profit model improvement and innovation: how businesses really make money and win business model...

AGRICULTURE  &  MINING  Industry   SERVICE  Industry  

INFRASTRUCTURE/PLATFORM  Management  

MANUFACTURING  Industry  

       Nespresso’s  PROFIT  MODEL  CLASSIFICATION  SYSTEM  (PMCS)          How  Businesses  Really  Make  Money  and  Win  Business  Model  Compe66ons  in  the  Imita6on  Economy  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hGp://businessmodels.ning.com  &  hGp://twiGer.com/RodKuhnKing  

GENERIC  PROFIT  MODEL         q  Luxury  Spot                (Differen1a1on)  

q Ecosystem  Management  

What  industry  is  the  business  (or  customer)  in?  

AGRICULTURE  &  MINING  Industry   SERVICE  Industry  

INFRASTRUCTURE/PLATFORM  Management  

MANUFACTURING  Industry  

       PROFIT  MODEL  CLASSIFICATION  SYSTEM  (PMCS)    -­‐  By  Industry  (Categories  of  Products/Services)            How  Businesses  Really  Make  Money  and  Win  Business  Model  Compe66ons  in  the  Imita6on  Economy  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hGp://businessmodels.ning.com  &  hGp://twiGer.com/RodKuhnKing  

GENERIC  POFIT  MODELS        

What  industry  is  the  business  (or  customer)  in?  

AGRICULTURE  &  MINING  Industry   SERVICE  Industry  

INFRASTRUCTURE/PLATFORM  Management  

MANUFACTURING  Industry  

       PROFIT  MODEL  CLASSIFICATION  SYSTEM  (PMCS)    -­‐  By  Sector  of  Industry  (Categories  of  Products/Services)      How  Businesses  Really  Make  Money  and  Win  Business  Model  Compe66ons  in  the  Imita6on  Economy  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hGp://businessmodels.ning.com  &  hGp://twiGer.com/RodKuhnKing  

GENERIC  PROFIT  MODELS        

q Healthcare,  Life  Sciences,  and  Pharmaceu?cals  

q Chemicals  Manufacturing  

q Autos,  Trucks,  Trains,          Ships,  and  Other  Vehicles  

q Consumer  Products  Manufacturing  

q Aerospace  &          Defense  

q Food,  Beverage,  and  Tobacco  Manufacturing  

q Mining,  Metals,  Energy,  U?li?es,  and          Environmental  Services  

q Agriculture,  Forestry,  Fishing,          and  Hun?ng  

q  Insurance    

q Food  Services  &  Lodging  

q Construc?on  &  Eng.  

q Healthcare  

q Banking,  Fin.          Markets  &  Services  

q Consumer,  Educa?on,  Real          Estate  and  Public  Services  

q  IT  Services  

q Business  &  Consul?ng  Services  

q Retail  q Media  &  Entertainment  

 Note:  The  above  descrip6on  of  sectors  is  based  on  the  IBBCS;  see  hGp://www.industrybuildingblocks.com/Industry-­‐Groups.php      

q Travel  

What  industry  is  the  business  (or  customer)  in?  Who  is  the  customer-­‐protagonist  (most  dissa?sfied)?  What  is  the  customer  Job-­‐To-­‐Get-­‐Done?  What  is  the  profit  model  of  the  business  (customer)?  What  are  analogs  and  an?logs  of  the  profit  model?  

AGRICULTURE  &  MINING  Industry   SERVICE  Industry  

INFRASTRUCTURE/PLATFORM  Management  

MANUFACTURING  Industry  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hGp://businessmodels.ning.com  &  hGp://twiGer.com/RodKuhnKing  

GENERIC  PROFIT  MODELS        

q Consumer  Products  Manufacturing  q Food,  Beverage,  and  Tobacco  Manufacturing  

q Food  Services  &  Lodging  

q Retail  

 Note:  The  above  descrip6on  of  sectors  is  based  on  the  IBBCS;  see  hGp://www.industrybuildingblocks.com/Industry-­‐Groups.php      

What  industry  is  the  business  (or  customer)  in?  Who  is  the  customer-­‐protagonist  (most  dissa?sfied)?  What  is  the  customer  Job-­‐To-­‐Get-­‐Done?  What  is  the  profit  model  of  the  business  (customer)?  What  are  analogs  and  an?logs  of  the  profit  model?  

                 Nespresso’s  PROFIT  MODEL  CLASSIFICATION  SYSTEM  (PMCS)  -­‐  By  Sector  of  Industry                          How  Businesses  Really  Make  Money  and  Win  Business  Model  Compe66ons  in  the  Imita6on  Economy  

AGRICULTURE  &  MINING  Industry   SERVICE  Industry  

INFRASTRUCTURE/PLATFORM  Management  

MANUFACTURING  Industry  

       PROFIT  MODEL  CLASSIFICATION  SYSTEM  (PMCS)    -­‐  By  Profit  Strategies/Tac6cs/PaGerns                How  Businesses  Really  Make  Money  and  Win  Business  Model  Compe66ons  in  the  Imita6on  Economy  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hGp://businessmodels.ning.com  &  hGp://twiGer.com/RodKuhnKing  

q Asset  Sale  

q Long  Tail   q Open  Source  Collabora?on  q Dona?on   q SoTware  as  a  Service  

q Two-­‐sided  Market  

q Asset  Sale  

q Razor  Blade  (Bait  &  Switch)  

q Subscrip?on  Fee    

q Crowdsourcing  

q Lending/Ren?ng/Leasing  

q Licensing  

q Licensing  

q Brokerage  

q Usage  Fee  

q Asset  Sale  

q Adver?sing  q Co-­‐crea?on  

q Usage  Fee  

q Mul?-­‐sided  Market  PlaXorm  

q Ad  Network  

q Outsourcing  

q Ecosystem  Management  

q Direct  Sale   q  Indirect  Sale  

q Offline  

q Online  

q Discount  

q Tiered  Payment  

q Auc?on  

q Facilitated  Network  

q Brand  Mul?plier  

q Reverse  Auc?on  

q Customiza?on  

q Cross-­‐subsidiza?on  q Franchise  

q Product  Leadership  

q Automa?on  (Self-­‐service)  

q Gamifica?on  

q B2C   q B2B  

q Pre-­‐Payment  

q Fair            Pricing  

q Community  (Hub)  

q On  Demand  

q DIY  

q Unbundling   q Unbundling  q Bundling   q Free  

GENERIC  PROFIT  MODELS        

q P2P  PlaXorm  

q Landlord  

q Leasing  

q 2nd  Hand  

q  Luxury  Spot                (Differen1a1on)  

q  Disrup1on  Spot                  (Low  Cost;  Lean)  

q  Blue  Ocean                  (Value  Innova1on)  

q Creator  

q Distributor   q Broker  

q  Sweet  Spot  

q Product  Extension  

q Opera?onal  Excellence  

q Frac?onaliza?on  q Customer  In?macy   q Affiliates  

What  industry  is  the  business  (or  customer)  in?  Who  is  the  customer-­‐protagonist  (most  dissa?sfied)?  What  is  the  customer  Job-­‐To-­‐Get-­‐Done?  What  is  the  profit  model  of  the  business  (customer)?  What  are  analogs  and  an?logs  of  the  profit  model?  

q Shared  Value  

AGRICULTURE  &  MINING  Industry   SERVICE  Industry  

INFRASTRUCTURE/PLATFORM  Management  

MANUFACTURING  Industry  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hGp://businessmodels.ning.com  &  hGp://twiGer.com/RodKuhnKing  

q Asset  Sale  

q Asset  Sale  

q Outsourcing  

q Ecosystem  Management  

q Direct  Sale  

q Offline  

q Online  

q Product  Leadership  

q Automa?on  (Self-­‐service)  

q Pre-­‐Payment  

q Community  (Hub)  

GENERIC  PROFIT  MODEL        

q Shared  Value  

q Product  Extension  

q Customer  In?macy  

What  industry  is  the  business  (or  customer)  in?  Who  is  the  customer-­‐protagonist  (most  dissa?sfied)?  What  is  the  customer  Job-­‐To-­‐Get-­‐Done?  What  is  the  profit  model  of  the  business  (customer)?  What  are  analogs  and  an?logs  of  the  profit  model?  

q  Luxury  Spot                (Differen1a1on)  

q Brand  Mul?plier  

       Nespresso’s  PROFIT  MODEL  CLASSIFICATION  SYSTEM  (PMCS)    -­‐  Profit  Strategies/Tac6cs/PaGerns                                How  Businesses  Really  Make  Money  and  Win  Business  Model  Compe66ons  in  the  Imita6on  Economy  

q Bundling  

Disrup1on  Spot  

Luxury  Spot  

Strategic  Choice  

Sweet  Spot  Profit  Model  

Blue  Ocean  Profit  Model  

Luxury  Spot  (“Differen?a?on”)  

Profit  Model  

DisrupLon  Spot/Lean  (“Low  Cost”)  Profit  Model  

ILLUSTRATION  OF  THE  4  GENERIC  PROFIT  MODELS  

Trade-­‐off  Map  of  Cost  vs.  Revenue    

(-­‐):  PAIN:  Cost  

(+):  DELIGHT:  Revenue  

Key  Profitable  Model    Unprofitable  Model  

“Insane”  Happiness  (Value)  Ideal  Final  Result  (IFR)  Infinite  Shared  Happiness    

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hGp://businessmodels.ning.com  &  hGp://twiGer.com/RodKuhnKing  

Market  Segment  (Job-­‐To-­‐Get-­‐Done/Goal;  Product/Tool):  ………………..…..……..…….…………  ……………………………………………………………………….…………….………….……………….  

Disrup1on  Spot  

Luxury  Spot  

Strategic  Choice  

Sweet  Spot  Profit  Model  

Blue  Ocean  Profit  Model  

Luxury  Spot  (“Differen?a?on”)  

Profit  Model  

DisrupLon  Spot/Lean  (“Low  Cost”)  Profit  Model  

GENERIC  PROFIT  MODEL  of  Nespresso  

Trade-­‐off  Map  of  Cost  vs.  Revenue    

(-­‐):  PAIN:  Cost  

(+):  DELIGHT:  Revenue  

“Insane”  Happiness  (Value)  Ideal  Final  Result  (IFR)  Infinite  Shared  Happiness    

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hGp://businessmodels.ning.com  &  hGp://twiGer.com/RodKuhnKing  

Market  Segment  (Job-­‐To-­‐Get-­‐Done/Goal;  Product/Tool):  Drink  coffee    

Key  Profitable  Model    Unprofitable  Model  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h^p://businessmodels.ning.com  &  h^p://twi^er.com/RodKuhnKing  

VALUE  CREATION  MODEL  

VALUE  PROPOSITION  MODEL  

PROFIT  MODEL  

ENVIRONMENT  

 PROFIT  MODEL  STORYTREE                                        For  Nespresso  

Generic  Profit  Model  Management:  Visualize  the  Abrac?veness  of  Your  Profit  Model    

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h^p://businessmodels.ning.com  &  h^p://twi^er.com/RodKuhnKing  

VALUE  CREATION  MODEL  

VALUE  PROPOSITION  MODEL  

PROFIT  MODEL  

 PROFIT  MODEL  STORYTREE                                        For  Nespresso  

Indu

stry  Ecosystem

 (IE):  Sup

ply  

Market  E

cosystem

 (ME):  D

eman

d  

Key  Trends  &  Complementors  (KTC):  PESTLIED  (-­‐/+)  

Macro-­‐Economic  Influencers  (MEI):  Global  Economy  

Generic  Profit  Model  Management:  Visualize  the  Abrac?veness  of  Your  Profit  Model    

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h^p://businessmodels.ning.com  &  h^p://twi^er.com/RodKuhnKing  

VALUE  CREATION  MODEL  

VALUE  PROPOSITION  MODEL  

PROFIT  MODEL  

Generic  Profit  Model  Management:  Visualize  the  Abrac?veness  of  Your  Profit  Model    

 PROFIT  MODEL  STORYTREE                                        For  Nespresso  

Bargaining  Pow

er  of  Sup

pliers  

Bargaining  Pow

er  of  C

ustomers  

Threat  of  New  Entrants  

Threat  of  SubsLtute  Products  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h^p://businessmodels.ning.com  &  h^p://twi^er.com/RodKuhnKing  

VALUE  CREATION  MODEL  

VALUE  PROPOSITION  MODEL  

Inputs/Partners  q Coffee  Machine  Manufactur-­‐

er  q Coffee  q Coffee  Growers    

Internal  Resources  q Employees  q Patents/IP  q Brand  q Plant  (for  Producing  Pods)    

Processes/AcLviLes  q Produc6on  q Marke6ng/Branding  q Distribu6on/Logis6cs    

Product/Value  ProposiLon  q Nespresso  Coffee  Machine  q Nespresso  Pods  

q Best  Quality  Coffee              at  Home/in  Office  

Channels  &  RelaLonships  q Retail  (Machines  Only)  q Nespresso.com  q Nespresso  Bou6ques  q Mail  Order;  Call  Center  q Nespresso  Club  

Customer/Job-­‐To-­‐Get-­‐Done  q Luxury  Spobers  (High  Enders)  

Who  Are  Struggling  to  Find  High  Quality  Coffee  at  Home/Office  

q Drink  High  Quality  Coffee            at  Home/in  Office  

Cost:  (Structure/Metrics)  High  Cost  q Supplies/Inputs  q Employees/IP  q Machinery/Produc6on  q Marke6ng/Distribu6on  

Revenue:  (Streams/Metrics)  High  Revenue  q Sale  of  Coffee  Machine  q Sale  of  Pods/Capsules  q Sale  of  Other  Machine  

Accessories  

PROFIT  q High  Profit  Margin        

 PROFIT  MODEL  STORYTREE                                        For  Nespresso  

PROFIT  MODEL  

Strategic  Profit  Model  Management:  Visualize  Your  Profit  Model    

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h^p://businessmodels.ning.com  &  h^p://twi^er.com/RodKuhnKing  

VALUE  CREATION  MODEL  

VALUE  PROPOSITION  MODEL  

Inputs/Partners          

Internal  Resources          

Processes/AcLviLes          

Product/Value  ProposiLon          

Channels  &  RelaLonships          

Customer/Job-­‐To-­‐Get-­‐Done          

Cost:  (Structure/Metrics)          

Revenue:  (Streams/Metrics)          

PROFIT          

PROFIT  MODEL  STORYTREE  …………………………………………………..  

PROFIT  MODEL  

Strategic  Profit  Model  Management:  Visualize  Your  Profit  Model    

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h^p://businessmodels.ning.com  &  h^p://twi^er.com/RodKuhnKing  

VALUE  CREATION  MODEL  

VALUE  PROPOSITION  MODEL  

Inputs/Partners  q What  material,  informa?on,  

and  capital  are  needed  prior  to  launching  product?  

q What  partners/alliances  are  needed?  

Internal  Resources  q Who  are  team  members?  q What  hard  assets  (equip-­‐

ment/infra’)  will  are  needed  prior  to  launching  product?  

q What  technology  is  needed?    

Processes/AcLviLes  q What  are  development  

ac6vi6es  that  must  be  completed  prior  to  launching  product/service/tool?  

Product/Value  ProposiLon  q What  product/service/tool  will  

customer  use  and/or  buy?  q Why  will  customer  buy  product/

service/tool?    

Channels  &  RelaLonships  q How  will  product/service/tool  

be  delivered  to  customer?  q What  sort  of  rela6onship  will  

business  have  with  customer?  q How  will  customer  be  engaged,  

acquired,  and  retained?  

Customer/Job-­‐To-­‐Get-­‐Done  q What  customer  will  use  and/or  

buy  product/service/tool?  q What  job  is  customer  trying  to  

get  done?  What  are  obstacles?  q What  is  customer  pain?  q What  is  customer  delight?      

Cost:  (Structure/Metrics)  q At  what  price  will  customer  

buy  product/service/tool?  q What  effort  will  customer  

expend  in  buying  product?  q What  is  customer  acqu.  cost?  q What  is  annual  total  cost?  

Revenue:  (Streams/Metrics)  q How  soon  will  customer  buy?  q How  many  and  oTen  will  

customer  buy?    q How  will  customer  pay?  q What  will  be  annual  total  

revenue?  

PROFIT  q What  will  be  the  annual  

profit  margin?  q What  will  be  the  annual  

profit?      

PROFIT  MODEL  STORYTREE  …………………………………………………..  

PROFIT  MODEL  

Strategic  Profit  Model  Management:  Ques?ons  

Note:  The  above  ques6ons  are  based  on  John  Mullins  and  Randy  Komisar’s  book,  “Gefng  to  Plan  B”  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h^p://businessmodels.ning.com  &  h^p://twi^er.com/RodKuhnKing  

VALUE  CREATION  MODEL  (“Build”)  

VALUE  PROPOSITION  MODEL  (“Discover”;  “Plan”)  

Inputs/Partners  q Materials/Supplies  q  Informa6on  q  Investment  Capital  q Strategic  Alliances/Partners  q Co-­‐creators/Contractors    

Internal  Resources  (Physical/Intellectual/Emo?onal/Spiritual  Resources)  q Employees  q Machinery/Infra’  Facili6es  q Technology/IP  q Brand/Culture  

Processes/AcLviLes  q Discover  q Plan  q Build  q Measure  q Learn  

Product/Value  ProposiLon  q Value  Proposi6on  Requirements  q Value  Proposi6on  Statement  q Product/Service/Tool:  Features  

Channels  &  RelaLonships  q Online  Channels  q Offline  Channels        

Customer/Job-­‐To-­‐Get-­‐Done  q Customer-­‐Protagonist  q Cri6cal  Problem  q Task/Job-­‐To-­‐Get-­‐Done  q Constraints/Obstacles  q Success  Criteria  (Outcomes)    

Cost:  (Structure/Metrics)  q Cost  of  Customer  Acquisi6on  q Total  Cost  q Opera?ng  Cost  q Working  Capital      

Revenue:  (Streams/Metrics)  q E:  Engagement  q A:  Acquisi6on  q A:  Ac6va6on  q R:  Reten6on  q R:  Referral  q R:  Revenue  

Value:  Profit  q High  Profit  Margin  (Price):  

Low  Volume;  Low  Velocity  q Low  Profit  Margin  (Price):  

High  Volume;  High  Velocity  q Gross  Margin  q Customer  Life6me  Value  

PROFIT  MODEL  (“Measure”)  

Profit  Model  Management  (Checklist)     PROFIT  MODEL  STORYTREE  

(“Learn”)  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h^p://businessmodels.ning.com  &  h^p://twi^er.com/RodKuhnKing  

VALUE  CREATION  MODEL  

VALUE  PROPOSITION  MODEL  

PROFIT  MODEL  

ENVIRONMENT  

PROFIT  MODEL  STORYTREE  …………………………………………………..  

Generic  Profit  Model  Management:  Visualize  the  Abrac?veness  of  Your  Profit  Model    

Past    Profit  Model  

Present  Profit  Model  

Future  Profit  Model  

Profit  Model  (PM)  PLAN    

Profit  Model  Design  Toolkit  for  Thriving  in  a  Vola?le,  Uncertain,  Complex,  and  Ambiguous  (VUCA)  Environment  

Profit  Model  

(StoryTree)  

Profit  Model  

(StoryTree)  

Profit  Model  

(StoryTree)  

Industry  Ecosystem  

Market  Ecosystem  

Profit  Model  (StoryTree)  

Macro-­‐Economic  Influencers  

Key  Trends  &  Complementors  

Mission/Vision/Purpose/Ideals/  Ideal  Final  Result  For  Profit  Model  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h^p://businessmodels.ning.com  &  h^p://twi^er.com/RodKuhnKing  

Past    Profit  Model  

Present  Profit  Model  

Future  Profit  Model  

Nespresso’s  Profit  Model  (PM)  PLAN    

Profit  Model  Design  Toolkit  for  Thriving  in  a  Vola?le,  Uncertain,  Complex,  and  Ambiguous  (VUCA)  Environment  

Profit  Model  

(StoryTree)  

Profit  Model  

(StoryTree)  

Profit  Model  

(StoryTree)  

Industry  Ecosystem  

Market  Ecosystem  

Profit  Model  (StoryTree)  

Macro-­‐Economic  Influencers  

Key  Trends  &  Complementors  

Mission/Vision/Purpose/Ideals/  Ideal  Final  Result:  “A  Passion  for    Quality,  Innova1on  and  Privileged  Rela1onships    With  Cus-­‐  tomers”  

 #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h^p://businessmodels.ning.com  &  h^p://twi^er.com/RodKuhnKing  

Contact  

Dr.  Rod  Kuhn  King  rodkuhnhking@gmail.com    VDD  University  for  Profit  Model  Design  &  Management  hGp://businessmodels.ning.com  hGp://twiGer.com/RodKuhnKing    

“No  Entrepreneur  LeT  Behind  (NELB)”  #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hGp://businessmodels.ning.com  &  hGp://twiGer.com/RodKuhnKing