business models do fail 10 examples - 5 reasons
DESCRIPTION
Business Models do fail 10 examples - 5 reasons by Elton-Pickford.comTRANSCRIPT
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Business Models Do Fail10 examples - 5 reasons
10 Business Models that Failed
5 Reasons of Failure Why do Business Models Fail ?
Part 1
Part 2
Introduction
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Business Models do Fail10 examples - 5 reasons
INTRODUCTION
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Achievement: January 2013
Why this paper ?
This document aims at identifying the root causes of Business Model failures. This analysis is supported by several real cases and constitutes a practical ground to explore the utilization of the Business Canvas (Alexander Osterwalder) and the Effervescence Framework (Yannick Mériguet - Elton-Pickford).
Elton-Pickford is striving to provide organizations with efficient ways to explore new Business Models and publishes regularly case studies on Innovative Business Models. This document counter-balances the regular publications on successful Business Models by exposing failures as business reality too.
We are proud to offer you this study which we invite you to share and comment with passion.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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PublicationThis document is provided under the terms of Creative Common License BY-NC-SA. The modification and the distribution of this copyrighted work for noncommercial use only are authorized under the reference: BUSINESS MODELS DO FAIL - 10 EXAMPLES - 5 REASONS.
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Achievement: January 2013
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Understand the Elton-Pickford Framework
SCENARIO
What are the specific organization objectives (Growth, Performance, Positioning, Differentiation, etc.). What is the internal context of the company (Specific competencies, Tension, M&A, Start Up)? These elements define the foundation of the targeted strategy.
BUSINESS MODEL
What are the fundamental characteristics of the targeted Business Model? How well do they fit the context and scenario specificity & uniqueness? How do they optimize the company strategy?
CONTEXT
The context highlights the critical elements to take into account in the external context of the company. What are the key market characteristics, socio-economic environment, consumer habits, etc. ? And how can it influence the Go To Market Strategy of the organization.
Copyright Elton-PickfordEffervescence FrameworkCreated by Yannick Meriguet, Associated at Elton-Pickford
SCENARIOOF THE ORGANIZATION
CONTEXT
BUSINESS MODEL
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Customer Segments (CS)The Customer Segments building block defines the different groups of people or organization an enterprise aims to reach and serve. Different types of customer Segments exist: mass market, niche market, segmented, etc.
Understand the Business Model Canvas
Channels (CH)The Channels building block describes how a company reaches its Customer Segments to deliver a Value Proposition. Channels can be direct or indirect: internet platform, sales forces, store, retailers, etc.
Value Proposition (VP)The Value Proposition building block describes the bundle of products and services that create value for a specific Customer Segment. It solves a customer problem or satisfies a customer need. The Value Proposition can be characterized by its newness, performance, price, etc.
Customer Relationships (CR)The Customer Relationships building block describes the type of relationships a company establishes with specific customer segments. Customer Relationships may be driven by different motivations: customer acquisition, customer retention and boosting sales. We can distinguish between several categories of Customer Relationships: personnal assistance, self-service, co-creation, etc.
Revenue Streams (R€)The Revenue Streams building block represents the cash a company generates from each Customer Segment. There are several way to generate Revenue Streams: asset sale, subscription, usage fee, etc.
Created by Alexander Osterwalder, Business Model Generationwww.businessmodelgeneration.com
CSCRVPKAKP
C€ R€
KR CH
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
www.businessmodelgeneration.com
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Key Ressources (KR)The Key Resources building block describes the most important assets required to make a business model work. Key Resources can be characterized as physical, intellectual, financial, human, etc.
Key Partners (KP)The Key Partners building block describes the network of suppliers and partners that make the business model work. Reasons behind partnering may be diverse: Optimization and economy of scale, acquisition of particular resources and activities, reduction of risk and uncertainty, etc.
Cost Structure (C€)The Cost Structure describes all costs incurred to operate a business model. They can be cost or value driven and be classified as fixed or variable costs.
Key Activities (KA)The Key Activities building block describes the most important things a company must do to make its business model work (development, maintenance, production, etc.)
Understand the Business Model Canvas
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Created by Alexander Osterwalder, Business Model Generationwww.businessmodelgeneration.com
www.businessmodelgeneration.com
10 Business Models that Failed
Part 1
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Copainsdavant.comInternet2009
2xmoinscher.comInternet2012 Encarta
Publishing2009
IridiumTelecom1998
SpanairAirlines2012
KodakChemistry, digital2012
Blockbuster VideoMovie rentals2010
MoulinexConsumer Electronics2009
BicPerfume1991
VogicaHousehold furnishing2010
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
1copainsdavant.com
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Industry
Internet - Social web
Date of creation2001
CorporationBenchmark Group
Country of OriginFrance
Case’s period2001 - 2012
Market typeMass market
Revenues(2009) Group : 17 M€ / Website : 3,5 M€
Number of Employees(Group) 150
Scenario HighlightsFirst mover advantage
Search of profitability
Context HighlightsGrowing internet usage
Nationwide efficient broad band infrastructure
Social web growing interest
New competitors
Business Model HighlightsSocial network
Connect with past friends on internet
Freemium / premium
Reasons of FailureCustomer segment not buying a paid service
Likelihood of profitability
Emerging competition
copainsdavant.com
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Initial value proposition
Created in 2001, "Copains d'avant" is the Facebook made in France, and enable to re-connect with past classmates, publish school promotion pictures and communicate via internal mailing system. The company is quickly becoming the social web leader in France.
Deployed strategy
After 3 years of existence, with a full free access, the company is searching a path to profitability. In 2004, the decision is made to monetize the site, and the internal mailing system along with additional functionalities are now provided as a paid service. Facing these new constraints, site frequentation is declining and the brand image of the company is hurt. If the value proposition is still attractive for users, they are not ready to pay for such services. The internal mailing system is the cornerstone of the interaction between schoolmates, and if too much constraints (price) exist, they stop to use it, loosing the benefits of the entire value proposition.
Things get worst : the growing Facebook platform is penetrating the European market with a modern design, increased functionalities and at no cost for the user.
New pivot
In 2007, the company acknowledges the failure of its business model, and re-open the full service for free. Revenues will be now generated by advertising. Additional services are created, and in 2010 the management of the company is changed and re-think its entire positioning and image.
copainsdavant.com
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO CONTEXT
BUSINESS MODEL
SOCIAL NETWORK
RE-CONNECT WITH PAST CLASSMATES ON INTERNET
FREEMIUM / PREMIUM
FIRST MOVER ADVANTAGE
SEARCH FOR PROFITBILITY
INTERNET USAGE PENETRATION
NATION WIDE EFFICIENT INTERNET INFRASTRUCTURE DEPLOYED
EMERGING SOCIAL WEB
NEW ENTRANTS
BROAD BAND CONNECTION
FACEBOOKSince 2004
copainsdavant.com
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
www.businessmodelgeneration.com
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La Tribune, Le Français CDA résiste toujours, october 2010Capital, Petits meurtres entre amis chez CDA, june 2010
PAID SERVICE
MAINTENANCE
+
PLATFORM PROMOTION
EMAIL :
1 MILLION PER DAY
SOCIAL NETWORK
RE-CONNECT WITH
FORMER CLASSMATES
FREE SERVICE
ADVERTISING*
MASS PERSONALIZATION
COPAINSDAVANT.COM
SALES FORCES
ADVERTISING CAMPAIGN
MASS MARKET
OLD USERS
30 - 40 YEARS
13 MILLIONS OF UNIQUE
VISITORS / MONTH
ADVERTISINGEFFICIENT ADVERTISING
SPACE
copainsdavant.com
* Since 2007
PLATFORM
INFRASTRUCTURE
HUMAN RESOURCES
Studio Vitamine, CDA : Nouvelle version bêta, february 2012
Source :
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
22xmoinscher.com
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Internet - Marketplace
2001
3 Suisses
France
2001 - 2012
Mass Market
(2007) 3,3 M€
(Website) 35
Numerous emergent competitors
Growing Internet Usage
Nationwide efficient broad band infrastructure
Cost reduction strategy for margin recovery
Market Place
Transaction Markup
Buy/sell - Business to Consumers
Secured Transactions
Cost reduction program targeting a core activity of the business (Management)
Decreasing traffic (Model viability)
Emerging competition (Environment)
2xmoinscher.com
Industry
Date of creation
Group
Country of Origin
Case’s period
Market type
Revenues
Number of Employees
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Scenario Highlights
Context Highlights
Business Model Highlights
Reasons of Failure
Second chance
The customer acquisition cost was becoming superior to the customer Lifetime value, making the business unprofitable.
In march 2012, the company communicates is going bankrupt, few months later Uncle Henry buys it and plans to re-open the platform the 15th of October 2012. Stay Tune...
Initial value proposition
Created in 2001, 2Xmoinscher is an internet platform that connect consumers (Buy/sell) along with professional (Sell). Users can buy or sell brand new or second-hand products.
During the transaction, 2Xmoinscher is positioned as trusted partner by securing and holding the payment between parties. After the transaction is closed without litige the cash transfer is proceed.
The revenue model is based on a transaction fees after completion of the sales.
Competition & investments
While the company is communicated breaking event after 2 years, it’s facing important economic pressures between 2008 and 2012 generating eventually important financial losses.In addition, Ebay, PrimeMinister, Amazon, LeBonCoin create a highly competitive market which will knock about the sustainability of the business itself.
At the same time, the company has embarked in a cost reduction program and curbed their marketing investments. It will have a huge impact on the site attractiveness, decreasing significantly the incoming traffic, and the generated revenues. Presence of large fixed costs (platform) will lead to a rapid margin erosion and eventually financial loss. 2Xmoinscher learned the hard way the specificity of a volume business.
2xmoinscher.com
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO CONTEXT
BUSINESS MODEL
MARKET PLACE
BUY / SELL NEW AND SECOND END PRODUCTS
SECURED TRANSACTION
TRANSACTION FEES
EMERGENCE OF SIZABLE COMPETITION
GROWING INTERNET USAGE
NATIONWIDE EFFICIENT BROAD BAND
INFRASTRUCTURE
COST REDUCTION PROGRAM FOR MARGIN RECOVERY
POSITIONNING AS A TRUSTED PARTNER
DECREASE MARKETING BUDGET
Business Model Sustainability is based on sustaining traffic vouching generation of revenues.
REDUCED INCOMING SITE TRAFFIC
2xmoinscher.com
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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PLATFORM
MAINTENANCE &
DEVELOPMENT SELL / BUY & GENERATE
REVENUE MERCHANTS & CONSUMERS
BUYERS - MASS MARKET
BUY HALF THE PRICE (NEW
& SECOND HAND
PRODUCTS)
PLATFORM
MARKETING & PROMOTION
ADVERTISING
2xmoinscher.com
Journal du Net, Fermeture 2xmoischer, march 2012Tomsguide, 2xmoinscher, Actualité n°2888
Journal du Net, Une page se tourne, 2xmoinscher ferme ses portesPC Impact, 2xfoismoinscher fait ses adieux, News n°69448
PLATFORM 2XMOINSCHER
TRUST PARTNERS WITH
SECURED
TRANSACTIONS
HUMAN
RESOURCES
HUMAN RESOURCES
TRANSACTION FEES
ON COMPLETED SALES
Source :
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
www.businessmodelgeneration.com
3Encarta - Microsoft
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Publishing / digital Encyclopedia
1993
Microsoft
USA
1993 - 2009
Mass Market
NC
NC
Model viability
Differentiation through content quality
Multi platform products (CD, DVD, online)
Improvement of web content in general (site, blog, media etc.)
New Competitor enters the market with free content and a collaborative
platform
Multimedia Encyclopaedia
Rich content of high quality
Sales of CDs, DVDs etc. and online access subscription
Profitability of products (Model viability)
Emerging competition (Environment)
Business Model not developed further (Company culture)
Encarta
Industry
Date of creation
Group
Country of Origin
Case’s period
Market type
Revenues
Number of Employees
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Scenario Highlights
Context Highlights
Business Model Highlights
Reasons of Failure
Fierce competition
These actions have no impact on the Customer’s behaviour. In 2009, Encarta has a low market share of 1.27%, against 97% for Wikipedia.
At this time, Wikipedia has more then three millions articles in English. As a consequence, Microsoft decides not to continue its business model and exits the Market end of 2009.
Initial value proposition
Started in 1993, Encarta proposed a digital Encyclopedia available on multiple technology carriers (CD, DVD, online) and in multiple languages. This product by Microsoft established itself very quickly as the Market leader, competing with its 36'500 articles (2007) against large multimedia corporations.
Change of habits
In 2001, Wikipedia enters the market. The content is created and maintained by the users themselves on a free basis, which continuously improves the quality of the platform. Two years later, this platform overtakes Encarta by the number of articles.
As a reaction, Encarta improves the content actuality and proposes a free light access to a limited amount of articles.
Encarta
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO CONTEXT
BUSINESS MODEL
UNIVERSAL MULTIMEDIA ENCYCLOPAEDIA
RICH AND HIGH QUALITY CONTENT
SALES OF DIGITAL PRODUCTS, SUBSCRIPTION FOR ONLINE ACCESS
IMPROVEMENT OF WEB CONTENT IN GENERAL (SITE, BLOG, MEDIA,
ETC.)
ENTRY OF A COMPETITOR WITH A FREE AND COLLABORATIVE
BUSINESS MODEL
MODEL VAIBILITYREVENUE STREAMS /
MANUFACTURING COSTS
DIFFERENTIATION THROUGH CONTENT QUALITY
MULTI-PLATFORM PRODUCTS (CD,DVD, Online)
35 000 ARTICLES26 000 MEDIAS
Encarta
HIGH CAPABILITY TO CREATE CONTENT VERY
RAPIDLY
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
CSCRVPKAKP
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MULTIMEDIA
ENCYCLOPEDIA MASS MARKET
Première, Encarta, coulé par Wikipédia, ferme définitivement ses pages, march 2009NouvelObs, L’encyclopédie en ligne Encarta va fermer, march 2009Clubic, Microsoft fermera Encarta cette année, march2009
WEB PLATFORMHUMAN RESOURCES
HUMAN RESOURCESSALES OF DIGITAL PRODUCTS
Encarta
RICH AND HIGH QUALITY
CONTENT
CD / DVD
SALES OF SUBSCRIPTION FOR ONLINE ACCESS
CONTENT PUBLISHING
PROMOTION OF THE
ENCYPLOPAEDIA
Source :
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
www.businessmodelgeneration.com
4Iridium - Motorola
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Telecom Services
1991
Motorola
USA
1991 - 1998
Mass Market
NC
NC
Take over Market leadership
Deploy a large scale network
Manage the world wide phone network
Win a major technological challenge
Development of competition
Alternative emerging Technologies
Cost reduction of Telecom infrastructure
Rising customer demand
Call from anywhere in the world
Terminal sales
Subscription sales
Profitability of the value proposition (Model viability)Emerging competition (Environment)Technological development (Environment)Project management (Management)
Iridium
Industry
Date of creation
Group
Country of Origin
Case’s period
Market type
Revenues
Number of Employees
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Scenario Highlights
Context Highlights
Business Model Highlights
Reasons of Failure
Bankruptcy
In 1998, Iridium starts and 9 months later, the company goes into bankruptcy. Customers face technical failures, the product doesn’t work in cars or buildings, as the usage is only possible outside, requiring a open connection to the satellite array. Moreover, the value proposition is very costly: access costs 7 USD per minute against 50 cents for a traditional carrier. To this adds the acquisition of the phone for more than 3’000 $.
Initial value proposition
In 1991, Iridium starts building a mobile phone system which allows communication from anywhere. This system would cover any cities, any agglomerations and any square meter on earth, being at sea, in the jungle, in the mountains.The system, developed by Motorola, bases on an array of satellites displaced around the globe.
This phenomenal project costs app. 6bn USD, and includes the launch of 15 rockets and more than 75 satellites. It started its operation in 1998.
Evolution of the technological environnement
During the 8 years of project work, mobile communication developed quickly. Telco operators deployed terrestrial networks, thus covering the main access zones. In parallel, the costs of communication and of acquiring the cell phones have dropped considerably.
iridium
Iridium
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO CONTEXT
BUSINESS MODEL
CALL FROM ANYWHERE IN THE WORLD
SALES OF PHONES
SALES OF SUBSCRIPTIONS
RISE OF COMPETITION
NEW EMERGING TECHNOLOGIES
COSTS DECREASE OF THE TELECOM INFRASTRUCTURE
INCREASE IN CUSTOMER DEMAND
TO BECOME THE WORLD LEADER ON THE TELECOM MARKET
TO DEPLOY A LARGE SCALE NETWORK
TO MANAGE THE WORLD PHONE NETWORK
TO WIN A MAJOR TECHNOLOGICAL CHALLENGE
Development of terrestrial networks
The initial customer segment is quite
restricted. A mass Market is developing shortly after
the Launch
Iridium
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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MASS MARKET
TELECOM NETWORKS
75 SATELLITES
FINANCIAL
RESOURCES
6bn USD
NETWORKS &
INFRASTRUCTURE
15 ROCKETS75 SATELLITES
NETWORK
DEVELOPMENT AND
MAINTENANCE
Libération, Iridium menace de sonner dans le vide, March 2000Steve Blank, No Business Plan Survives First Contact With A Customer, November 2011Stéphanie Legrand, Mémoire de recherche IAE de Lille, 2000
Iridium
COMMUNICATION: 7$ USD p. min.
SALES OF PHONES: 3’000$ USD
PHONE FROM
ANYWHERE
Source :
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
www.businessmodelgeneration.com
5Spanair
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Airline carrier – Transportation
1986
IEASA (80,1%) - SAS AB (19,9%)
Spain
1986 - 2012
Mass Market
(2009) 670 M€
(2008) 4 000
High variable costs
Financial tension (debts)
Cost reduction strategy based mainly on fixed costs
Airplane crash in 2008
High competitive Market
New entrants
Cost of fuel
Security norms & constraints
High Customer’s sensitivity on security policies
General airplane transportation
Main destinations: Spain, Europe, Latin America
Massive increase in fuel costs (Environment)
High competitive forces (Environment)
Costs reduction with major impact on the main value proposition
(Management)
Spanair
Industry
Date of creation
Group
Country of Origin
Case’s period
Market type
Revenues
Number of Employees
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Scenario Highlights
Context Highlights
Business Model Highlights
Reasons of Failure
A new company
Spanair starts in Spain in 1986. Its first flights are conducted in 1988. Quickly, Spanair develops to a major player in air transportation in Spain and soon gains a market share of 22%, directly behind the main player Iberia. Even though the main flights are domestical flights, the company proposes European flights with more than 100 destinations.
At the end, Spanair transported more than 11 mio. passengers yearly, with more than 200 daily flights. During its whole history, the carrier transported app. 104 mio. passengers.
The last flight
Meanwhile, new security rules have been introduced, requesting more stringent maintenance procedures and quicker renewal of airplanes. This impacts highly on the fix costs situation. On the other hand, consumers are getting more critical, after different air crashes that happened during this period. Many consumers start to look at security & maintenance ranking of the airlines.
On August, 20th 2008, flight nbr. 5022 misses the take-off and explodes on the ground. Most passengers die immediately. The following investigations reveal some neglected maintenance elements, showing weaknesses in the maintenance programs, as well as consequential impacts of over aging airplanes.
Following this, Spanair looses the main part of its Customer base. A destroyed image and growing debts end in the closure of all activities in Jan. 2012
A high tension Market
After 2000, the air transportation Market becomes more competitive. Notably, new entrants destabilize the market forces through new business models based on low price value propositions. First financial losses appear here and there. The following years are marked by an important rise of fuel cost, a sensitive key element of the business model, which impacts on the margin dramatically. This second element adds to the already very tense financial situation of most companies.
During Summer 2008, the management starts a cost reduction program aiming at reducing head count by 25%, stopping app. 10 destinations and grounding of 15 airplanes.
Spanair
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO CONTEXT
BUSINESS MODEL
MAJOR
DESTINATION : SPAIN, EUROPE, LATIN AMERICA
HIGHLY COMPETITIVE MARKET
NEW ENTRANTS
FUEL PRICE FLUCTUATION
CONSTRAINTS THROUGH NEW SECURITY NORMS
GROWING CUSTOMER AWARENESS OF SECURITY
RULES
MAJOR VARIABLE COSTS
FINANCIAL DIFFICULTIES, DEBTS
FIXES COSTS REDUCTION
AIRPLANE CRASH IN 2008
Many Spanish and Foreign companies
Major impact on margin
Spanair
Fuel
Loss of trust from many customers
LOW-COST
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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FLIGHT PROMOTION
SALES OF FLIGHT TICKETS
FUEL
AIRPLANES (75)
AIRPORTS TAXES
INDIVIDUALS
PROFESSIONALS
QUICK TRIPS TO SPAIN OR
ABROAD
TRAVEL AGENCY
INTERNET SITE OF SPANAIR
**
Source :Le Monde, La compagnie aérienne Spanair en faillite, tous ses vols annulés, January 2012,Air Journal, Spanair en faillite, January 2012,L’expansion, Spanair en faillite, January 2012.
Spanair
AIRPORTSREASSURE CUSTOMERS
ON FLIGHT SECURITY
AIRPLANE ACQUISITION
AIRPLANE
MAINTENANCE
HUMAN RESOURCES
PILOTS
AIRPLANE
MAINTENANCE
PASSENGER
TRANSPORTATION
TRAVEL AGENCIES
AIR ALLIANCE
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
www.businessmodelgeneration.com
6Eastman Kodak Company
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Chemicals – Manufacturing of photographic films
1881
George Eastman
USA
1930 - 2012
Segmented Markets (Individuals + Professionals)
(1995) 15 Mds $ - (2011) 6 Mds $
(1954) 73 000 - (2011) 7 600
Work against Market evolution
Reinforce existing business model
Introduce as many patents as possible to block the emerging digital Market
Technology developments strongly enabling digital photography
Photography is getting a mass product for individuals
Rising customer demand
New competitors in phase with changing Customer requirements
Manufacturing of photographic films
High margins
Change in behaviour: Camera as a consumer good for mass markets
(Environment)
Technology development: digital revolution (Environment)
Strong focus on Margin protection (Company culture)
Eastman Kodak Company
Industry
Date of creation
Founder
Country of Origin
Case’s period
Market type
Revenues
Number of Employees
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Scenario Highlights
Context Highlights
Business Model Highlights
Reasons of Failure
Collapse
At the end of the 80’s, first competitors enter the market with digital cameras. Between 1990 and 1999, Kodak introduces about 1’000 patents in digital photography, but never achieves its final goals, as digital photography is closer to Electronics than traditional photography.
In less than 10 years, the company will reduce workforce by 63’000. Handicapped by its own past, Kodak is not able to change direction, and Sony, Canon or Fuji will cause the collapse of Kodak in 2012.
Technological Innovation
In 1880, Georges Eastman, founder of Kodak, invents a special coating machinery that enables the mass production of dry films for photography. For a hundred years, the company will dominate the world of cinema and photography.
Kodak bases the growth strategy on the film production and generates record sales growth and huge margins (app. 80%). In 1981, Turnover of Kodak achieves 10 bn USD.
Change in Customer requirements
In the early 80’s, Kodak invents digital photography. However, the company is not determined to develop further this technological innovation. Management estimates that the latter could be a major threat to the actual activity, the sale of argentic-based films.
The organization got used to very high margin, this for years and years. As a reaction, it tried to protect the existing business instead of satisfying the changing market requirements, thus shifting away from the real changing market.
Eastman Kodak Company
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO CONTEXT
BUSINESS MODEL
MANUFACTURING OF PHOTOGRAPHIC FILMS
MANUFACTURING OF PHOTO CAMERA
VERY HIGH MARGINS
TECHNOLOGY DEVELOPMENT
PHOTO CAMERA AS CONSUMER GOODS IN A
MASS MARKET
CHANGE IN CUSTOMER REQUIREMENTS
NEW COMPETITORS IN PHASE WITH CUSTOMER EXPECTATIONS
COUNTERACT AGAINST MARKET EVOLUTION
REINFORCE THE EXISTING BUSINESS MODEL
PATENT AS MUCH POSSIBLE IN ORDER TO BLOCK THE DIGITAL MARKET
Rise and growth of digital photography
Eastman Kodak Company
app. 80 %
CSCRVPKAKP
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Eastman Kodak Company
MANUFACTURING OF
PHOTOGRAPHIC FILMS
HIGH
MARGINSHUMAN RESOURCES
R&D
RAW MATERIAL
INDIVIDUALS
PROFESSIONALS
RESELLER
NETWORKPATENTS
ROYALTIES75% of
GB in 2011
80 %
ADDITIONAL PRODUCTS
Printers
Ink cartridgesPhoto papers
One-time usage cameras
WWW.KODAKEXPRESS.COM
*
* From mid 90’s
*
**
**
** Commercialization in 2003
www.kodak.frLe Figaro, Kodak se déclare en faillite, January 2012Philippe Silberzahn, Fin de Kodak, victime dilemme de l’innovateur, January 2012 Knowledge@Wharton, «What’s Wrong with This Picture : Kodak’s 30-year Slide into Bankruptcy», february 2012
PHOTOGRAPHIC FILMS
PHOTO CAMERAS
Source :
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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7Blockbuster Video
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Movies rentals
1985
Echostar
USA
1985 - 2010
Mass market - Individuals
(2002) 5,5 bn USD
48 000
Offer a wide selection of movies
Expansion of internet
New comers
Wide selection of movies for rent
Exclusive offer of new movies for rent
Develop stores in residential areas and malls
New usage (environment): illegal downloading, streaming
New comers (environment): emerging competitors
New technologies (environment): internet, downloading, VOD
Blockbuster Video
Industry
Date of creation
Group
Country of Origin
Case’s period
Market type
Revenues
Number of Employees
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Scenario Highlights
Context Highlights
Business Model Highlights
Reasons of Failure
An abrupt end
In 2009, Blockbuster creates an automated distribution network to rent movies. The goal of this mass deployment is to come back as a key player. For economic reasons, some shops will be replaced by machines.Despite this, the company filed for bankruptcy in 2010.The company left behind more than 6000 franchised and proprietary shops spread over 18 countries representing about 48000 employees.
Innovation in services
In 1985, Blockbuster opens its first movie rental store in Dallas. From VHS tape to DVD, the company will have an exponential growth. In early 90's, the demand is booming.
Movie rental allows to compensate the limited TV channels at that time and offers a wide and attracting catalog of movies. 9 years after its creation, Blockbuster will be valued at $ 7.6 billion.
A changing environnement
In mid 2000, new signs of change are emerging in the environment. Customers' expectations are changing and new comers are disturbing the existing market. Competitors appear and offer mail-delivered movie rental with a wider catalog. Technological improvements will also disturb Blockbuster business model. Concurrently to internet development, streaming websites will explode along with all illegal downloading possibilities.
In addition, more and more TV channels propose new offers such as video on demand.
Blockbuster Video
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO CONTEXT (between 2002 and 2010)
BUSINESS MODEL
WIDE OFFER OF MOVIES RENTALS
NEW MOVIES
PROXIMITY WITH RESIDENTIALS AREAS AND MALLS
INTERNET EXPANSION
NEW COMERS
OFFER A WIDE SELECTION OF MOVIES
New usages
Mail-delivvred rentalVideo On Demand
development
Blockbuster Video
87 million customers+ 6000 shops
Twenty countries
Illegal downloadingStreaming websites
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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DEVELOPMENT OF
NETWORK
40 % OF
TURNOVER
DISTRIBUTED TO STUDIOS
48 000 EMPLOYEES DEDICATED SHOP
+
FRANCHISES
WIDE MOVIES RENTAL
OFFER
EXCLUSIVITY ON MOVIES
* On a dedicated period
*
STUDIOS
INDIVIDUALS
87 MILLIONS OF
CUSTOMERS
INFORMATION ON USER
BEHAVIOUR
DEDICATED
DISTRIBUTION
NETWORK
DEVELOPMENT OF THE
CONTENT OF THE OFFER
MOVIES RENTALINFRASTUCTURE
EMPLOYEES
PRIORITY ON NEW MOVIES6 000 SHOPS
IN 18 COUNTRIES
Blockbuster Video
Le figaro, 24 september 2010 ;Financial Times, 24 february2010 ;Le Monde, 17 february 2010 ;
L’expansion, 11 may 2007 ;The Times, 28 february 2010.
Source :
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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8Moulinex
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Moulinex
Manufacturer of small appliances
1937
Jean Mantelet
France
1937 - 2001
Mass Market
(1998) 1,21 Billion €
(1998) 11 000
Financials difficulties in 90's
Success story and recognizedd brand
Worldwide presence
Bursting of the family unit
Development of women's employment
Emergence of strong asian competitors
Small appliances associated with feeling of pleasure
Manufacturing of small appliance for women market
Mass production and low margin
Originally, strong innovation on product
Decrease of product sales with low margin (Business model viability)
Emerging competitors (Environment)
Financial management (Management)
Industry
Date of creation
Founder
Country of Origin
Case’s period
Market type
Revenues
Number of Employees
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Scenario Highlights
Context Highlights
Business Model Highlights
Reasons of Failure
Pricing policy
In 1950, Jean Mantelet developed a different pricing strategy from its competitors. Instead of establishing a selling price based on cost price including depreciation of production equipment, he focused on the consumer. His approach is based on the consumer's ability to buy the product by defining a "democratic" price.The entrepreneur looks for a mass production to ensure low costs and a minimum profitability.
Moulinex
Worlwide exposure
The exponential market growth allows Moulinex to be located in several countries. At the end 80's, Moulinex products are distributed in more than 135 countries. However, the company activity is largely based in France. Only 20% of the turnover is generated abroad against 40% for SEB, its main competitor.
History of the group
In 1932, Jean Mantelet invents the vegetable mill. Wishing to end by finding lumps in mash potatoes prepared by his wife, he decided to create the famous "Potato Masher" or "Presse-Purée". Manufacturing and distribution of these products are a great success.This new equipment allows solving a shared problem to all housewifes at that time. In 1957, it operates his business under the brand Moulinex. In 1962, appears a strong motto: "Moulinex free women"
a period of thirty and mores the beginning of the consumer society. It means liberation of household chores and automation of dedicated tasks. Moulinex will then have huge opportunities to address these new needs.
Within only few years, the brand will invent no less than 70 products among which we find the coffee grinder, the multi-function robot, the iron or the microwave.
End of the story
This booming market quickly attractes competitors, firstly european and then asian ones. The market was huge and attracting. The low complexity of products and the low level of maintenance for this type of goods reduced seriously entry barriers.
In the 90's starts the decline of the group. A slowdown in gross markets can be explained by the saturation of several customer segments. Sales suddenly collapsed. The emblematic founder died in 1991. It leaved room for internal dissension, mismanagement and a lack of innovation. In an effort of diversification of its products, he company made a major acquisition (Krups) which increased its debts and reduced its flexibility. Despite several massive restructuring and merger attempts or capital opening, the French jewel is closed in 2001, September 7th.
The brand still exists today. It has been acquired by SEB group together with some French production units.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Moulinex
SCENARIO CONTEXT
BUSINESS MODEL
SMALL APPLIANCES PRODUCTS MANUFACTURING
MASS PRODUCTION
LOW MARGIN
STRONG INITIAL VALUE PROPOSITION
INNOVATION IN PRODUCTS
MARKET GROWTH DEPENDS ON HOUSEHOLDS NUMBER
INCREASE OF WOMEN EMPLOYMENT
DECLINE OF AVERAGE HOUSING SIZE
EMERGENCE OF STRONG ASIAN COMPETITORS
FINANCIAL ISSUES IN THE 90’S
OLD SUCCESS STORY
STRONG BRAND
WORLWIDE PRESENCE
135 COUNTRIES
IN 1931 BY THE FOUNDER, THE
«POTATO MASHER»
The increase of single-parent families promote
the market growth
Looking for time savings in houshold
chores
Decline of storage areas: search for multi-
functions products
Represents only 20% of Moulinex
turnover
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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Moulinex
SMALL APPLIANCES
EQUIPMENTS
RESELLERS NETWORK
WOMEN
SELL EQUIPMENTS WITH
REASONNABLE PRICE
20% OF TURNOVER
DONE ABROADLOW MARGIN
STRONG BRAND
PRESSURE ON PRICE
MASS PRODUCTION
180 000 UNIT / DAY*
LOGISTICS
DISTRIBUTION
ADVERTISING
SMALL APPLIANCES
STORES
Marketing Magazine N°144, Saga Française à succès, 2010 ;Ministère de l’industrie, Approche sectorielle - électroménager, 1999Mémoires d’entreprises, Moulinex,1993
OuestFrance, La bataille des millions, 2009Stratégies, Moulinex se robot que je ne saurais voir, 1998.
IMPORTANT REAL ESTATE
RESOURCES
HUMAN RESOURCES
Unskilled labor
Mainly women
IMPORTANT REAL ESTATE
RESOURCES
HUMANS RESOURCES
MASS-MARKET RETAILING
135 COUNTRIES
BRAND PROMOTION
ADVERTISING
BUDGET
ADVERTISING AGENCIES
* Production for 16 plants in 1980
Source :
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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9Cuisines Vogica
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
VGC Distribution
Furniture fabrication
1976
William Ego
France
2000 - 2010
Mass Market
(2008) 107 Million €
(Groupe) 1 000
Financial difficulties
Strong decline of customer satisfaction
Economic Crisis
Highly competitive environment
Activities unbundling
Failure of key partners
Customer segmentation (professional / individuals)
Important logistics activities
Financial Management (Management)
Failure of key partners (Business model execution)
Industry
Date of creation
Leadership
Country of Origin
Case’s period
Market type
Revenues
Number of Employees
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Scenario Highlights
Context Highlights
Business Model Highlights
Reasons of Failure
Value proposition
Located in "Les Vosges", VGC Distribution group combines manufacturing and distribution activities of kitchens and bathrooms. After various takeovers and restructuring, the group wants to be one of the key players in this business.
With 45 stores located in France, VGC Distribution addresses two different customer segments. On one hand, it offers individuals the construction and installation of custom kitchens. It can also include appliances. On the other hand, it addresses major retailers such as Castorama, But or Brico-Dépôt by providing kitchens in kits.
Business model execution
In the early 2000s, the company faced several financial difficulties mainly related to inadequate management choices.
The company is forced to leave construction activities. From then relying on Nevelt, a sub-contractor that will ensure the production. VGC Distribution will then focus on sales and distribution.
VGC sales exceeds forecasts. but having Nevelt not being able to honor all orders, increasing immediately delivery times for end customers. Delivery time initially negotiated to 8 weeks will become several months. In addition, some sets are coming with missing parts which forces VGC to perform installation in several steps.This will increase significantly logistic costs of the company.
Final closure
Delivery delays and lower product quality caused a growing customer frustration. In addition, VGC Distribution is facing chronic financial difficulties and a major economic crisis. As a result many orders will be canceled. Unable to pay Nevelt, its supplier, the group go into receivership for several months before its liquidation.
VGC Distribution
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
VGC Distribution
SCENARIO CONTEXT
BUSINESS MODEL
CONSTRUCTION & ASSEMBLY
KITCHEN AND BATHROOM FURNITURE
OWN DISTRIBUTION NETWORKS
DECLINE OF HOUSEHOLD CONSUMPTION
STRONGCOMPETITION
FINANCIAL DIFFICULTIES
FAILED PARTNER
NEGATIVE CUSTOMER REPUTATION
CUSTOMIZED RELATION
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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Vogica - VGC Distribution
VOGICA
45 stores
SALES OF FURNITUREStrong margin
INDIVIDUALS
PROFESSIONALS
Castorama
Brico dépôtBut
KITCHEN & BATHROOM
FURNITURE KIT
LOGISTIC
Routing orders
SALES OF FURNITURES
Slow margin
NEVELT
Furniture production
MANUEST
NEVELT
Furniture production
PERSONNAL
Delivery within 8 weeks
APPLIANCES
under its brand 1982
AGRESSIVE BUSINESS
PRACTICES
Appliances Supplier
KITCHEN & BATHROOM
CUSTOM ASSEMBY
Source :Le figaro, 8 november 2010 ;Huffington Post, 27 september 2010 ;
Usine nouvelle, 28 september 2010 ;Le Point, 9 november 2010.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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10Group BIC
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
BIC - Perfumes
Consumer products
1945
Bruno Bitch
France
1988 - 1991
Mass Market
(2010) 1.830 Billion€
(Group) 9 200
Several success stories in marketing of disposable products
Financial results of the group
Capitalization on distribution network
Product praised by the public
Increase of perfume price
Growing competitor products
Perfume manufacturing and sales
Low price
Distribution through tobacco shops and bars channel
Focus on simple and practical usage
Mistake in distribution channel selection
Inappropriate value proposition with customer expectations (VP/CS)
Industry
Date of creation
Leadership
Country of Origin
Case’s period
Market type
Revenues
Number of Employees
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Scenario Highlights
Context Highlights
Business Model Highlights
Reasons of Failure
Wrong distribution channel
Three years after the launch, sales didn't take off and BIC ceases its perfumer activity. It appears that the distribution channel was not the right one. Many tests have been carried out on the product and on customer ability to buy. But, conditions and retail environment were not considered.Flagrances are often associated to luxury, good time or even enjoyable olfactoric moments. Tobacconists do not match with this universe. Odors, atmosphere, as well as sellers competences are in total opposition with the selling experience expected by the customer. Actually this is not reflecting the real customer perception.
In view of the customer, a good fragrance is strongly paired with emotions, and disposable goods (as the other products from BIC are) do not match with this image.
Diversity of products
Founded in 1945 by Edouard Buffard and Marcel Bitch, Bic group launches in its first years the Bic Crysta ball-point pen. Today the group operates worldwide and in morethan 160 countries. For almost 60 years, BIC has shown a real ability to diversify its activities and products. To date, the French group produces lighters, razors, and various water sport articles (windsurfing, kayak...) in addition to pens.
Since 2008, BIC also sells a mobile phone manufactured and distributed in partnership with Alcatel and Orange.
Innovation in products
In 1988, BIC launched its own range of flagrances. This perfume is accessible for everyone, used by everyone at any time. Marketing teams rely on the practical side by offering small bottles shaped like lighters that are easily transportable. It also perfectly fits in a pocket or a handbag. Sold for 25 francs (3.5 €) for about 300 sprays, the product comes in 4 colors (red and blue for women, black and green for men).Each perfume targets a specific customer segment or a specific context depending of its flavoring composition.
After many marketing studies, it was decided to distribute the perfume on a large scale in Europe, USA and several countries in Africa.Leveraging on its large ligther distribution network, the bottles are proposed to the mass market through existing retail shops. In apparence, it seems convenient for the customer to combine the purchase of a lighter with a perfume.
BIC - Perfumes
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO CONTEXT
BUSINESS MODEL
FRAGRANCE
SMALL AND PRACTICAL FORMAT
EASY TO USE
LOW PRICE
DISTRIBUTION THROUGH TOBACCONISTS
CAPITALIZATION ON THE
DISTRIBUTION NETWORK
SUCCESS STORY ON LOW PRICE
AND PRACTICAL PRODUCTS
FINANCIAL RESULTS
OF THE GROUP
COMPETITIVE PRODUCTS
«EAU DE TOILETTE»
Perfume for20 Francs
STAGNANT TURNOVER2,2% DECREASE IN 1987
GROWING
INCREASE OF PERFUME
PRICE
PRICE INCREASED 66%
BETWEEN 1981 AND 1988
NEED TO RENEW
BIC - Perfumes
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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DISTRIBUTORS
TOBACCO BARS
LOW PRICE
MASS MARKET
Male / FemaleWORLWIDE
MANUFACTURING
PARTNERS
DISTRIBUTORS
TOBACCONISTS
MANUFACTURING
STRONG BRAND
MANUFACTURING
ADVERTISING
PERFUME: HIGH END
PRODUCTADVERTISING
ASSISTANCE IN SALES IN
TOBACCO BARS AREAS
PROMOTION
DISTRIBUTION NETWORK
PRODUCT EXPERIENCE
«DREAMS»
SMALL AND PRACTICAL
FORMAT BASED ON ITS
FUNCTIONALITY
PERFUMER EXPERT
Source :Bicworld.com, 6 décembre 2012 ;L’Obs économie, Le bide de bic, 17 novembre 1988.
BIC - Perfumes
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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5 reasons of failureWhy do Business Models Fail ?
Part 2
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Alignment between Value Proposition and Customer Segment1
Missmatch between the Value Proposition and the Customer Segments.
The value proposition doesn’t answer a real need or doesn’t address a real problem of the customer.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO OF THE ORGANIZATION
CONTEXT
BUSINESS MODEL
1Conflict within the Business Model: Inadequate fit between Value Proposition and Customer Segment
The Business Model is disconnected from the Context
Value proposition
Alignment between Value Proposition and Customer Segment
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCRCPVACPC
C€ R€
RC CX
1
Value proposition Customer
segment
Fight !
Alignment between Value Proposition and Customer Segment
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Business Model financial viability2
The costs exceed the revenues generated making the business non-profitable.
Don’t confuse «impossible profitability» with slow return.
Example : customer acquisition cost or production cost too high etc.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO OF THE ORGANIZATION
CONTEXT
BUSINESS MODEL
2Conflict within the Business Model : No profitability
Value proposition Costs > revenues
Business Model financial viability
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Costs Revenues
Costs
Revenues
Losses !!!!!
2 Business Model financial viability
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Environmental constraints are not fully integrated with the design of the Business Model3
Poor analysis of the environment : competition, technological trends, regulation and economics forces are poorly evaluated.
Main environmental changes must be challenged prior to developping new business models.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO OF THE ORGANIZATION
CONTEXT
BUSINESS MODEL
3
Key elements
NOT integrated
Value proposition Costs > revenuesEnvironment
Environmental constraints are not fully integrated with the design of the Business Model
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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Technology trendsSCRCPVACPC
C€ R€
RC CX
Financial markets
Globalization
Regulation
Competition
New Entrants
New customer behaviors
...*
* Non exhaustive list
3Environmental constraints are not fully integrated with the design of the Business Model
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Business Model Execution4
Management team did not focus enough on execution by lack of competencies, poor governance, or low transformation support.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO OF THE ORGANIZATION
CONTEXT
BUSINESS MODEL
4Value propositionCosts > revenuesEnvironmentManagement
Conflict & absence of key competencies within the management team
Business Model Execution
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Analysis of the Environment
4ExecutionIdentification of
opportunities
ManagementFailure
Business Model Generation
Business Model Execution
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5 It is difficult for companies to break old patterns that made them successful in the past. And the temptation is strong to pursue what has worked before. The risk is to look at new opportunities thru the lens of current profits and performance yields.
The management does not take into account the necessity to adapt its business model. It stays unbalanced between a radical shift and incremental improvements.
The goose that lays the golden egg
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
SCENARIO OF THE ORGANIZATION
CONTEXT
BUSINESS MODEL
5Organizational culture and past successes doesn’t encourage the management to question the real foundation of its current Business Model and new opprtunities for growth.
The goose that lays the golden egg
Value propositionCosts > revenuesEnvironmentManagementOrganizational culture
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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5Actual profits Potential profits
Actual model Future model
Very profitable Less profitable
The goose that lays the golden egg
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Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
About the author
Antoine Dumont is associate at Elton-Pickford. He actively participates in the elaboration of the global strategy and development of the business activities.
He is an expert in economic intelligence and conducts regulary missions on this subjects for french Ministries of the Interior and the Defense.
Antoine started his career as M&A consultant. He moved as Sales Director in the IT industry where he worked for large industrial and financial clients (BNP Paribas, Oseo, Saint Gobain, Rieter Automotive).
He conducts, on a regular basis, speaking engagements on Business Model Innovation. He contributed to the Blackbook - 10 Innovative Business Models, and wrote several case studies on disruptive Business Models.
He followed the Executive Program in Management and Strategy to the ESCP Europe.
Acknowledgements
Peter Keates, Yannick Meriguet, Olivier Gemoets, Franck Louesdon.
Contact :[email protected]+33 (0)6 25 55 09 88@AntoineDmt
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Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013