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https://www.youtube.com/watch?v=B4ZSGQW0UMI
English Transcript
0:15 Have you ever wondered why hyper successful companies like Nokia or Kodak
suddenly lose their edge?
0:20 Or how could firms like Commodore Computers,
0:25 Grundig, Nakamichi, Newsweek or Polaroid possibly fail?
0:30 Did they not have abundant R&D resources, top employees and profound
knowledge of their
0:36 markets? Yes, but they had another thing in common:
0:40 They all missed the moment when they should have left their successful path
to rethink
0:44 their business model. They missed out on radical innovation because
0:48 they were too busy managing daily business and serving current clients -
instead of
0:53 envisioning future opportunities. In other words: Today's success is the
enemy
0:58 of tomorrow's success!
1:01 The innovation cycle spins faster than ever in nearly all industries.
1:06 Innovation either increases the customer value of a product or service or
it lowers their
1:11 costs
1:12 - and therefore creates a competitive advantage. Apple, for instance,
creates a high perceived
1:19 customer value with its innovative new products. And Dell reduces its costs
and working
1:24 capital through build-to-order-processes.
1:28 But even though its importance is undisputed, there are many misconceptions
about
1:32 innovation. Three myths are particularly pervasive:
1:38 First, innovation stems from ideas nobody has had before.
1:43 Second, big success requires big resources.
1:47 And third, innovation breakthroughs are always based on fascinating
technologies.
1:54 Luckily, they are all wrong!
1:56 IBM did not invent the Personal Computer, Apple did not invent MP3
technology, and Amazon did not invent the online book store.
2:02 Successful innovators learn
and recombine
2:07 - whereas the pioneers get eaten by the wolves.
2:12 Cisco had virtually non-existent R&D resources, but out-innovated the
largest research lab
2:18 in the world, AT&T's Bell labs.
2:21 14 of today's 25 most innovative firms have innovated their business model -
and not
2:28 just their technology!
2:29 Take firms such as Google, Amazon, or eBay. Great algorithms, yes, but it is
the business
2:35 model not just the technology that is responsible for their success.
2:40 So, what exactly is a business model innovation?
2:44 A business model provides answers to four questions:
2:47 Who is your target customer?
What do you offer to the customer?
2:51 How do you create the value proposition?
And how do you generate revenue?
2:57 And a business model innovation changes at least two of these four
dimensions!
3:02 In our research, we have looked at all major business model innovations in
the past 50
3:07 years. They have all revolutionised one or several
3:11 industries. For instance, Ikea has redefined the
3:14 way we buy furniture, TomTom has transformed the navigation business, or
eBay has changed the world of trade.
3:20 Yet only 10% of these business model
innovations
3:26 were novel and introduced new business model patterns.
The other 90% merely
adapted, refined or combined these patterns.
3:32 For instance, innovative companies often
apply
3:37 creative imitation. They ask themselves: How could a business model
innovation from another
3:43 industry revolutionise our own industry?
3:46 In total, we have identified 55 business model patterns that are responsible
for all
3:52 business model innovations.
3:54 For example Flatrate, Supermarket, Rent Instead of Buy, Experience Selling,
E-Commerce or
4:02 the Razor and Blade Pattern.
4:04 Let's have a look at this one: Since 1904, Gillette has been giving away
4:09 Razors for next to nothing, but selling its blades at
4:13 obscenely high prices. Nespresso creatively imitated this pattern,
4:18 selling cheap coffee machines and expensive coffee - and revolutionised the
coffee industry.
4:25 And many other companies applied the Razor and Blade Pattern, too.
4:28 Remember Apple's iTunes, Amazon's Kindle or Hewlett Packard's
Inkjet-Printers?
4:33 Now, what do YOU have to do to innovate YOUR business model?
4:38 We advise you to follow four steps: Initiation, ideation, integration, and
implementation.
4:46 During Initiation, you analyse your current business model. Again:
4:50 Who is your target customer? What do you offer to the customer?
4:54 How do you create the value proposition? And how do you generate revenue?
4:58 During Ideation you confront this business model with the 55 business model
innovation
5:04 patterns and develop new models. How would Nespresso conduct your business?
5:09 Or is there a match between your product and the experience selling
pattern? Challenge your
5:14 basic assumptions and the dominant logic of your industry.
5:17 But don't try to reinvent the wheel. Instead, use analogies and learn from
other
5:23 industries.
5:25 During Integration you need to check the consistency of the business model.
5:29 This is important detail work where you examine all four questions
regarding organizational
5:34 ?t.
5:35 Finally, during Implementation, it is time to awaken the beast.
5:40 But be careful! In iterative cycles, you design a business
5:45 model, build a pilot, test the pilot and return to the
5:49 design phase. It is important to not only gain qualitative
5:54 and quantitative data to verify or falsify your
5:57 assumptions about your new business model but also not to forget about the
soft factors
6:02 of innovation!
6:02 Thanks to incorrect management behaviour and organisational resistance more
than 70% of
6:09 all change initiatives fail! Therefore, keep a few rules in mind:
6:15 First, only implement one business model at the time.
6:20 Second, clearly communicate the new business model and the need for change.
6:25 Third, don't overemphasise short term KPIs. Innovation needs time.
6:31 Fourth, get top management commitment. Without their sponsorship's business
model
6:37 innovation is doomed to fail! And finally, overcome the not-invented-here
syndrome!
6:45 Got that? Let's wrap it up then. Innovation is THE key factor to defeat
path
6:51 dependency and stay competitive in today's economy.
6:55 Yet, innovation is not necessarily about new technologies, excessive
research and
7:00 development, or about creating completely new ideas. Most of the time,
innovation is
7:05 about learning from others and reinventing your
7:07 business model - not just your technology. This can be done in a structured
process of
7:12 initiation, ideation, integration, and implementation: You analyse your
business
7:18 model, apply the 55 innovation patterns, check for inconsistencies and
start implementing
7:25 carefully - keeping in mind success factors and
7:28 pitfalls.
7:29 Are you ready then to revolutionize your own industry?
7:33 Try to creatively learn from the giants whose shoulders you are standing
on!
7:38 Think big and think different. Steve Jobs did it - so why can't you?
Published on 22 Oct 2013
Duration 8:22
The fourth part of the series shows how innovations come into
being and what myths they are associated with.
For more information on BMI see www.bmi-lab.ch
© University of St.Gallen (HSG)
Text by Prof. Dr. Oliver Gassmann (
http://bit.ly/HfkHSU)
Production:
http://www.zense.ch
Academic Director: Prof. Dr. Thomas Beschorner
To watch the first "Little Green Bags" video on corporate social
responsibility (CSR), please go to
http://youtu.be/E0NkGtNU_9w
To watch the second "Little Green Bags" video on the ten myths
of entrepreneurship, please go to
http://youtu.be/G8gRkJ9cnzo
To watch the third "Little Green Bags" video on the energy
revolution, please go to
http://youtu.be/5lcgGs3UUg4
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