Business model innovation was one of many hot topics at Innovation Suite 2011. The conference hosted thirty two invitees from nine countries and a variety of companies including GE, Bayer, Kraft, and SAP. On the minds of many was how to create new business models to transform a company and move to higher ground.
Business Model Innovation is defined as follows (from Wikipedia):
Business model innovation results in an entirely different type of company that competes not only on the value proposition of its offerings, but aligns its profit formula, resources and processes to enhance that value proposition, capture new market segments and alienate competitors.
Here are four ways to conceptualize a new business model:
Airline service innovation seems like an oxymoron considering the industry's reputation for low quality. But the industry is fighting back to improve its image. Companies that specialize in inflight entertainment as well as airframe manufacturers are accelerating the use of new technologies to deliver more value in the air. That's good news for an industry that has focused way too long on cost-cutting. The next battle for supremacy will be won by airlines and aviation companies that innovate services across the experiential "journey" in a sustained way. For this month's LAB, we will create new-to-the-world concepts for the inflight service experience using the S.I.T. tool set.
We begin by creating a list of the components of the product or service. We select a component and we further break it down to its sub-components or attributes that we can focus on. We then apply a tool to that component to change it in some way. Working backwards ("Function Follows Form"), we envision potential benefits of the modified service to both the customer and the company.
Here is a list of components:
Book publishing faces turbulent times. While the market is growing, key parts of the business model are coming apart at the seams. Market segments are fragmenting, price points are changing, channel power is shifting, and barriers to entry are lowering. Even the definition of "a book" is in question. Is it the medium (printed pages between two pieces of cardboard, electronic, online)? Or is it the message (the story, the characters, the themes)? When an industry faces turmoil, there is only one thing to do - innovate!
For this month's LAB, lets innovate the plain old, everyday book, an idea that goes back 5000 years. We will use the corporate innovation method, S.I.T.. It is based on five patterns. We use the patterns to create hypothetical, abstract "solutions." Then we work backwards from the solution to try and identify potential problems that it solves. This works well because there is an asymmetry in people's thought process effectiveness when it comes to creativity. People are more fluent and easier with searching for benefits for given configurations than finding the best configuration for a given benefit or function. The term for it is called Function Follows Form.
The athletic footwear market is maturing, so it will need sustained innovation to keep growing. "Performance footwear" emerged with the ancient Greeks and has since grown to a $50 billion global industry. Innovations such as vulcanized rubber, high tops, arch support, specialized functions, endorsements, and branding have kept the industry vibrant and growing, especially for the dominant three players: Nike, Adidas, and Reebok. Now it's crunch time!
For this month's LAB, we will use the corporate innovation method, S.I.T., to create new athletic shoe concepts. The method works by taking one of the five patterns (subtraction, task unification, division, multiplication, and attribute dependency) and applying it to an existing product or service. This morphs it into a "virtual product," which is an abstract, ambiguous notion with no clear purpose. We then work backwards (Function Follows Form) to find new and useful benefits or markets for the virtual product.
Here are five innovations created by graduate students at the University of Cincinnati as part of their graded requirements in the innovation tools course.
I just had the pleasure of hearing Mr. Seren Lund present at the PharmaBrand Summit in Monaco. He is the Senior Marketing Director of Product and Marketing Development at the Lego Group. He told the amazing story about how Lego markets their product and leverages the power of their user community to create innovation and growth. It prompted me to search the blogosphere for other stories about Lego, and I can see that the company is quite popular. Blogging Innovation, Endless Innovation, Stefan Lindgard, and various others have written useful blog posts about Lego..
Rather than talk about Lego and its innovation, I decided to apply the corporate innovation method, S.I.T., to the basic Lego product – the 2x6 brick. I created these new embodiments during the two hour break following Seren’s presentation. With a bit of research, I learned there are some 24,000 SKU’s. While I have some general knowledge about the product (having purchased it for my son), I must admit I do not know a great deal. So it would not surprise me to find that I created ideas that already exist.
Shortage of water may become a more catastrophic problem than food or energy shortage according to experts. The problem affects developing as well as developed countries including the U.S.. For this month's LAB, we will look at how the corporate innovation method, S.I.T., can be used to address such a serious issue. The following ideas were developed by students at the University of Cincinnati working on the PUR water filtration system from Procter & Gamble. They are excellent examples of purpose-driven innovation. You can download the team's complete portfolio here.
There are a 183 million pet fish in the United States, more than double the number of dogs. Fourteen million U.S. households have fish. During the past decade, the pet fish category grew by more than 20% making it one of the fastest growing in the industry. For this month's LAB, we will apply the corporate innovation method, S.I.T., to the mainstay of fish keeping - the aquarium.
Here are five unique aquarium concepts invented by one of my graduate students, Janette Douglas, at the University of Cincinnati as part of her final exam in "Applied Marketing Innovation." For the this exam, each student was given a product randomly. They had three hours to create new-to-the-world concepts and demonstrate proficiency using each of the templates.
People are fascinated with the idea of human cloning after researchers cloned a sheep in 1997. The debate about the risks and benefits of human cloning rages on. What if you could clone yourself in a virtual sense? Even better, imagine cloning yourself into another person's body? What would you feel? What would you learn? How would your life be better?
Dr. Henrik Ehrsson, a neuroscientist from Karolinska Institute in Sweden, has pioneered a method of allowing us to get out of our bodies and into the body of someone else...virtually...so that you sense whatever the other person senses. We "clone" ourselves everyday with simple technologies like a mirror or camera. But this is different. This technique clones you into another form so you can experience life from that point-of-view.
Innovation puts cash in your wallet. But what about the wallet itself? For this month's LAB, we will apply the corporate innovation method, S.I.T., to create new and useful concepts for the wallet.
Wallets are the most personal items we own. They carry our money, credit cards, identification, licenses, photographs, and other memorabilia. Your wallet says a lot about you. As with food, we try to stuff more inside while staying thin. Wallets have been around a long time. Today, the wallet industry is a multi-billion dollar market fueled by new designs and innovation. Here are six unique wallet concepts invented using the five templates in the S.I.T. method. They were created by graduate students at the University of Cincinnati as part of their course requirements in "Applied Marketing Innovation."
Health Care Reform, as the U.S. government sees it, promises lower costs, better access, and improved quality for all. Let's apply a structured innovation method to health care to see if we can achieve some of these goals. For this month's LAB, we will apply Systematic Inventive Thinking to the hospital discharge process.