Redifferentiating Products

Recognizing the Potential of an Innovation

Why Business Models Matter

“During the dot-com boom, ‘Business Model’ was a buzzword routinely invoked to glorify all manner of half-baked plans”

-- Michael Lewis

Why Business Models Matter

Telling a good story Part of selling your strategy / investment

Tying Narrative to Numbers Strategy becomes less philosophy More performance and outcome

When business models don’t work It’s because the fail either

The ‘Narrative’ test Or the ‘Story’ test

A business model is not strategy

It doesn’t describe external forces: Competition Environment Scaling

It only depicts the systems that will be put into place to achieve a strategic objective

A good model is not enough The boxes on the value map need to be

understood in depth In order to develop a good strategy

R & D

C u s to m erR elat io n s h ipM an ag em en t

L ab o r C u s to m er s

F act o ry

W o r k

Production

Graphing the Value Map

External competitive environment (supply & demand curves)

Internal strategies, competencies, knowledge, assets ‘owned’

Value flows between owners and/or the external environment

E n v ir o n m en t

S tr a teg y - O w n er

Mad Catz is an example of A Network Business Models

Ag o r a Allian c e

Ag g r eg a tio n Valu e C h ain

D is tr ib u tiv eN etw o r k

Hier ar c h ic a l

S e lf -O r g an iz in g

C o n tr o l

v a lu e in teg r a tio nL o w Hig h

Taxonomy of Network Business Models

Business ModelsValue Chain IntegratorUses both Electronic and Logistic Networks

I n teg r a to r

P r o d u c er s

C u s to m er s

Ag o r a Allian c e

Ag g r eg a tio n Valu e C h ain

D is tr ib u tiv eN etw o r k

Hier ar c h ic a l

S e lf -O r g an iz in g

C o n tr o l

v a lu e in teg r a tio nL o w Hig h

Business Models Aggregator (e-Tailor)

P ro d u cer

P ro d u cer

P ro d u cer

A ggregat o r

C u s to m er

C u s to m er

C u s to m er

Ag o r a Allian c e

Ag g r eg a tio n Valu e C h ain

D is tr ib u tiv eN etw o r k

Hier ar c h ic a l

S e lf -O r g an iz in g

C o n tr o l

v a lu e in teg r a tio nL o w Hig h

Business Models Distributive Net, Agora & Alliance

Bu y er

Bu y er

Bu y er

Bu y er

S elle r

S elle r

S elle rS elle r

P r ic e D isc o v e r yM e c h a n ism

Prosumer

Prosumer

Prosumer

Prosumer

Value Space

Ag o r a Allian c e

Ag g r eg a tio n Valu e C h ain

D is tr ib u tiv eN etw o r k

Hier ar c h ic a l

S e lf -O r g an iz in g

C o n tr o l

v a lu e in teg r a tio nL o w Hig h

D is tr ib u tiv e N etw o r k

P r o d u c er s C u s to m er s

P r o d u c er sC u s to m er s

Creative Tension

On the one-side are arguments about what the customer wants (demand-side)

On the other-side are arguments about what we can do (supply-side) Assets and core competences Which in turn are determined by Mission and Vision statements, Business Model and Strategy

Why Redifferentiate

The Encore Problem

“Show me a manger who claims he’s in a mature business.. … and I’ll show you a manger who’s asleep at the wheel”

--Shelly Weinig

Redifferentiating is a skill that can be learned Quizzing Consumption Chain Analysis

Quizzing

Detailed look at customer usage and decision making regarding your product

Looks for ideas to Change the Customer’s Experience i.e., to redifferentiate your product

Remember: Experience is dynamic So are the questions in quizzing

How to Quiz

Ask QuestionsWho?

… is with customers while hey use the product How much influence do they have

If we could arrange it, who would we want the customer to be with …

What? … Do our customers experience when the use the product … needs provoked our offering

What else? … might customers have on their minds When? … do our customers use this .. Where? … are our customers when they use this How? … do customers learn to use the product ..

Mind Maps

Mind Maps are a tool to Organize the Products of Quizzing

Function of Consumption Chain Analysis

A complement to quizzing … Quizzing is random

Consumption Chain Analysis Time sequenced

From the time customers first become aware of their need for your product or service

To the time thy finally dispose of the remnants of the used up product

Consumption Chain Analysis

Aw ar en es so f n eed

S to r ag e an dtr as p o r t

In s ta lla t io na n d A s s e mb ly

R ec eip t

F in an c in g

P ay m en t

D eliv er y

O r d er an dp u r c h as e

S e lec tio nS ear c h

F in a l d is p o s a l

R ep air s an dR etu r n s

S er v ic e

Us e

The Purpose of a Business is to Create a Customer

-- Peter Drucker

Even if you create marvelous inventions Your customers won’t care unless that is exactly what

they need

Business customers are especially impatient With any product that doesn’t help them gain

competitive advantage

CCA is about keeping your customer at each step

Every Link in the Consumption Chain has its Own Attribute Map

The Attribute Map compares your product to those of others

Basic Discriminator Energizer

Positive Nonnegotiable Differentiator Exciter

Negative Tolerable Dissatisfier Enrager

Neutral So What? Parallel

Attribute Maps

Are applied: Before CCA At each step of the consumption chain

This can get complex This forces you to simplify Minimize strategy drivers Minimize essential features

Summary: Steps for Redifferentiating

1. For each customer segment sketch the consumption chain2. Identify the trigger events that precipitate customer

movement from link to link3. Put in place procedures to alert you when the trigger is pulled

(and plan your response)4. Quiz to assess needs that may not be met currently5. Create an attribute map for each significant link in the

Consumption Chain6. Use your knowledge of Customer Experience to create

Blockbuster Products7. Put the ideas you generate into your opportunity register

Repeat this process for each class of stakeholders

Case Study: Mad Catz

Quizzing, Consumption Chain Analysis, Attribute Maps to optimize (1) Design, (2) Business Model

(For Presentation)

Mad Catz What are Critical Drivers of the Business

Apply Consumption Chain Analysis at each stage of the game controller consumption change Log each potential customer defection or

advancement towards purchasing the controller

Differentiators, exciters, enragers?

Mad Catz Creative Tension: Design vs. Competences

Core Competences are the things that the firm does That they do better than other firms That are the source of their competitive advantage

They are not necessarily what the customer wants (!!)

Firms establish their core competences by: Investing in people Investing in assets, plant and land Identifying and focusing their mission

How do you reconcile Mad Catz design and business model with their competences?

Mad Catz Design a New Controller

Take what you know of Mad Catz business to design a new controller that: Fits with Mad Catz capabilities Maximizes sales Maximizes profits

Innovation Workout

Design and Value Map a Business (commercializing an innovation)

Morphological boxes