Reinventing Your Business Model
When a New Business Model Is Needed
The opportunity to bring a job-to-be-done focus where one does not yet exist
The need to fend off low-end disrupters
The opportunity to capitalize on a brand-new technology by wrapping a new business model around it
The need to respond to a shifting basis of competition. Inevitably, what defines an acceptable solution in a market will change over time, leading core market segments to commoditize
The opportunity to address through disruptive innovation the needs of large groups of potential customers
The Elements of a Successful Business Model
Designing a profit formula
Identifying key resources and processes
How Dow Corning Got Out of Its Own Way
Breaking the rules.
Identifying new competencies
Business Model: A Definition
Consists of four inter- locking elements that, taken together, create and deliver value.
Customer value proposition (CVP)
Cost structure: direct costs, indirect costs, economies of scale
Revenue model: price × volume
Margin model: given the expected volume and cost structure, the contribu- tion needed from each transaction to achieve desired profits.
Resource velocity: how fast we need to turn over inventory, fixed assets, and other assets – and, overall, how well we need to utilize resources – to sup- port our expected volume and achieve our anticipated profits.
How Great Models Are Built
Creating a customer value proposition
What Rules, Norms, and Metrics Are Standing in Your Way?
The secret sauce: patience