BUSINESS MODEL INNOVATION WITH 3D

PRINTINGProf. Thierry Rayna

ESG Management School

PROF. THIERRY RAYNA

• Professor of Economics

• Department of Economics & Finance

• Chair of Digital Business

• ESG Management School, Paris

• Email: trayna@esg.fr

• Twitter : @ThierryRayna

OUTLINE

• Business Model Innovation

• How 3D Printing is changing Business Model Innovation

• Learning from the past

PARADOXES

• Technological innovation = Pinnacle of competitiveness

• Yet

• Less technologically advanced firms have wiped out more advanced firms because of a better business model

• Technological innovation endangers firms as it renders business model obsolete

• Critical importance of Business Model Innovation

BUSINESS MODEL INNOVATION

• Is a means to sustain competitive advantage, especially in a highly competitive environment

• Among the most sustainable forms of innovation

• Continuous business model innovation is an important capability for every firm seeking success in the long term

• Firms that put business model innovation at the heart of their strategies have a higher profitable growth than those that do not

BUT…

• strong inertia associated with business models (especially when they are successful)

• harder to see the rationale for business model innovation and predict its impact

• requires a change of mindset: often means abandoning the paradigms that made the firm successful and which are embedded in the firm’s existing business model

• business model innovation requires developing new skills and rejecting what made previous success

BUSINESS MODEL INNOVATION

BUSINESS MODEL COMPONENTS

Value PropositionProduct offeringService offeringPricing model

Value CaptureRevenue modelCost structure

Profit allocation

Value DeliveryDistribution Channels

Target market segments

Value Communication

Communication channelsEthos and story

Value CreationCore competencies

Key resourcesGovernance

Complementary assetsValue networks

EFFECT OF BMI

Inside Outside

Incremental

Radical Disruptive

One component, minor change

Many components, major changes

A few components, major changes

Many components, minor changes

New industry

New markets

Same customers

Same market, new customers

Non-consumers

New market

Sustaining

3D PRINTING AND BUSINESS MODEL INNOVATION

THE TWO EFFECTS OF 3D PRINTING ON BMI

• Innovation in business model components

• Innovation in business model innovation

INNOVATION IN BUSINESS MODEL COMPONENTS

VALUE PROPOSITION

• Technological innovation = Changes in value proposition

• New products

• New services

• But that is not all. Oh, no, That is not all…

VALUE CREATION

• Main impact of 3D Printing technologies

• In particular :

• value network

• complementary assets

MASS CUSTOMISATION AND VALUE CREATION

• Large scale mass customisation

• Co-creation leads to higher value than mass production

• Customers become a key component of value network

• much larger!

CROWDSOURCING AND VALUE CREATION

• Crowdsourcing already led to significant business model innovation, even to entirely new form of business models (Kickstarter, Threadless)

• 3D Printing takes crowdsourcing a whole step further

• Crowdsourcing manufacturing (Additer, Kraftwürz and MakeXYZ) = wider Value Network

• Existing 3D Printers become Complementary Assets

VALUE DELIVERY

• 3D Printing increases Value Delivery

• Distribution Channels

• Target Market Segments

DISTRIBUTION CHANNELS

• Creates new Distribution Channels

• Online services (Cubify Cloud, i.Materialise, Ponoko, Sculpteo, Shapeways)

• Printshops (iMakr, MakeBot)

• Customers themselves

• Can complement/replace mass-manufacturing

TARGET MARKET SEGMENTS

• So far, niche market segment neglected because of high fixed costs

• 3D printing enables to serve niche markets regardless of how small they are

• monetize the ‘long tail’!

HELPER FOR SQUARE

• Sold over 1,000 units

• Home manufactured

• $8 a piece

‘KICKSTARTER 2.0’?

• Success of Kickstarter and the likes, but

• Lack of scalability

• (Relatively) significant demand needed to initiate production

• May be complicated to produce more batches (irregular demand)

• 3D Printing removes these constraints and is fully scalable

POSITIVE FEEDBACK LOOP

Value proposition

Value creation

Mass-customisation

Value delivery

3D printers

Crowdsourcing

Contribution

Service

Equipment

VALUE CAPTURE

• Positive impact:

• Reduced costs & costs passed on to consumers

• Negative impact:

• Far more difficult to capture value

• Innovative Revenue Model and new Profit Allocation

+

+

+

+

INNOVATION IN BUSINESS MODEL INNOVATION

3D PRINTING CHANGES BUSINESS MODEL INNOVATION

• Beside changes in components, 3D Printing radically changes the way to conduct Business Model Innovation

• ‘Mobile’ Business Models

• Rapid Prototyping for Business Models

ADAPTIVE AND ‘MOBILE’ BUSINESS MODELS

• Ability to move business model horizontally to existing or new markets is a key aspect of business model innovation

• Often risky, because significant investments have to be made before even entering the market.

• 3D Printing reduces costs: products manufactured on demand with minimal costs

• 3D printing technologies can enable firm to rapidly move upstream or downstream and change the length and width of business model

RAPID PROTOTYPING FOR BUSINESS MODEL

• Business Model Innovation by trial & error

• Significant risk and costs

• 3D printing technologies enable trying out various business models at a much lower cost

• size of the testbed actually increases with the adoption of 3D printing technologies

• Ability to rapidly try and test ideas to significantly increase the speed of business model innovation

ADAPTIVE BUSINESS MODEL RAPID PROTOTYPING

Own marketRelated market New market

Design

Manufacturing

Distribution

Upstream

Downstream

Sideways

3D Printing = Pay As You Go!

LEARNING FROM PAST EXPERIENCE: VALUE CAPTURE IN DIGITAL

INDUSTRIES

THE DIGITAL ECONOMY:A LAND OF OPPORTUNITIES

THE DIGITAL ECONOMY:WHAT MOST COMPANIES ARE TRYING TO DO

THE MUSIC INDUSTRYC. 2010

THE DIGITAL ECONOMY:WHAT GOOGLE IS DOING

THE DIGITAL ECONOMY:WHAT GOOGLE IS DOING

THE DIGITAL ECONOMY:WHAT WE ARE DOING

DIGITAL ECONOMICS AIKIDO

• Stop fighting against nature

• Channel the strength of digital economy to your advantage...

• ... without harming your customers

+

+

+

+

{ }

+

+

+

+

{ }

WHAT ROLE FOR CORPORATIONS?

CORPORATIONS = GATEKEEPERS

TAPPING THE FLOW

TAPPING THE FLOW

TAPPING THE FLOW

Certification service

Micropayment

THANK YOU

trayna@esg.fr@ThierryRayna