Great presentation done at JIC by Michaela Csik from Holcim.

1. © 2012 Holcim Ltd
55 Business Models to Revolutionize your Business
JIC, Brno, Dec 2nd 2014

2. © 2014 Holcim Ltd
Welcome
• 05/2013 – 10/ 2013: Senior Consultant BMI Lab AG
• 02/2009 – 04/2013: Research assistant and PhD candidate,
ITEM-HSG, Competence center business model innovation
• Numerous consulting projects, workshops and talks in the area
of business model innovation
• Internships in Europe and Asia (among others BASF, PwC, Nike)
Professional
experience
Education • University of St.Gallen, PhD studies, 2009-2014
• University of Mannheim, Studies in business administration, 2003-2008
• Stanford University, Center for Design Research, Visiting Researcher, 2012
Dr. Michaela Csik
• Since 11/2013 Innovation Manager at HolcimCurrent
position
Selected
Publications
Frankenberger, K.; Weiblen T.; Csik, M.; Gassmann, O. (2013): The 4I-
framework of business model innovation: a structured view on process phases
and challenges. In: Int. J. Product Development, Vol. 18, Nr. 3/4, S. 249-273.
Gassmann, O.; Frankenberger, K.; Csik, M.: Geschäftsmodelle entwickeln –
55 innovative Konzepte mit dem St.Galler Business Model Navigator,
München: Hanser, 2013.
Gassmann, O.; Frankenberger, K.; Csik, M.: The Business Model Navigator –
55 Models that Will Revolutionize Your Business, London: Pearson/Financial
Times, 2014.

3. © 2014 Holcim Ltd
Why we are here today
3
 New, powerful methodology
to systematically develop
innovate business models
 German version*: Bestseller
with more than 4000 copies
sold
 «… a sensation.»
Frankfurter Allgemeine
* Gassmann, Frankenberger und Csik (2013): Geschäftsmodelle entwickeln: 55 innovative
Konzepte mit dem St. Galler Business Model Navigator, Hanser Verlag: München

4. © 2014 Holcim Ltd
Quiz question: How to innovate a black sock?
4

5. © 2014 Holcim Ltd
Blacksocks: SockscriptionTM
 Founded in 1999
 Idea: Receive 3, 4 or 6 deliveries per year
of the identical socks
 Each SockscriptionTM lasts 1 year
 More than 40,000 customers from 74
countries

6. © 2014 Holcim Ltd
Quiz question: What is the main difference?
6
Business model innovation as a key driver of success
Price per kilogram
15 CHF
Traditional business model
(sell coffee through retail)
Price per kilogram
80 CHF
Innovative business model

7. © 2014 Holcim Ltd
Business model innovation is a major source of competitive
advantage which is superior to other forms of innovation
7
Business model
innovation
Process
innovations
Product/service
innovation
1
2
3
4
5
6
-1
0
Percent compound annual growth rate over 5 years
Source: IBM (2006)

8. © 2014 Holcim Ltd
Business model innovation is a major source of competitive
advantage which is superior to other forms of innovation
8
Under-
performer (*)
Out-
performer (*)
Innovationpriorities
inpercent(%)
0
20
40
60
80
100 Product and service
innovation
Business model
innovation
(*) CAGR Operating Margin
Process
innovation
Source: IBM (2006)

9. © 2014 Holcim Ltd 9
“Business model innovation matters and
it is a top priority of CEOs.”
Business model innovation is at the top of the management
agenda
More than 50% of executives believe that in future
competition takes place not between products or
services, but between business models.
Source: Economist Intelligence Unit (2005)
More than 60 % of executives believe
that their business model will undergo
fundamental changes in the next 5
years.
Source: IBM (2008)
Business model innovation matters
and it is a top priority of CEOs.
Source: IBM (2006)

10. © 2014 Holcim Ltd
Evolution of Innovation Management: trend towards Open
Innovation and Business Model Innovation
Business
Models
Service /
Process
Product /
Technology
Lonely inventor Corporate
Innovation
Open Innovation
Solutions
Era
Source: adapted from O. Gassmann (HSG)
10
PAST
PRESENT
FUTURE

11. © 2014 Holcim Ltd
Why is business
model innovation
crucial for a
company’s
success
11

12. © 2014 Holcim Ltd
Business model innovation allows companies to stay in the
game by adapting to changes in their environment
12

13. © 2014 Holcim Ltd
Example of a failed business model – Kodak

14. © 2014 Holcim Ltd
Example of a failed business model – Blockbuster

15. © 2014 Holcim Ltd
Example of a failed business model – Brockhaus

16. © 2014 Holcim LtdSource: http://www.brianvellmure.com/wp-content/uploads/2012/05/6951344609_bae7a4977e_z.jpg

17. © 2014 Holcim Ltd
Business model innovation allows companies to escape
cutthroat competition by changing the rules of the game
17
“The only way to beat the competition is to stop trying to beat
the competition.”
Source: Kim/Mauborgne (2005)

18. © 2014 Holcim Ltd
Business model innovation allows companies to escape from
cutthroat competition
18
Traditional business model:
 High level of service
 Main airports
 Hub-and-spoke system
Business model innovation:
 No frills approach
 Secondary airports
 Point-to-point system

19. © 2014 Holcim Ltd
Business model innovation allows companies to escape from
cutthroat competition
19
Traditional business model:
 100 % outsourced production (Asia)
 Focus on branding/marketing
 Design cycles 2-3 months
Business model innovation:
 More than 60 per cent of production
in Spain, Portugal and other
nearby countries (Morocco,Turkey)
 Weekly changing collections

20. © 2014 Holcim Ltd
Business model innovation allows companies to escape from
cutthroat competition
20
Traditional business model:
 Sold through subscription or at
kiosk
 High-class quality articles
Business model innovation:
 Ad-financed Newspaper (free)
 Self-services
 Low quality articles

21. © 2014 Holcim Ltd
The competitive advantage of business model innovation
is more sustainable as compared to other forms of innovation1TSRpremium(%)
Product and
process innovation
Business model
innovation
5 years
Source: Business Week / BCG Innovation Survey, 2008; BCG Value Science analysis
1 Total shareholder return (TSR) premium is defined as the percentage by which innovators'
average total shareholder return exceeded that of their industry peers
10
8
6
4
2
0
1.7
8.5
6.0
0.1
3 years
+ 5.9
+ 6.8
21
5 years

22. © 2014 Holcim Ltd
Business model innovation allows to capture the value of
technology or product innovation
22

23. © 2014 Holcim Ltd
Business model innovation plays a key role in capturing the
value of product or technology innovation
23
Product / Technology
Innovation
Value
Business Model
Innovation
+ =
X
Traditional business
model

24. © 2014 Holcim Ltd 24
Product / Technology
Innovation
Value
Business Model
Innovation
• Increase in revenues
from 30 million to 2.5
billion USD (1972)
• Monthly leasing for
95 USD (including
2000 copies)
+ =
• Cost of machine:
30 000 USD
 no market
Business model innovation plays a key role in capturing the
value of product or technology innovation - Example Xerox
• Xerography technology
Modell 914

25. © 2014 Holcim Ltd
Business model innovation plays a key role in capturing the
value of product or technology innovation - Example Apple
25
Product / Technology
Innovation
Value
Business Model
Innovation
+
MP3
• 10 billion USD revenue
after 3 years
• Market capitalization
from 2.6 billion USD
(2002) to 33 billion
USD (2007)
This image cannot currently be displayed.
=

26. © 2014 Holcim Ltd
Business model innovation plays a key role in capturing the
value of product or technology innovation - Example Nespresso
26
Product / Technology
Innovation
Value
Business Model
Innovation
• Patent in 1976
• Turnover 3.2 billion
CHF in 2010
• Over 10 million
Nespresso club
members
+ =
“Trial-and-Error”
- sell capsules in retail stores
- restaurant market

27. © 2014 Holcim Ltd
Examples of successful business model innovators that
were able to capture the value of new technologies
27
Genetics
Internet / Data
mining
GPS
Voice over IP
Digital
photography
Internet
Cloud computing
3-D printer
mp3

28. © 2014 Holcim Ltd
How can business
models be
innovated in a
systematic way
28

29. © 2014 Holcim Ltd
Even though there is clear evidence that an innovative
business model is one of the major key driver of success…
29

30. © 2014 Holcim Ltd
…companies still put a major emphasis on the development
of new product offerings
30

31. © 2014 Holcim Ltd
One explanation is a lack of systematic tools to develop
innovative business models
No tools Strategy
tools
60
0
20
40
60
80
100
Source: Frankenberger et al., (2013), International Journal of Product Development
Brainstorming
techniques
Which methods and tools are used to develop
business model ideas?
In percent
20 20
«There are multiple tools and
methods to come up with new
product ideas but nothing to
support idea generation for
business models»
«Business model innovation
is more like a coincidence
and connot be initiated
sytematically»
«The real innovative
business model ideas can
only be developed by the
creative genius»

32. © 2014 Holcim Ltd
The goal was to develop a construction methodology
for business model innovation
Research Question:
Are there any recipes that can be used by companies to systematically
generate innovative business model ideas?
Approach:
Define Analyze Extract
Define a theoretical
framework of how to
describe a BM/BMI
Analyze more than
350 business model
innovations from the
last 50 years
Extract the patterns
responsible for
successful business
model innovations

33. © 2014 Holcim Ltd
The magic triangle:
Definition of a business model
What is offered to the
customer?
How is the value
proposition created and
delivered to the
customer?
Who is the target
customer segment?
Why is the
business
profitable?
33
A business model is a blueprint of how a company creates and
captures value.

34. © 2014 Holcim Ltd
Definition of a business model innovation
A business model innovation introduces a new logic of how a
company creates and captures value by changing multiple
dimensions of a business model.
Change in the What,
Who, How and/or Why
Business model Business model innovation
34

35. © 2014 Holcim Ltd
Business Model Innovation Example
Nespresso
35
Old: Coffee powder (commodity)
New: Coffee capsules and machines
to produce high-end quality espresso
Old: Retail shops
(e.g. supermarket)
New: Direct selling approach
Old: Mass market
New: High-end households, Office
markets
Old: Retail margin
New: Coffee machine is sold at
production costs, main revenues:
Capsules

36. © 2014 Holcim Ltd
Business Model Innovation Example
Dell
36
Old: Pre-configured computer
New: Mass customized computer
Old: Built-to-stock/
Selling through retail network
New: Built-to-order production/
Direct selling
Old: Private users, companies
New: -
Old: Retail margin
High inventory costs
Positive cash conversion cycle
Component prices as main cost driver
New:
Skip retail margin
Lower inventory costs
Negative cash conversion cycle
Lower component prices

37. © 2014 Holcim Ltd
Business Model Innovation Example
Skype
37
Old: Calls are costly, especially international
New: Free VOIP based video calling /
cheap calls to phones (SkypeOut)
Old: Maintenance of own
telecommunication infrastructure
New: No own infrastructure, mainly
software development
Old: Charge for each phone call
New: 90 % of Skype users
subscribe to the free version / 10
% of Skype use SkypeOut
Old: Mass market
New: Mass market (especially
global web +smartphone users )

38. © 2014 Holcim Ltd
Business Model Innovation Example
20 Minuten
38
Free daily
newspaper
• Predominently
outsourced production
• Self-service
• Commuters (18-49 years)
• Advertisers
• Financed by
advertising

39. © 2014 Holcim Ltd
5 years of intensive research–
detailed analysis of all major successful business
model innovators in the last 50 years

40. © 2014 Holcim Ltd
Result: 90 percent of business model innovation is a
recombination of 55 business model patterns
Business Model Innovation Map
Source: Gassmann, Frankenberger, Csik (2013)

41. © 2014 Holcim Ltd
Business model pattern «Razor and Blade»
Apple
iPod/iTunes
(*) (2003)
Amazon
Kindle
(2007)
Better
Place
(2007)
Nestlé
Nespresso
(1986)
Nestlé
Special.T
(2010)
Nestlé
BabyNes
(2012)
Gillette
(1904)
Hewlett-
Packard
(1984)
Standard Oil
Company
(1880)
The basic product is cheap, or given away free. The
consumables that are needed to use or operate it, on
the other hand, are expensive and sold at high margins.
What?
How?
Who?
Why?
(*) reverse ‘Razor and Blade’
Source: ITEM-HSG

42. © 2014 Holcim Ltd
Business model pattern «Freemium»
Dropbox
(2007)
LinkedIn
(2003)
Skype
(2003)
SurveyMonkey
(1998)
Spotify
(2006)
What?
How?
Who?
Why?
Hotmail
(1996)
The basic version of an offering is given away for free in
the hope of eventually persuading the customers to pay
for the premium version.
Source: ITEM-HSG

43. © 2014 Holcim Ltd
Business model pattern «Peer-to-Peer»
Couchsurfing
(2003)
TaskRabbit
(2008)
Zopa
(2005)
eBay
(1995)
Airbnb
(2008)
What?
How?
Who?
Why?
RelayRides
(2010)
This model is based on a cooperation that specializes
in mediating between individuals belonging to an
homogeneous group. It is often abbreviated as P2P.
Source: ITEM-HSG

44. © 2014 Holcim Ltd
Business model pattern «Self-Service»
Accor
(1985)
IKEA
(1956)
BackWerk
(2001)
What?
How?
Who?
Why?
McDonald’s
(1948)
Mobility
Carsharing (1997 )
A part of the value creation is delivered to the customer in
exchange for a lower price of the service or product. This is
particularly suited for process steps that add relatively low
perceived value for the customer, but cause high costs.
Source: ITEM-HSG

45. © 2014 Holcim Ltd
Business model pattern «Subscription»
Dollar Shave Club
(2012)
blacksocks
(1999)
Salesforce
(1999)
Premiere
(1990)
Jamba
(2004)
What?
How?
Who?
Why?
The customer pays a regular fee, typically on a monthly
or an annual basis, in order to gain access to a product
or service.
Source: ITEM-HSG

46. © 2014 Holcim Ltd
The power of creative imitation
46
What does …
… mean for your business?
Razor and BladeFreemiumPeer-to-PeerSelf-ServiceSubscription

47. © 2014 Holcim Ltd
Pattern cards as a practical tool to generate innovative
business model ideas
Source: ITEM-HSG

48. © 2014 Holcim Ltd
Pattern cards as a practical tool to generate innovative
business model ideas
Pattern title
Example of business model innovations
using the pattern
Pattern content
Pattern elements
Source: ITEM-HSG

49. © 2014 Holcim Ltd
Workshop:
Business Model Pattern Cards
Preparation
 Each company / participant receives six pattern cards
Task
1. Develop a rule-breaking business model innovation ideas:
 Go through the cards one after the other
 Force yourself to develop 5 ideas per card even if you think
this does not fit
 Cluster those ideas into groups
 Decide on the best idea
2. Detail the selected idea by concretizing all dimensions of the
magic triangle: “who, what, how, why”
3. Come up with a name for your innovation and prepare an
elevator pitch to attract investors (5min).
Source: ITEM-HSG

50. © 2014 Holcim Ltd
The Business Model Navigator: A systematic approach
for developing innovative business models
I d e a s e l e c t i o n
Initiation
Analyse the
ecosystem
Ideation
Adapt the
patterns
Integration
Detail the
business
model
Implement-
ation
Realize the
plan
Players Change Drivers
Test
Adapt
Learning
through trial and
error
Market
introduction
Iteration
Iteration
Iteration
What?
How?Why?
Who?
Old
Business Model
Internal
consistency
External
consistency
Similarity Principle
Confrontation Principle
What?
How?Why?
Who?
Old
Business Model
What?
How?Why?
Who?
New
Business Model
Design Realization
55 Patterns
Source: ITEM-HSG

51. © 2014 Holcim Ltd
Where you can buy the book and pattern cards
Book (English):
http://www.mypearsonstore.com/bookstore/business-model-navigator-55-models-
that-will-revolutionise-9781292065816?xid=PSED
http://www.amazon.com/Business-Model-Navigator-Models-
Revolutionise/dp/1292065818/ref=sr_1_1?s=books&ie=UTF8&qid=1417705500&sr
=1-1&keywords=the+business+model+navigator
Book (German):
http://www.amazon.de/Gesch%C3%A4ftsmodelle-entwickeln-innovative-Konzepte-
Navigator/dp/3446435670/ref=sr_1_1?s=books&ie=UTF8&qid=1417705204&sr=1-
1&keywords=The+Business+Model+Navigator
Pattern Cards:
www.bmi-lab.ch (Note: webshop currently offline due to shortness of supply)

52. © 2014 Holcim Ltd
For further information visit www.bmi-lab.ch or contact me
directly: michaela.csik@holcim.com

53. © 2014 Holcim Ltd 53