1. !The competition of thefuture is between businessmodels not just products orsolutions.!6 Thesis on the Pets Industry!by Dr. Patrick Sthler! uidminds GmbH, Zrich!!

2. How can you dare to buy pet food at Aldi? !!I buy my personal grocery at Aldi, but never for my dog.! !Quote from a dog owner to a friend of mine who buys his dog food at Aldi! 3. Agenda!! The economics of the pet food industry!! Shift happens!! Innovation in Pets Industry!! More choice is not better!! The Internet is more than a channel!! Reinventing your industry. That is your job!!! 4. A word of warning!Im not a pet industry expert.I am an expert for theprocess of re-thinking andre-inventing businessmodels!! 5. My childhood pets ! Dr. Patrick Sthler!! Partner @uidminds the business innovators, Zurich!! Expert on Business Model Design & Innovation!! Passion for customer experience & authenticity !! Passionate mystery shopper!! Managing Director of Internet Firm Experteer (90 FTEs)!! 2 pets in my lifetime (Hannibal, turtle and Arpat, dog )!! First website 1996, digerati ever since! 6. Humanization inmarketing atthe extreme 7. Your customers ! Your consumers !(they pay)!(they eat and use)! 8. Your customers!Your consumers!! Marketing &! extreme high variety communication of breeds/sizes and aimed at needs of therefore of needs! the human being! Offer!! Humanization of pet! life stage products! food and pet ! therapy food for accessories ! better joints food or! Highly emotional! for weight reduction!! Ideologies regarding ! special food for all what pets needbreeds! (BARF, Vegan, no preservatives, etc.)! Complex market with two different stakeholders with different needs 9. fThe application oingconsumer market ionwas a big innovatsome years ago.! 4 pet food manufacturers control 80% of the market*!Procter & ! Originally, they are all fast-movingGamble,consumer goods companies thatNestl, Mars,have transferred their skills to theand Colgate- pet food market!Palmolive!! logic consequence: humanization! *Source: Wikipedia! 10. The humanization of petfood is the logic st ep.That is the core businessof FMCG companie sThe market leaders are champions!! to deal with big retailers like " Carrefour, Metro, Tesco, Aldi or Rewe!! to build brands like Frolic, Royal Carnin!! to attract customers to retailers by traditional advertising!But they are still mass production rmsthat have no direct contact to their endcustomers or end consumers (the pets).They know almost nothing about the individualconsumer (pet)! *Source: Wikipedia! 11. Large pet food rms are !Masters of branding &1!channel management!not of customer experience orproduction economics 12. but!Shift!happens! 13. Disruptive Innovation in the pet industry camefrom the retail side!! The pets industry is following other industries where category killers like Toys R US, Home Depot, Media Markt, Globetrotter or Ikea revolutionized their industries!! Fressnapf or Qualipet are disruptive innovators or category killers in the pets industry!! Due to strong retailers, trade and private label pet food is doing well not only at Fressnapf & Co but also at Aldi and other discounters!! Private label became brands in their own rights! 14. Business Model Innovation so far:!Disruptive innovation in 2!the pet industry camefrom the channels!and more will come due to theInternet 15. Getting the right balance of nutrients is notentirely simple and depends on a seeminglyendless amount of variables such as breed,activity level, age and medical condition.*!! Why is the pet food g industry not providin? this individual food*Source: http://www.k9magazine.com/life-stage-dog-food/#ixzz1ic35kWAS! 16. The tyranny of choice!Consumers nd too manyoptions troubling because of the risk ofmisperception and miscalculation, of misunderstanding the availablealternatives, of misreading ones own tastes, of yielding to amoments whim and regretting it afterwards, combined with thestress of information acquisition*! *Source: Daniel McFadden, The Economist, The tyranny of choice, Dec 16th, 2010! 17. Distributionas thebottle neck! 18. Customer Insight to build upon!Consumer want !3!the right choice!not more choice! 19. theAnother challenge:ofecological footprintpets 20. otDont w orry! We do n . Wefo llow the hype scover the basic 21. Electrification atWe can learn from other the end of the 19th general purpose century technologies like electricity!Dr. Patrick Sthler | 21 22. It took 40 years betweenthe of diffusion of electricityand ! At the beginning, steam engines were replaced by electric motors and power was transported by converter belts. Dr. Patrick Sthler | 22 23. ... and new processes and businessmodels that were based onelectricity like the assembly line!It much easier todistribute electricitythan mechanicalenergy 24. Tradition is not a business model!The Internet will spark 4!business modelinnovations "but it will take time! 25. The internet isnot facebook!The Internet isnot Twitter.! 26. Failed business modelsdue to lack ofunderstand what the The Internet is notInternet is all about TV , just a bit better!!The Internet is not anewspaper, with someinteractive features!! 27. More failure The Internet is not just another distribution channel, this time electronic!The Internet is not atelephone, just with musicand video.! 28. New Media are!1. active (can act by themselves)!2. ubiqutious (space & time)3. interactiv (human can interact with and through themedium, but also the medium with other media)!4. interlinked (mashups are possible)!5. multimedia (text, voice, video)! 29. Tradition is not a business model!The Internet has very 5!special idiosyncrasies.Build your businessmodels on top of them!"! 30. technology! X! value / utility! creates! enables!business model! denes! The business modelbusiness strategy! creates value not technology or a product itself ! 31. To develop a business model, is "To Do the "right things "And Not to do things right! 32. What is abusinessmodel?! 33. Are youaware ofyour DNA?!The business model is theDNA of your business! 34. The business model givesmeaning to your employeesand customers! 35. 4 key questions for a successful business: WhatHow do weHow do we Who is on excites our create value earn money? our team? customers?for our custo- What value mers?do wepursue? Value Proposition Value Architecture Revenue Model Culture and Values The core businesschalleng e 36. 4 key questions for a successful business: WhatHow do weHow do we Who is on excites our create value earn money? our team? customers?for our custo- What value mers?do wepursue? Value Proposition Value Architecture Revenue Model Culture and Values The core businesschalleng e 37. 4 key questions for a successful business: WhatHow do weHow do we Who is on excites our create value earn money? our team? customers?for our custo- What value mers?do wepursue? Value Proposition Value Architecture Revenue Model Culture and Values The core businesschalleng e 38. 4 key questions for a successful business: WhatHow do weHow do we Who is on excites our create value earn money? our team? customers?for our custo- What value mers?do wepursue? Value Proposition Value Architecture Revenue Model Culture and Values The core businesschalleng e 39. What industry are !we in? Who areour competitors?! ! 40. In which industry !are we in?!! 41. That was the job ! the customer wanted to do.!!Dr. Patrick Sthler | 41! 42. Value PropositionCustomersWho are our customers?What job do we solve for ourcustomers?Customer BenetWhat benet do we create for ourcustomers?What benet do we create for ourpartners? 43. Value ArchitectureO er Distribution & CommunicationWhat is our o er?Channels How do we reach our customers? How do we communicate with our customers?Value ChainWhat are our value creating steps?What is our value chain?Core CapabilitiesPartnerWhat are the core capabilities Which partners do we need?we need? 44. Revenue Model Cost StructureRevenue Sources Cost structure is dened by the With what do we earn money? value architecture. 45. Team & ValuesTeam ValuesWho is on our team?What values do we pursue?What competencies do we have How do we interact with eachon the team? other and the customers? 46. Questions for successful Business Model InnovationValue ArchitectureValue PropositionO er Distribution & Communication CustomersWhat is our o er?Channels Who are our customers? How do we reach our customers? What job do we solve for our How do we communicate with customers? our customers?Value Chain Customer BenetWhat are our value creating steps?What benet do we create for ourWhat is our value chain?customers?What benet do we create for ourpartners?Core CapabilitiesPartnerWhat are the core capabilities Which partners do we need?we need?Revenue ModelCost StructureRevenue SourcesCost structure is dened by the With what do we earn money?value architecture.Team & ValuesTeamValuesWho is on our team? What values do we pursue?What competencies do we haveHow do we interact with each otheron the team?and the customers? 47. Questions for successful Business Model InnovationValue ArchitectureValue PropositionO er Distribution & Communication CustomersWhat is our o er?Channels Who are our customers? How do we reach our customers? What job do we solve for our How do we communicate with customers? our customers?Value Chain Customer BenetWhat are our value creating steps?What benet do we create for ourWhat is our value chain?customers?What benet do we create for ourpartners?Core CapabilitiesPartnerWhat are the core capabilities Which partners do we need?we need?Revenue ModelCost StructureRevenue SourcesCost structure is dened by the With what do we earn money?value architecture.Team & ValuesTeamValuesWho is on our team? What values do we pursue?What competencies do we haveHow do we interact with each otheron the team?and the customers? 48. If you are in a market forgiants...! 49. .. and you play with theirrules you will getnowhere! 50. but if you can create your own rules of engagement than you can compete even in a market for giants. ! 51. Innovation is all about beingdifferent! 52. But if everybody is doing hesame, you have to ndsomething else! 53. Path to business model innovationLead, dont follow. Break6!rules. Create markets.Throw away your market studies! 54. If you want to nd a disruptive businessmodel innovation you just have tofollow the prescription to the right.""Your success is guaranteed!! 55. Sorry, life is not a fairy tale."You can nd sustaining innovation witha structured process, but not disruptivebusiness model innovation. "Business model innovation are all abouttry and error under high uncertainty! 56. Your Head!THE greatest working tool " 57. Creating Business modelinnovations is a creative andanalytical process "There is a reason why god gave ustwo brain hemispheres ! 58. The uidminds Way to Business Model Innovation 123Understand Unlearn & mobilizeIdeateFind fresh customerUnveil tacit assumptionsGenerate as many ideas asinsights via jobs-to-be-done about your industry and possible for:Describe current businessyour business model Value propositionmodelCreate discomfort with(customers & benets)Understand market trends current situation Value architecture& mechanisms Secure backing of top Revenue model management for theValues & culture rethinking process and the necessity for change 456Design Select & prototypeBuild & learnDecide on three to four stra-Select the optimal business Execute business modeltegic directions to work onmodelsGather customer data &Design of business modelsTest prototype with feedbackon canvaspotential customers Adapt & improve businessCheck interdependenciesBuild prototype modelof all components of the Write business casedesigned business modelSelect the business modelWork on uniqueness of your to start withpositioningOptimize componentsCreated with the friendly support of Wolfsburg AG | Designed by Gottschalk+Ash Intl 59. What is a good strategy?!trend!differenti focus!ation!build on strengths! 60. Its about nding the righttrend to surf! ! 61. Business model innovation is about being!!DIFFERENT!! 62. NO, REALLY! DIFFERENT! 63. Dr. Patrick Sthler | 63! 64. DOING!not learning to do,!is the essence of !entrepreneurship! Guy Kawasaki, The Art of the Start 2004, p. xi! 65. Scary to be this nail. Wherewill the hammer hit nexttime?! 66. More information http://blog.business-model-innovation.comDr. oec. Patrick Sthler!uidminds GmbH!Seefeldstrasse 5a!CH-8008 Zrich!Patrick.Staehler@uidminds.ch!www.uidminds.ch!@business_inno!