRANSFORM YOUR BUSINESS MODEL PRESENTED BY: NICK NIEMANN PRESENTED TO: RETSO (Atlanta) Copyright ©2009-2013 Nicholas K. Niemann. All Rights Reserved. Rev. 4/2013 WORKSHOP 101
2. OUR APPROACH FOR TODAY
3. • All Business Models Are Perishable • Define “Business Model” • Describe Your Business Model • Evaluate Your Business Model • Improve Your Business Model Workshop 101 - Today
4. This Is A Short Version Of My Business Model Programs to various companies and organizations
5. … At Locations Around The Country * Houston * San Francisco * York * Oakland * Charlotte Minneapolis * * Jacksonville St. Paul * * Winnipeg * Milwaukee * Philadelphia * Chicago Bismarck * * Harrisburg * Birmingham * Greensboro Omaha * * St. Charles * St. Louis * San Diego * Boston * Indianapolis Des Moines * Denver * * Dallas * Las Vegas * Carlsbad * Ft. Lauderdale K.C. (KS) * * Berkeley * Morristown * Phoenix Portland * * Atlanta * Toronto * Boca Baton Tampa * K.C. (MO) * * New York City
6. All Business Models Are Perishable
7. Quiz What Do The Following Companies Have In Common? A & P Supermarkets Blockbuster Video Borders MySpace Comdisco Montgomery Ward TWA Kodak Studebaker Bonwit Teller Woolworth Bethlehem Steel Polariod              Recognizable Brand                                        Large Failure to Innovate Static Business Model              Failed
8. Business Model 4 Forces (or Trends) Impact Your Business Model
9. Business Model Finance Forces Resources Forces Customer Forces Offer Forces The 4 Business Model Forces
10. Business Model Finance Forces Resources Forces Customer Forces Offer Forces • Society • Demographics • Products/Services • Customer Makeup • Value Chain • Infrastructure • Assets • Transformative Issues • Regulatory • Price Points • Market • Capital • Technology • Competitors • Insurgents • Needs and Wants The 4 Business Model Forces
11. Business Model Finance Forces Resources Forces Customer Forces Offer Forces Strategic Execution The 4 Business Model Forces
12. Geoff Colvin Senior Editor, Fortune Author ‘Talent Is Overrated” (2010) “As products and services live shorter lives, so do the business models of the companies that sell them”
13. “Business models are living much shorter lives these days.” - Fortune Magazine, October 2, 2006
14. “Nearly all CEOs are adapting their business models” “Two-thirds are implementing extensive innovations.” - 2008 IBM Global CEO Study “The Enterprise of the Future” (Over 1,000 CEOs)
15. “CEOs are breaking with traditional strategy-planning cycles in favor of continuous, rapid-fire shifts and adjustments to their business models.” Bloomberg Businessweek May 18, 2010 Discussing New Survey of 1500 CEOs by IBM’s Institute for Business Value
16. Business Model Innovation is Highly Profitable Source: 2006 IBM Global CEO Study (p. 15)
17. “_____ turned out to be the worst investment I ever made … .” “______ created a better business model …” Activist Investor Carl Icahn Harvard Business Review April 2011 Quiz ? ?
18. “ turned out to be the worst investment I ever made … .” “ created a better business model …” Activist Investor Carl Icahn Harvard Business Review April 2011
19. “Blockbuster’s biggest problem stemmed from its business model.” John Antioco Blockbuster CEO Harvard Business Review April 2011
20. Blockbuster and Netflix Market Cap 2002 - 2010 Blockbuster Netflix
21. “The CEO’s Role In Business Model Reinvention” (Harvard Business Review, Jan. 2011) “For companies to endure, they must get the forces of preservation, destruction and creation in the right balance.” [Out Of Whack!!]
22. Define “Business Model”
23. Direct Channel Franchise Monopolistic Servitization Of Products Subscription Business Model Confusion
24. Many Languages = Confusion
25. Q. Where do we start in discussing anything? A. Start with a common language
26. “Designing and Then Selecting Which Business Model Will Work Best In Today’s Environment” Designing, Building and Choosing The Car The Car How You Drive The Car “The Logic of The Company – How It Creates & Captures Value in a Competitive Marketplace” “The Residual Choices Open To A Company By Virtue of The Business Model It Employs” vs vs Source: Harvard Business Review (Jan. 2011) Strategy Strategy Tactics (i.e. Execution) Tactics (i.e. Execution) Business Model Business Model Illustration
27. Quiz Why Are These Diverse Animals Key To Understanding Business Models?
28. Quiz Which one doesn’t belong here? Quarter Horse Arabian Thoroughbred Morgan Shetland Pony
29. These diverse animals all have the same building blocks Eyes Muscle Heart Brain Ears Skeleton Stomach Nerves
30. = Business Model
31. = The Logic = A Blueprint = The Core Content = Short Story Business Model
32. So … What Business Model Language Can We Use
33. A few years ago, I started working with . . . . . . Dr. Alex Osterwalder of Switzerland. . . . an international leader in Business Model Design.
34. The “Business Model Generation” Project We Had 470 Co-Authors From 45 Countries We completed Handbook in the fall 2009 Now being published internationally by Wiley Publishers 600,000 copies sold. Translated into 26 languages Business Model Hub Now Has 12,000 + Members Next steps underway e.g. www.Strategyzer.com
35. Business Model
36. Business Model Resources Offer Customer Finance 4 Epicenters
38. Value Propositions Customer Segments Revenue Streams Key Resources Key Activities Key Partners Cost Structure Customer Relationships The 9 Business Model Building Blocks Customer Channels Source: Business Model Generation
39. Source: Business Model Generation The Business Model Canvas
40. How Do I Control My Costs? What Do I Sell? How Do I Reach and Deliver to My Customers? How Do I Keep My Customers? How Do My Customers Pay Me? What Do I Use to Make It? How Do I Make It? Who Outside Of My Company Helps Me Do It? Who Buys From Me? The Business Model Canvas
41. The Canvas Creates Clarity
42. This Business Model Canvas is already used at companies such as And now in 45 countries throughout the world.
43. The Business Model Canvas Customer Doesn’t Care As Much About This Customer Sees This FRONT STAGE BACK STAGE
44. The Swiss Army Knife of Business Model Design and Change = The Business Model Canvas
45. Business Model = Your “How” Strategy = Design & Select [The Emotional Impact] We provide movie entertainment Blockbuster 1 (Stores) Blockbuster 2 (w/ Online) Blockbuster 3 (by Dish) Netflix 2 (+ Stream) HuLu Plus iTunes Netflix 3 (Stream Only) Pay Per View Redbox Netflix 1 (Mail) Cable TV ? ? Amazon Instant Video Movie Theatre WHY? (Why Do You Do It?) WHY? (Why Do You Do It?) HOW? (How Do You Do It?) HOW? (How Do You Do It?) WHAT? (What Do You Do?) WHAT? (What Do You Do?) Example: The Movie Business Execution = Tactics to Implement
46. Describe Your Business Model (Your “How”)
47. Let’s Learn To Describe Our Business Model By Looking At The Origin Of The Supermarket Business Model Ferd Niemann Sr. 1899 - 1969 Ferd Niemann Jr. 1928 - 2006 My education in Business Models started here . . .
48. I’m the 3rd generation of a family grocery business tradition. 1917 2013 Where constant strategic business model change has long been a way of life.
49. Quiz The Supermarket Business Model You’ve been in supermarkets 100’s of times. But, do you know who actually invented the supermarket Business Model: A. Harold Cooperman E. William Albers B. Clarence Saunders F. Sam Drucker C. Barney Kroger G. None of the above D. Michael Cullen
50. Was it … this man?
51. Let’s start in 1883 . . . Barney Kroger . . . . . . Cincinnati, Ohio
52. 1929: Kroger has 5,575 stores like this. 1930: Kroger opens its “Store of the Future” Same Model – New Front
53. Kroger Corner Grocery (1930) Works because: Customers expect/will pay for service Full Service Home Delivery A Few Local & Regional Suppliers Small Stores Lots of Clerks Rely on Word of Mouth Short Store Hours Small Selection Grocery & Household Products Neighbor- hood Only Personal Service High Rent High Inventory Costs High Labor Costs High Prices Store Credit Uniform Mark Ups
54. Now, let’s go back to 1902 18-year-old Michael Cullen, a clerk for Great Atlantic & Pacific Tea Co. (A&P) In 1930, Assistant Branch Manager for Kroger in Illinois.
55. What was happening in 1930? Automobiles National Economic Crisis Electric Refrigerators Cans not barrels 1 in 5 unemployed Grocery store margins squeezed
56. Michael Cullen decided he had a plan The Cullen Letter − New kind of grocery store (the “Warehouse Grocery”) − “Monstrous in size” − Get out of “high rent district” − Eliminate frills (become “Industrial Age Barns”) − Switch to self-service − Eliminate store credit − Eliminate home delivery − Use free parking
57. Michael Cullen decided he had a plan The Cullen Letter − New kind of grocery store (the “Warehouse Grocery”) − “Monstrous in size” − Get out of “high rent district” − Eliminate frills (become “Industrial Age Barns”) − Switch to self-service − Eliminate store credit − Eliminate home delivery − Use free parking The Cullen Letter − Buy inventory in large quantities − Reduce grocery prices − Carry wide range of products (“One-Stop Shopping”) − Keep store open at night − Use aggressive advertising campaigns (“Save consumers money”) - Variable pricing mark-ups Kroger’s BM was “Out Of Whack!!”
58. Cullen’s “Warehouse Grocery” (1930) Works because: Customers will drive for variety/low price Self Service Many Local & Regional Suppliers Big Stores Free Parking High Power Advertising Long Store Hours Large Selection Grocery & Household Products Region One Stop Shop at Low Prices Low Rent Areas Quantity Buying Power Low Labor Costs Low Prices Cash Only Variable Mark Ups
59. Illinois Ohio Kroger HQ
60. Illinois Ohio No response “Mr. Albers is too busy to talk to you.” Kroger HQ Kroger HQ
61. Cullen quit Kroger !! A&P rejected it, too. (15,737 stores) Sent his letter to A&P HQ
62. Sweet Life Foods HQ Illinois New York … so he went to New York City to look for backing … and he found it.
63. America’s First Supermarket King Kullen Grocery August 4, 1930 Jamaica, Queens, New York City
64. America’s First Supermarket • At store opening, needed police to control bargain hunters • 1st week store volume “phenomenal” • In 2 years, 7 more stores opened • 1932: 8 King Kullen Store annual sales = $750,000 (per store) • 1936: 15 King Kullen stores • 1936: Michael Cullen died unexpectedly A Big Winner
65. King Kullen Today • Still family controlled and operated • “America’s First Supermarket” per Smithsonian • 48 King Kullen stores • U.S. today has 35,000+ supermarkets Source: Nielsen Company
66. This Is Intentional Business Model Innovation!!! Accidental ? or Intentional ?
67. • Why didn’t Kroger and A&P see this coming? • Would you or your organization have seen this coming? • How would you have reacted to Michael Cullen? Ask Yourself …
68. I know nothing! I see nothing! I hear nothing!
69. Transformation to the Supermarket Kroger Corner Grocery (1930) King Kullen Supermarket (1930) ONE STOP SHOP (+) REGION (+) Full Service Home Delivery A Few Local & Regional Suppliers Small Stores Lots of Clerks Rely on Word of Mouth Short Store Hours Small Selection Grocery & Household Products Neighbor- hood Only Personal Service High Rent High Inventory Costs High Labor Costs High Prices Store Credit Uniform Mark Ups Self Service Many Local & Regional Suppliers Big Stores Free Parking High Power Advertising Long Store Hours Large Selection Grocery & Household Products Region One Stop Shop at Low Prices Low Rent Areas Quantity Buying Power Low Labor Costs Low Prices Cash Only Variable Mark Ups
70. Some Companies Excel in a Specific Component (This Is Their Competitive Advantage) Source: Business Model Generation Skype Apple P & G ZAPPOS WellDoc Dell Wal-Mart Google Intel A A A A A A A A A
71. Evaluate Your Business Model
72. Is Your Business Model Already Dead or Dying? (And you just don’t realize it yet?) Are You Fat, Dumb & Happy ?!? (Think Kodak)
73. “How the Mighty Fall” “I’ve concluded that there are more ways to fall than to be great.” Jim Collins How the Mighty Fall, p. 19 (Author of “Built to Last” and “From Good to Great”)
74. “Innovate or Die” Bill Gates to Congress “A Much More Useful Idea: Fire Bullets, Then Fire Cannonballs” “Great By Choice” (2011) But … as Jim Collins Stresses:
75. “Reinvent Your Business Before It’s Too Late” (Harvard Business Review, Jan. 2011) “High performers are well on their way to new-business success by the time their existing businesses start to stall.” Business Performance PATH OF HIGH PERFORMERS THIRD INDUSTRY- LEADING BUSINESS SECOND INDUSTRY- LEADING BUSINESS FIRST INDUSTRY- LEADING BUSINESS
76. Evaluating Your Business Model (Video)
77. Evaluating Your Business Model
78. Business Models That Outperform Others Do So In Various Ways Dell Apple appstore ecosystem Nintendo Wii Nespresso Source: Dr. Alex Osterwalder • Disrupting the existing market • Creating a hard-to-copy competitive advantage • Establishing game-changing cost and/or profitability structures • Creating entirely new markets How Example
79. Evaluate Your Business Model (Selected Qs) - Grade A to F - Is Your Business Model Highly Scalable? • Facebook • Zynga • Skype Do You Get Others To Do Much Of The Work At Little To No Cost To You? • IKEA (Furniture) • Facebook • YouTube • RedHat • Angie’s List • Craig’s List • YouReport@ FoxNews.com Do You Have Protected, Recurring, Sustainable Key Resources Which Provide A Platform For Multiple Products And Services? • Apple Do You Earn Before You Spend? • Dell How Well Does Your Value Proposition Get Your Target Customer’s Job Done? • P & G Does Your Customer Segment Market Have Enough People Or Companies Which Need And Can Afford Your Value Proposition? • Southwest Airlines Do Switching Costs Significantly Prevent Your Customers From Churning? • iPad • Windows Is Your Business Model Based On A Game Changing Cost Structure? • Skype • Bharti Airtel Does Your Business Model Produce Recurring Revenues? • Printers (Ink Cartridges) • Game Consoles (Games) • Apple (Apps) • Software (Subscriptions) 1. 2. 5. 4. 3. 8. 7. 6. 9.
80. Improve Your Business Model
81. Challenge How Can We Use The Business Model Canvas To Challenge Our Ideas? Improve
82. Challenge Examples • I’d like to add a new product/ service. • I’d like to add a new customer segment. • I want to cut out a process. • I want to change our pricing. • I want to buy company. • I want to sell a division. • I want to add a key partner. • Etc. … “9 Block It”
83. “SMART” How Can We Overcome The Five Main Barriers To Consumer Purchasing: Skill, Money, Access, Result and Time? Improve
84. SMART – 5 Main Obstacles To Consumer Purchase Obstacle Overcome By (Examples): Skill - Intuit’s Quickbooks (vs. PeachTree) Money - TATA’s Nano Auto (vs. normal car) Access - Whole Foods (vs. scattered organic food vendors) Result - LinkedIn (for business users vs. Facebook) Time - CVS Minute Clinic (vs. doctor office)
85. Key Partners Whole Foods (Access) “SMART” Revenue Streams TATA’s Nano (Money) Value Proposition QuickBooks (Skill) Key Activities CVS Minute Clinic (Time) Customer Traits (S) Low Skills (M) Not Wealthy (A) Unconnected (R) Specific Need (T) Busy Key Resources LinkedIn (Result)
86. SOME CLOSING THOUGHTS
87. Prototyping
88. The Value Proposition Canvas (Source: Business Model Foundry GmbH www.BusinessModelGeneration.com)
89. Tool Box for Business Model Design A Brief Look At Workshop 201 A Brief Look At Workshop 201 Create Destroy Preserve 1. Describe () 2. Assess () 3. Why () 4. Challenge () 5. SMART () 6. Intelligence 7. LockIn 8. Porter 9. Advantage 10. TROT 1. Describe () 2. Assess () 3. Why () 4. Challenge () 5. SMART () 6. Intelligence 7. LockIn 8. Porter 9. Advantage 10. TROT 1. Transference 2. Fusion 3. Mapping 4. BlankSlate 5. Ideation 6. Freemium 7. Longtail 8. CherryPick 9. Collaboration 10. TRIZ 1. Transference 2. Fusion 3. Mapping 4. BlankSlate 5. Ideation 6. Freemium 7. Longtail 8. CherryPick 9. Collaboration 10. TRIZ 1. BlueOcean 2. SWOT 3. Unbundle 1. BlueOcean 2. SWOT 3. Unbundle
90. Source: City Slicker Movie Curly (Jack Palance) asks Mitch (Billy Crystal) if he knows the secret of life. He then raises his finger and says “This … One thing … That’s what you have to find out.” “What one thing can most improve a company’s growth and profitability?” Source: The Ultimate Competitive Advantage: Secrets of Continually Developing a More Profitable Business Model (Donald Mitchell and Carol Coles) Key Question:
91. “Our investigations and experience show that the answer is having the best process in your industry for continuing business model innovation.” The Answer: Authors - Donald Mitchell & Carol Cole The Ultimate Competitive Advantage
92. Key Points Today: • 4 Business Model Forces • Strategy vs. Business Model vs. Tactics • 4 Business Model Epicenters • Business Model Canvas (9 Blocks) • King Kullen (Describe) • Frog In The Kettle (Evaluate) • “9 Block It” (Improve) • “SMART” (Improve) • Value Proposition Canvas • Prototyping
93. Thank You! Nick Niemann www.OwnersNextMove.com www.McGrathNorth.com
94. Nick Niemann Why Do We Do This? Avoidable Executive Mistakes Are Today Causing Too Many Businesses To Agonizingly Stall, Fall Short or Fail. Executives Often Deny Or Don’t See The Peril Until It’s Too Late, Which Can Devastate Families, Employees & Communities. How Do We Do This? We Work With CEOs and Key Executives To Identify & Target The Specific Actions Needed To Overcome The 12 Avoidable Company Killer Executive Mistakes. What Do We Presently Do ? We Presently Do This In 2 Main Ways - • Break It & Make It Workshops (Business Model strength and design) • The Next Move Program (Business Continuity, Succession & Exit Planning)
95. Nick Niemann My Background • Business - Working with business owners and executives for 30+ years - Helped manage Niemann family businesses (e.g., Niemann Foods, Inc. Board of Directors) - Designed and created Nebraska’s Business Model for Economic Development (so far has produced over 600 business expansions, 100,000 new jobs and $20 billion capital investment) - Business and Law degrees – Creighton University • Advisor Boards - Vistage Trusted Advisor Board (Omaha) - Headquarters Target Advisory Group - Omaha Chamber of Commerce - Small Business Council – Omaha Chamber of Commerce • Sample Speaking Engagements - U.S. – Vistage CEO & KE Boards - Denver-BEI National Conference - Kansas City-MOKAN Regional Conference - Las Vegas-MRI Global Conference • Contact: NNiemann@McGrathNorth.com 402-633-1489 • Websites: www.OwnersNextMove.com www.BusinessModelGeneration.com www.McGrathNorth.com www.ExitPlanning.com - Dallas-AAFD National Conference - Phoenix-M Financial National Conference - Charlotte-McDonald’s National Conference - Omaha-Home Instead National Conference • Family: Married to college sweetheart for 32 years. 6 children. 11 grandchildren.
96. Presentation Notice Disclaimer This presentation should not be considered as legal, tax, business or financial advice. This presentation is designed to provide information about the subject matter covered. It is provided with the understanding that while the speaker/author is a practicing business owner advisor, neither he nor his firm has been engaged by the attendee/reader to render legal or other professional services (unless a specific engagement agreement has been executed). If legal advice or other expert assistance is required by the attendee/reader, the services of a competent professional should be sought. Circular 230 Disclosure The following statement is required by the U.S. Treasury Department Regulations: Any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed here. Copyright ©2009-2013 Nicholas K. Niemann. All Rights Reserved. BREAK IT AND MAKE IT -- HOW TO SUCCESSFULLY TRANSFORM YOUR BUSINESS MODEL