Business Model Innovation For Business Growth

Your course instructor, Simon Torrance, offers a warm introduction to the Business Model Innovation For Brand Growth course, which will help you to adopt advanced digital business models for attracting new growth potential.

The course includes 5 x 45-minute modules:

• Module 1: The new growth agenda – the new sources of value in the digital economy (THIS MODULE)

• Module 2: Platform, network and ecosystem know-how – the 10 key platform strategies and how (in practice) to apply them

• Module 3: Business model pioneers – 10+ case studies from 4 continents of bold strategies that have moved the valuation needle

• Module 4: New business model portfolio – how to re-allocate capital and resources to create new growth flywheels

• Module 5: RENEW – the 5-step holistic process to rejuvenate your organisation’s ability to respond to market opportunities at speed

The digitisation of the economy is creating many opportunities to create new growth and value. But business model innovation (and ultimately transformation) is hard. This course shows you how to optimise the present and innovate for the future, and gives you examples of companies that have dramatically boosted their performance.

Introduction

This module is made up of 10 parts, each a video presentation of between 2-8 minutes long. In total there are 45 minutes of video content.

Topics covered:

• How the digital economy is creating unprecedented opportunities and threats and how strategy formulation and executive decision-making needs to change.

• How digitisation is reducing traditional profit pools, and what to do about it.

• What is ‘business model transformation’ and why is it so critical for organisations today (especially incumbents)

• What are the practical considerations in planning business model transformation: impact on strategy, capital allocation, skills, operations, organisational structure.

There are some additional reading materials and a recommended ‘learning task’ to undertake after each video.

Part 1

A new, more holistic definition of a ‘business model’. Understanding where you are on your growth trajectory - extrapolating forward. The importance of creating an inspiring ‘purpose’ to guide your actions.

Learning task:

• Write down your initial answers to the questions in the video and discuss them with colleagues.

• Update this as you progress through the course and discuss again with a wider group of colleagues.

How the digitisation of traditional value chains opens up new types of customer value. New opportunities to increase profitability by selling ‘outcomes’ and ‘experiences’ rather than just products and services.

Learning task:

• How could you create more regular and more valuable interactions with customers?

• What sort of ‘outcomes’ or ‘experiences’ could they buy?

• How could you monetise them in new ways?

Digitisation has created a new breed of ‘platform-based' business model that is asset-light with near-zero marginal costs of growth. Exponents with bold strategies are disrupting markets, impacting traditional profit pools.

Learning task:

Map out your top 10 competitors (current and future, traditional and new);

• Which part of the value chain are they attacking?

• Which ones have bold and well-funded new growth strategies?

• Which are leaders and laggards?

• What about you?

Most incumbents are caught in a ‘success trap’: they can’t evolve fast enough and so revert to protecting their existing business. Surveys of C-level execs show considerable concern about the significant risk they now face.

Learning task:

• How fast are you growing today?

• Do your current KPIs constrain or enhance your ability to grow fast?

• Does the organisation focus primarily on short-term efficiencies?

• Are your innovation efforts effective?

• Is your organisation and culture dynamic, open and flexible?

Reset the mental models of your leaders; Envision new ecosystems; Non-traditional capital allocation; Energise your organisation; Widen your appeal (and wow customers). Key learnings from Steve Jobs, Jeff Bezos and Warren Buffet.

Learning task:

• Consider how your leadership team, Board members and main shareholders think about your business model today.

• Which ones think like Steve Jobs and Jeff Bezos, which don’t?

New research demonstrates which types of business models deliver better financial performance. How incumbents can integrate these new models into their existing business.

Learning task:

• How does your Valuation Multiple, Return on Assets, Profit Margin and 3-5 year CAGR compare to current and future competitors?

• Do your leaders understand the economics of digital business models?

Look beyond traditional markets to new ‘white space’ opportunities at the intersection of the physical, digital and biological worlds. The 4th Industrial Revolution is creating an $8 trillion new services market.

Learning task:

• Think laterally and make a list of new, potential ‘white space’ opportunities that you’re not already looking at, and discuss with colleagues.

Examples of how two incumbents dramatically increased their valuations and outperformed traditional competitors by investing in new forms of business model ‘portfolio’.

Learning task:

• Does your company dynamically re-allocate capital each year?

• What different types of business model do you operate today?

• (Watch the more detailed case studies in the Business Model Pioneers section of this course and ask the questions again)

The critical importance of establishing an ‘ambidextrous organisation’: one that can both optimise the legacy and invent the future.

Learning task:

• What proportion of your organisation is focused on optimising the current business model compared to ‘inventing the future’?

• How would you characterise the level of understanding of digital business models in your organisation today?

• What about the skills to implement them?

How to think about becoming a magnet for many more third parties and orchestrate an ecosystem of innovation around you that allows you to add greater value to customers.

Learning task:

• What product or service providers who are complementary to you would your customers be interested in having access to?

• How could you monetise these products/services available without re-selling them?

• What is your level of engagement today with developers and other non-traditional 3rd party partners?

• How open and flexible are your IT systems today?

• How can you set up lightweight stand-alone systems outside of corporate IT?

• Should you build or buy in ‘growth hacking’ support?

You have now reached the end of Module 1: The New Growth Agenda. If you have enjoyed the course so far, you can enrol in Module 2: Platform, Network and Ecosystem Know-How from the Course Catalogue to continue the Business Model Innovation For Brand Growth course.

Introduction

This module is made up of 11 parts, each a video presentation of between 2-8 minutes long. In total there are 60 minutes of video content.

Topics covered:

• Why ‘Network Effects’, ‘Learning Effects’ and ‘Data Effects’ are so powerful and how incumbents can generate them to deepen relationships and defend against competitors

• The 10 platform strategies that all incumbents should understand

• The 5 key steps to integrate a platform-based strategy into your corporate, digital, financial and operational strategy.

There are some additional reading materials and a recommended ‘learning task’ to undertake after each video.

Part 1: 5 Key Principles

Platform businesses are taking over the world. Investors prefer them to traditional businesses because they are asset-light and have ‘exponential’ potential. The 5 key principles for creating a platform strategy that can impact a company’s valuation.

Learning task:

• Rate your company today against the 5 key principles. How far are they understood within your company?

What type of base technology do you have in place today which you can leverage to create a platform business model?

Learning task:

• Map your existing systems and tools to the matrix in the video.

• Where are you strong and weak?

• What have your competitors got in place already, or are planning?

Introduction to the 5 key steps. How platform-based business models work and how do they create value. Introduction to ‘Network Effects’ and how Uber exploits them. The 3 key attributes of a successful platform business.

Learning task:

• Consider carefully how ‘network effects’ create value in different ways to traditional economic models. Think about how AirBnB, Facebook or eBay operate. If you have some sort of ‘platform’ in operation today, how far does it match the 3 attributes?

How four different types of ‘Network Effects’ deliver value and create defensibility. How eBay and Facebook operate. The movement towards collaborative online-to-offline platforms, ideal for incumbents.

Learning task:

• Read the accompanying articles on network effects and start to consider what sort of platform you could create.

Platforms leverage networks of participants and other people’s assets. They succeed when they create new value for all participants in their ‘ecosystems’. The opportunity is to incorporate some of these approaches into traditional product-centric businesses.

Learning task:

• Which aspects of the chart does your organisation exemplify?

• How would you explain the differences between produce and platform businesses to your colleagues?

Deep dive analysis on how Amazon re-conceived its business model in 2000 and is now able to create self-sustaining ‘growth flywheels’ built on synergies between all its activities. The financial impact of this transformation.

Learning task:

• Show this video to your colleagues and discuss with them how your company could do something similar.

What traditional businesses can learn from how Apple, Google, Tencent and Xiaomi developed their business models. Method for re-conceiving your role within ecosystems.

Learning task:

• Go through the ecosystem mapping process with your team.

Platforms scale and generate revenue in very different ways. Traditional business plans are not appropriate. It’s critical that finance teams understand the economics of platforms and that plans with different metrics are created.

Learning task:

• Consider how to engage the CFO and finance department on this topic. Get them to go on this course!

Some platform strategies are easier to implement than others. Others have a greater impact. There are many options for incumbents, including M&A, which are described in detail here. But less than 2% of incumbents have an effective platform strategy today.

Learning task:

• Which strategies has your company already activated? How successful are they so far?

• Is there an opportunity to do more or different?

An effective platform strategy should create greater ‘pull’ for the most profitable parts of the core business. But a new organisational structure with new skills and metrics is needed to enable this new overall business model.

Learning task:

• What will be the most profitable/valuable parts of the core business in 3-5 years time?

• What will be commoditised?

The 12 key questions to ask about your current (or planned) platform strategy and implementation, to impact your valuation.

Learning task:

• Rate your current activity against the check-list. How do you score?

• Use the check-list and scoring to engage colleagues across functions: from Strategy to IT to Operations to Finance to Marketing.

You have now reached the end of Module 2: Platform, Network and Ecosystem Know-How. If you have enjoyed the course so far, you can enrol in Module 3: Business Model Pioneers from the Course Catalogue to continue the Business Model Innovation For Brand Growth course.

Introduction

This module is made up of 11 parts, each a video presentation of between 2-8 minutes long. In total there are 50 minutes of video content.

Topics include:

• Case studies and examples of incumbents and start-ups who have boldly implemented new platform-based strategies, across 10 sectors and 4 continents

• Best practices in vision and implementation

• Key lessons for leaders looking to boost their company’s valuation

There are some additional reading materials and a recommended ‘learning task’ to undertake after each video.

Part 1: The Incumbent’s Dilemma

Short, inspirational case studies demonstrating that a bold vision with the right business model pays off. Different lessons from each. For incumbents, where to place your bets: what you do today or what you could become?

Learning task:

• Consider your own ‘dilemma’ in terms of future projections for the company.

• Make a note of the ‘things to look out for’.

• Make notes on what resonates most with you in each case study and ask yourself and colleagues: how bold and creative could we be in re-thinking our growth strategy?

How a Chinese insurance company transformed into a platform-powered ecosystem orchestrator and is now worth more than Allianz, Axa and even HSBC.

Learning task:

• What are the 3 key lessons you can take away from this case study?

How a longstanding services company has re-invented itself as a community for multiple parties and service types and grown 20% year-on-year, with big ambitions to conquer the world.

Learning task:

• What are the 3 key lessons you can take away from this case study?

How the CEO of the company in a sector under significant economic pressure created a bold new strategy to disruptive his own market and RENEW his business model.

Learning task:

• What are the 3 key lessons you can take away from this case study?

How a 100-year-old Afrikaaner publishing company transformed into a $100 billion+ technology leader based on a platform strategy

Learning task:

• What are the 3 key lessons you can take away from this case study?

How a start-up found a market niche and grew into a Unicorn worth over $4bn, based on a hybrid business model that looks like Pinterest + Yelp + Amazon + TaskRabbit.

Learning task:

• What are the 3 key lessons you can take away from this case study?

How an under pressure retailer has moved from products to services to platforms with a ‘Retail-as-a- Service’ and open marketplace proposition.

Learning task:

• What are the 3 key lessons you can take away from this case study?

How a major global player is looking to deepen relationships with customers, partners and developers by moving into an adjacent market that is twice the size of its core.

Learning task:

• What are the 3 key lessons you can take away from this case study?

How a Unicorn satisfied high-value unmet needs in a market where the incumbents had been sleeping and grew revenue 10x over 4 years with a 10x valuation multiple.

Learning task:

• What are the 3 key lessons you can take away from this case study?

How Amazon, JP Morgan Chase and Berkshire Hathaway are opening up new market opportunities by collaborating on a platform to shake up US healthcare.

Learning task:

• What are the 3 key lessons you can take away from this case study?

Other notable examples of traditional companies who are investing in platform business models. How their business model ‘portfolios’ compare to the digital masters. Emergence of a new breed of ‘maverick’ corporation. 10 key lessons for any company.

Learning task:

• Compare and contrast these case studies against what your company is doing. How do you rate against the 10 key lessons? Which should you apply as a priority? What’s the best way of doing so? Share and discuss with colleagues.

You have now reached the end of Module 3: Business Model Pioneers. If you have enjoyed the course so far, you can enrol in Module 4: The New Hybrid Business Model Portfolio from the Course Catalogue to continue the Business Model Innovation For Brand Growth course.

Introduction

This module is made up of 10 parts, each a video presentation of between 2-8 minutes long. In total there are 50 minutes of video content.

Topics include:

• How to re-allocate capital towards a better mix of business models.

• What are the main types of ‘business model’ and which perform best (in terms of valuation, growth rates, ROA, profit margins)

• Why is the current approach to corporate capital and resource allocation not delivering the results it could, and how to think differently about your assets

• How to create a new business model portfolio than can deliver greater value (to customers, partners and shareholders)

There are some additional reading materials and a recommended ‘learning task’ to undertake after each video.

Part 4: Agenda & Context

Capital re-allocation is one of the best ways of turning a new strategy into action. Recap of the key principles of Business Model Transformation and intro to the key 6 steps to a more powerful business model ‘portfolio’.

Learning task:

• Consider how joined-up and integrated your corporate, digital, financial and IT strategies are today?

• Where does your company allocate capital and resources today?

• Is it able to dynamically re-allocate?

• What different types of business model do you operate today?

• Re-consider your own ‘incumbent’s dilemma’

The increasing importance of intangible assets and ‘Relational Capital’ in driving enterprise value. Different business models deliver different financial performance. How ‘Digital Masters’ combine business model types within synergistic portfolios.

Learning task:

• How much do intangible assets contribute to your enterprise value (or product or BU value)?

• What sorts of intangible assets do you leverage today and how? In what new ways could you leverage more?

How do traditional incumbents compare with Digital Masters and BM Pioneers? What advantages can incumbents leverage, what are the key gaps in capability that need filling?

Learning task:

• Write down your key assets (tangible and intangible) and capabilities (real and potential) and strengths and weaknesses and map them against current (and future) competitors?

• How do you rate today?

How to think about investing to both invent the future and optimise the core, understanding the 10 Platform Strategies. New metrics that drive business model performance. Deep dive into how Naspers manages its portfolio.

Learning task:

• Find out from how much ‘capital’ (in terms of money, time, people) is invested in platform-based business models and inventing the future.

• What metrics drive the company today?

• What are the 3 key lessons you can learn from the Naspers example?

Impact of creating synergies across the business model portfolio, rather than just diversifying. Importance of investing heavily in new skills and new digital services. Need to engage shareholders carefully.

Examples: ProSiebenSat (e-commerce + content) and Softbank ($100bn investment fund).

Learning task:

• How far does your current portfolio create new synergistic ‘growth flywheels’ like Amazon?

• How much is your firm investing in new skills and digital products and services compared to your current (and future) competitors?

• If you have an R&D function or a corporate VC arm, how far are they investing in platforms specifically? What are the constraints?

Why and how to map your investments in terms of relative marginal costs of growth and Return on Invested Capital risk. 6 Key questions to ask about the strength of your portfolio and how to spot new ‘white space’ opportunities.

Learning task:

• Plot your activities and investments (current and planned) on the matrix and reflect on how this impacts your overall performance.

How Apple leveraged 3rd parties to drive demand for its core products and de-risked its portfolio with investments in software and services.

Learning task:

• What are the 3-5 lessons your company can take from this example?

How Amazon has created rich synergies between all its activities which has allowed it to de-risk new bold moves.

Learning Task:

• What are the 3-5 lessons your company can take from this example?

Importance of modelling the impact of platform business model investment on overall growth rates and valuation, to attract management and shareholder attention. Examples of a bank and a services company. Criticality in investing much more heavily in an ‘invent the future’ unit (with power and prestige).

Learning Task:

• Look at the growth rates and Price-Sales Ratios of platform companies, map the potential evolution of your business model portfolio, and make some estimates about impact on key financial metrics. Use as ‘strawman’ to discuss with finance department and other colleagues.

A 10 point check-list to help you and colleagues design a BM portfolio that can move the valuation needle. Step One: educate leaders on the economics of digital business models.

Learning Task:

• Check your current status against the list, share and discuss with colleagues, find an executive sponsor and work where to start in terms of addressing the gaps.

You have now reached the end of Module 4: The New Hybrid Business Model Portfolio. If you have enjoyed the course so far, you can enrol in Module 5: How To Kickstart A Business Model Transformation from the Course Catalogue to continue the Business Model Innovation For Brand Growth course.