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Applied Business Development

Matti KaulioDept of Industrial Economics and Management

Royal Institute of Technology 100 44 Stockholm, SwedenPhone: +47 8 790 7607 Fax: +46 8 20 35 41

E-mail: mkaulio@kth.se

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Customer Value…

• Coffe beans (from producers) <0,01 /cup

• Roasted, branded & packaged 4 EUR/kg

• One cup of coffe (Machine) 1 EUR/cup

• ”Latte” in Stockholm city 3,5 EUR

• Espresso Piazza San Marco, Venezia 14 EUR

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Red vs Blue Ocean

• Competing in existing markets

• Beat the competition

• Exploit existing demands

• Make the value-cost trade-off

• Align the whole system of a firm’s activities with the strategic choices of differentiation or cost

• Create uncontested market spaces

• Make the competition irrelevant

• Create and capture new demands

• Breake the value-cost trade-off

• Align the whole system of a firm’s activities in pursuit of differentiation and cost

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Blue Ocean Strategy

• Red vs Blue Ocean

• Unit of Analysis:– Company

– Industry

– Strategic Move

• Value Innovation vs Technology Innovation vs Market Pioneering

• Market conditions can be created

• Tools for business development

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The Four-Actions Framework

A new valuecurve

Reduce

Which factors should be reduced well below the industry’s

standards

Create

Which factors should be created that the industry has

never offered?

Raise

Which factors should be rasied well above the industry’s

standards?

Eliminate

Which of the factors that the industry takes for

granted should be eliminated?

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• Make a Four-action-framework analysis of:– Skype (2 groups)

– Spotify (2 groups)

– Iphone (1 group)

– Ipod (1 group)

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Eliminate Raise

Reduce Create

Eliminate Raise

Reduce Create

Eliminate Raise

Reduce Create

Cross Case Analysis

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Revenue Models

• Producer model• Broker model• Consultancy model• Performance-based model• The TelCom model/combination model (fixed cost + opening cost +

variable cost; opening fee + downloaded data)• The TechTrade model: Licenciering + royalty• The ”Gilette” model• The ”Drug Dealer” model• The ”Gore-Tex model”• The ”Adobe” model• The ”Singer” model• Internet Advertisment model• The Construction Industry model

”The Elevator Pitch”

• For (target customer)

• Who are dissatisfied with (the current market alternative)

• our product/service is a (new product category)

• that provides (key problem-solving capability)

• Unlike (the product/service alternative)

• We have assembled (key whole product/service features for your specific application)

Moore, p 149

If Nestlé can ….

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