Business concepts are all well and fine, but what do these business model innovation concepts potentially do for you? I want to share some questions designed to help you apply what you have been reading to your existing business.

What is your current business model?

If you offer many products and services, you may have more than one. Understanding how you operate now will make it easier to think about how you can improve upon the present.

In thinking about this question, you will find it helpful to focus first on what benefits customers get from what you provide. Also, consider what benefits the customers’ customers get through to the end user of the product or service. In thinking about benefits, remember that customers always want more and at a lower price. How does your business model accomplish that for them?

As an example, let’s consider the Folger’s coffee business at Procter & Gamble. That business is an industry leader in providing coffee-based products to allow consumers to have a tasty, comforting beverage at home that may or may not stimulate them with caffeine. The products are sold primarily through supermarkets, discounters, and warehouse clubs.

Compare that with the Starbucks coffee business. Starbucks primarily provides high-quality coffee and tea products through a service in complex prepared forms in coffee bars to also provide an enjoyable experience. The company further offers roasted coffee beans as a product for tasty experiences at other coffee bars and eat-away-from home locales as well as for consumers to brew at home, so that customers can always have the good-tasting products they prefer.

The companies have two different business models that provide different products, differing amounts of experience, in different ways, and mostly in different locations. Notice that Folger’s could have innovated with the Starbucks business model before Starbucks even existed as a company. The model already existed in Europe, which is what helped stimulate the Starbucks model.

Had Folger’s taken this path, there would probably be only one business model now in the industry. Interestingly, the two businesses have started to compete directly with each other’s business models by offering prepackaged coffee-based beverages that are manufactured and distributed by others into normal beverage outlets.

What were the last five business models before the current one?

Understanding how you got to where you are today often provides valuable insights into what new business models would be most attractive in the future. The forces that made those innovations work may still be around today, or may have only been slightly changed.

Has your company had a process aimed at developing improved business models?

New business processes almost always emerge from a deliberate process of innovation. If your company has yet to establish such a process, chances are higher that you have a substantial backlog of opportunities for desirable new business models.

If you have such a process, does it look at business model innovation separately from product and technological innovation?

Many companies see new products and technologies as the only potential ways to provide increased benefits to customers and end users. As the coffee discussion suggested, it can be easier to add more value by turning a product into a service than it is to focus only on improving the product itself.

For example, General Food’s Maxwell House division had introduced flavored coffees conceptually like what you get in a coffee bar in the early 1970s. Few would argue that the taste and experience of these canned items are a match for what is offered at a Starbucks or a coffee bar using Starbucks products. Without a separate focus on designing and implementing new and better business models (that may include new products and technologies), you are probably missing most of your opportunities.

When was the last time your company changed its business model?

If the answer is more than two years ago, the odds favor there being a current opportunity to implement an improved business model.

How many times has the business model changed in your industry in the last ten years?

If the answer is less than three times, there is probably untapped potential for a new business model now.

How expensive is it for you to develop and test a new business model?

The answer differs a lot from industry to industry. If the costs are low, then you have very high potential to develop an improved business model. You will face few internal hurdles to doing the necessary early experimentation. Conversely, if the costs are high, you will probably need to create an improved way to develop business models that is less expensive.

How risky is it for you to develop a test a new business model?

For some companies, reputation is so important, for example, that it is difficult to even test new things until they are almost perfect. In other industries, working with crude prototypes is the expectation.

What do you lose if your business model experiment fails in all of the predictable ways that it could? If not very much, what are you waiting for?

If much is at stake, consider ways to reduce the amount at risk or the visibility of your flops. Early experiments should be expected to create “learning” rather than solutions, so you need to have a way to get your learning on the cheap.

Copyright 2008 Donald W. Mitchell, All Rights Reserved



By: Donald Mitchell

About the Author:

If you notice, you may observe that most of our nonintellectual discussions and conflicts are wars between tradition and innovation. Here you may find a person trying to convince others that one should stick with the legacies: experienced, practices, and patterns – not necessarily using the spoken words, but some contextual jargon; while the other person is contradicting. If only innovation and creativity can make a difference. Or in other words, you learn as you go. The same quarrel exists in our software engineering field, at least in our local industry as I see.

1. The Fundamentalist Craftsmen or Blind Followers 

There are people who have strong belief in old practices. They always have the same number of documents, same life-cycle, identical design, and unbelievably a single strategy for every project. The most surprising point for me is that even the failure is unable to make them believe that there’s something wrong. Instead of trying to make some improvements and searching for the shortcoming in their practices and strategy, they start believing that failure is a norm, or it’s not failure at all. For instance, you’ll hear them saying “Clients never get satisfied” or “Losing deadlines is a norm in our industry”.

Examples -make things easier

In a software project, the offshore back-office development team shares the documents reside in their local repository with the the on-site front-office team to let them update the documents. In absence of their access on offline documents the local team shares the documents via email with the remote team. Obviously they get frequent version conflicts in documents and when it happens, they arrange a meeting and manually resolve the conflicts in the documents.  For months, they suffer with this problem but avoid change in their practice e.g. having an online document repository instead of shareing the documents on email. The term coined here is Brute Force approach as Steve McConnell called it

2. The Innovator – or scientist, we can say 

Away from the above category, the innovators are what most of our new graduates comprise of. They start with buzzwords like Web 2.0, cloud computing and believe that legacy practices are obsolete and that the senior folks are not creative at all. They drive their projects for learning, ignoring the ground realities they neglect the cost and risk of change and avoid exploiting legacies: patterns and practices. Since they believe that they make things better than they are, it’s possible if you see them writing their own DB connection pooling in technologies having built-in connection pooling or writing their own classes from scratch instead of extending the existing one. They often try to make simple things state-of-the-art and having insufficient knowledge and experience they get lost in the middle. The term coined here is “Silver Bullet” as Steve McConnell says.

3. Engineering Mindset: the most needful 

The moderate mindset - or engineering mindset as I say- tends to utilize and exploit the experience, invested by the lots of great minds avoiding useless reinventions but never shy to address the issues with in the particular scenario, if it doesn’t fit with. The mindset says that understand your objective whether it’s build-to-learn or learn-to-build. It says that to be honest and successful, an engineer shouldn’t behave like a scientist who build and destroy just for learning. And it says that there’s always room for improvement since it’s a going concern but it’s not the ultimate goal of an engineer instead it’s to deliver the most optimal and economical.

A single practice may have different out comes when followed with or without reason. So, if a practice is being followed by majority, most probably there are reasons, try to find them, dont’ shy asking other followers if you couldn’t,  but if nobody else knows, you have at least one reason to avoid it. Better to have your own with reasons instead of following blindly.

Being an engineer, I do not believe that I am right all the way, considering that I’ve limited amount of skills, knowledge, experience. Your comments and disagreements will be anticipated hoping they’ll help us having a balanced mindset.



By: Catalyst

About the Author:

Everybody wants their homes to be more safe. If you would like to increase the level of your home security, you will have a lot of different innovations to help you in achieving your goal. There are many new and improved systems developed in the recent time that provide a better protection of your house and personal property. Especially there were many innovations in the field of communication that directly impact the products and services created for the home security industry. For example, most of the video cameras and audio equipment provide wireless capabilities nowadays. This means that you will no longer have to install a special wiring to connect your cameras to the receiving equipment. This will make the cameras, especially the hidden ones, a lot harder to find. The new system consists of three components: a video camera itself, a wireless transmitter (transmits the video stream signal to the receiving equipment, sometimes installed as a part of the camera) and a wireless receiver (receives the transmitted signal from the video camera and forwards the video stream directly into the receiving equipment).

Wireless cameras provide the possibility to transmit video information without cables. They are also easier to install and maintain but require some time to be spent on the configuration. There are other systems that use the advantages of the innovations in the communication industry. For example, wireless audio transmission can be implemented in addition to video transmission. Also, if you signed up for the alarm monitoring service, there are companies that allow the monitoring equipment to dial through the dedicated cellular link in a case of an emergency. This protects you from a situation when you are left unprotected during the time your regular phone lines are not working.

Scientific innovations contributed to the development of various home security systems and equipment. There are systems that will allow access only if a person provides the correct fingerprint or the eye signature. There are voice identification systems that will check if the voice of the person asking for access is indeed the voice of the authorized person. There are alarm systems that will detect the change in temperature or other scientific characteristic and will trigger an alarm if a change is detected. All of these systems are usually very expensive and are used if you are trying to protect something very valuable and expensive. Sometimes these protection measures are used to protect the information on home computers, assuming the information that is stored on the computer is extremely valuable. With time, however, the prices are expected to drop and many of the systems that are currently used only for the protection of expensive items or information will be used for the more common home security purposes. By then new and more advanced systems will be developed.

There are many home security innovation based on the general scientific discoveries and technological advancements. For example, the automated systems allow for a great deal of preprogrammed automation of most of your security equipment. With the automation system you can interconnect all of your security systems in one “all in one” system. In this case, for example, a triggered fire alarm can use the alarm security monitoring service to notify the fire department of the possible fire in progress. The motion detector outside of your house can trigger the video surveillance system and start the recording process when there is any movement detected. The motion detector will trigger the alarm in a case of a burglary if the door lock fails or a window is broken. A backup power supply is used to keep the security system running when the power shuts off for one reason or another. You can even connect all of your equipment to your personal computer and program the interaction of different security system components.

If you want to get more information about home security products, please visit: www.security2020.com

By: Ava

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