building the business model

“B ildi th B i M d l”“Building the Business Model”

i.e. – How to make $$$$

Dr Peter BevenPeter.Beven@qut.edu.au

Queensland University of Technology

CRICOS No. 00213J

Lets set the scene..

CRICOS No. 00213Ja university for the worldreal R

Capturing Opportunity –the K.I.S.S. Principle

A novel Business Model to deliver your

value propositionAchieve Disruptionp

ORyou WILL be replacedyou WILL be replaced

by someone smarter, quicker and betterquicker and better funded than you!

CRICOS No. 00213Ja university for the worldreal R

Value Proposition??Value Proposition??

Quality PriceMulti Dimensional Multi Dimensional

Core Value Attributes (the non negotiable ‘must haves’)

Peripheral Value Attributes (the ‘nice to haves’)

Tangible (e.g product design)/ Intangible (e.g Brand)

CRICOS No. 00213Ja university for the worldreal R

The Value CurveThe Value Curve

Quality AttributesQuality Attributes

Price Attributes

CRICOS No. 00213Ja university for the worldreal R

ING exampleING..example

CRICOS No. 00213Ja university for the worldreal R

CRICOS No. 00213Ja university for the worldreal R

Four Actions FrameworkValue Innovation:

ADD new attributes that are wanted INCREASE attributes that are highly valuedELIMINATE attributes that are not wantedREDUCE

CRICOS No. 00213Ja university for the worldreal R

The Value Chain internalThe Value Chain - internal

CRICOS No. 00213Ja university for the worldreal R

Dell’s Value Chain

N t j t bl l t

Dell s Value Chain

No stores, just assembly plantsStrong reliance on partners. State of the art productsproducts

I2 SCM. Suppliers nearby

Strong focus on government, education, and businessNo inventory.

Paid before

Online diagnostics, 24/7 customer

service, on-site helpSmall batch, build-to-order

CRICOS No. 00213Ja university for the worldreal R

Paid before making

Apple’s value Chain

St t f th

Apple s value Chain

Apple stores

State-of-the-art products; ease-of-use,

seamless integration

In-house development and

manufacturingCommunity-

building Itunes

CRICOS No. 00213Ja university for the worldreal R

building. Itunes

THE ‘K.I.S.S.’ FUNDAMENTALS

How is to be h d?

Is it sustainable?

Internal Competitive advantage?

cashed?

Is there differentiation?

Reflected by the Is there value?

‘Business Model’

CRICOS No. 00213Ja university for the worldreal R

Book Sellers Business Models

Products Books, Music, DVD’s, Electronics etc.

Books, music, DVD’s

Customers Consumers Consumers

Delivery Post / courier Customer walks in

Differentiation Broadest range, website Quality range, friendly & recommendations/ ordering system

knowledgeable service

Profits High volume Higher prices

CRICOS No. 00213Ja university for the worldreal R

Borders More RecentlyBorders More RecentlyTraditional Superstores Website

Products Books, music, DVD’s

Books, music, DVD’s

Books, music, DVD’s

Customers Consumers Consumers Consumers

D li C t lk i C t lk i M il d iDelivery Customer walks in Customer walks in Mail order or in-store pick-up

Differentiation Quality range, ?? ??friendly & knowledgeable service

Profits Higher prices ?? ??

CRICOS No. 00213Ja university for the worldreal R

BUT....

Didn’t Disrupt with the ‘new’ BM ..

The result...

CRICOS No. 00213Ja university for the worldreal R

The Business ModelThe Business Model

EFFICIENCY

VALUEVALUE

CRICOS No. 00213Ja university for the worldreal R

CRICOS No. 00213Ja university for the worldreal R

Disruption V SustainingDisruption V Sustaining

Di ti i ti ( b tit t )Disruptive innovations are new (substitute) technologies

Delivery of music; Computer memory capacity– Delivery of music; Computer memory capacitySustaining innovations are improvements in the same basic technologysame basic technology– Fuel economy; Computer memory capacity

DISRUPTION ALWAYS WINS

CRICOS No. 00213Ja university for the worldreal R

Disruptive InnovationDisruptive Innovation

Wh / h t i di t d?Who/what is disrupted?– Rivals, mainly (hopefully)

Cons mption process– Consumption process– Production process– Management process– Management process

Attach the disruption to a customer problemAttach the disruption to a customer problem

CRICOS No. 00213Ja university for the worldreal R

The Key Dynamics of Disruptive InnovationThe Tyranny of Success - Performance Oversupply

• Existing technologies become “good enough” for most customers’ needs.

• Different drivers emerge:

> lower-order needs.

> new needs.

• Existing technology cannot satisfy the new driversthe new drivers.

• New ‘disruptive’ technology emerges - “inferior” by traditional measures, but satisfies new drivers.

CRICOS No. 00213Ja university for the worldreal R

So is Apple a disruption model ???So is Apple a disruption model ???

YOU BET YA!!!!

CRICOS No. 00213Ja university for the worldreal R