Reinventing Your Business Model BY MARK W.JOHNSON,CLAYTON M.CHRISTENSEN,AND HENNING KAGERMANN

Why did iPod succeed ?

1998 Diamond multimedia introduce the rio- Diamond rio

2003 came an iPod /iTunes–market capitalization of around $150 by 2007

Gillette’s reverse strategy- blades and razors

Its was not the product but…….

Its is Business Model

Business Model -Four interlocking elements that taken together ,Create and Deliver Value

Model 1: Customer Value Proposition CVP

Help Customer get a solution for their fundamental problem

Helps customer perform a specific jobs with alternative offerings(niche key)

E.g.- Minute clinics enable people to visit a doctors office without Appointments by making nurse Practitioner Available to treat minor health issues

Profit formula

The model generates value for the company through factors such as revenue model, cost structure, margins and inventory turnover

E.g.- The Tata Groups' inexpensive car, the Nano, is profitable because the company has reduced many cost structure elements accepted lower –than-standard gross margins and sold the Nano in large Volumes to the target market :first time car buyers in Emerging Market

Key resources and processes

The Company has the people,technology,products,facilities,equipments and brand required to deliver the value preposition to the targeted customers.

And it has processes (training, manufacturing, service)to leverage those resources

E.g. –For Tata Motors to fulfil the requirements of the Nano's profit formula, it had to reconceive how the car is designed, manufactured, and distributed.it redefined its supplier strategy, choosing to outsource a remarkable 85% of the Nano’s components and to use 60% fewer vendors than normal to reduce transaction cost

How Great Models Are Built….

By Creating a customer value Proposition

Designing a Profit Formula

Identifying key resources and process

E.g. – TATA GROUP