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Business Models, Business Strategy and Innovation

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Rocío Bernabeu

on 16 November 2014

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Transcript of Business Models, Business Strategy and Innovation

since 1879 source: darbo.at "Nowadays D'arbo exports in 62 countries in the world and employs 300 people." turnover "(...) the most common business model to capture value from invention is to embed them in a product (...)" (Teece 2010, p. 185) ( provision of bundled complementary products and services creates value ) Strategy AGENDA Beck Florentina
Bernabeu Rocío Understand differences and connections among the terms:
Business Model
Business Strategy
Innovation

Critically analyse paper

Practical examples: Inditex (Zara) and Darbo Service Industry Innovation Business Model Sustainable Management Plan Value Chain Organisation Flexibility Entrepreneurship Technology Business Model an Innovation D'arbo Business model is the manifestation of strategy (Casadesus-Masannel and Ricart 2010;
Dahan et al. 2010) Business plan is the tool to analyze and communicate strategic choices (Shafer et al. 2005) Technological Innovation Profiting from Innovation Framework Bundling product and technology Business Model
to capture value of innovation
to translates technological innovation into economic success Integrated Business Model (innovation&product)
Outsourcing (pure licensing)
Hybrid approaches Unbundling product and technology "(...) capture value either by naked licensing -or even outright sale- of intellectual property" (Teece 2010, p.186) Match Business Model to Technological Innovation

value and competitive advantage Flexibility and Open Innovation Discovery, Learning and Adaptation There is no final and perfect Business Model Open Innovation Collaboration as Innovation "One company develops a novel idea but does not bring it to market. Instead, the company decides to partner with or sell the idea to an- other party, which then commercializes it. " (Chesbrough 2007, p. 22)

"(...) importing and exporting knowledge, ideas and projects" (van der Meer 2007, p.196) " 'Innovation' is the hottest word in business, but most of the discussion centers on products and services. The more profound challenge for most companies now is imagining a new business model, a new answer to the fundamental question, How do we make money?" (Colvin 2013, p.1) Definition of business model "It is about the benefit the enterprise will deliver to customers, how it will organize to do so, and how it will capture a portion of the value it delivers" "The structure, content, and governance of the transactions between the focal firm and its exchange partners" (Teece 2010, p.179) (Zott and Amit 2008, p.216) Lambert and Davidson (2012, p.2) Enterprise classification Enterprise performance Innovation Components of
business model design Technologies and features
Market segments
Benefit to customer
Mechanism to capture value
Revenue streams (Teece 2010, p.173) Business Model Canvas (Osterwalder and Pigneur, 2009) Sustainable Business Model (Stubbs and Cocklin 2009) Consider interest of all Stakeholders
Work for the "common good"
Create long term value
Internal sustainable systems The Strategy Hexagon D'arbo D'arbo Segments
and products Economic logic &
business model Speed & sequence
of moves Countries and regions Differentiation Core competences & activities of value chain Business models and Strategy EXPERIMENT, LEARN, ADJUST, IMPROVE Provisional Business Model "A competitively sustainable business model requires a strategic analysis filter" (Teece, p. 182) (Osterwalder and Pigneur 2009 p.15) “The business model is like a blueprint for a
strategy to be implemented through organizational
structures, processes and systems." BUT it also involves: Sustainability in economic sense:
Profitability
Competitive advantage
Organization How much does it cost? What are the structures of the activities in order to deliver value? Are there competitiors? How big is the market? How to bring utility to the consumer? How do we satisfy customers' need? How can imitators be held at bay? What is the competitive advantage? Which price? D'arbo Dimensions of entrepreneurship Innovativeness
Risk-taking
Proactiveness and creativity Intrapreneurship DISCUSSION Beck Florentina
Bernabeu Rocío Service Industry CONCLUSION By Beck Florentina & Bernabeu Rocío Service Industry Underdeveloped
theory Key to success Tool for enterprise
& industry analysis Economic growth Innovation Flexibility Business model
research Complex concept design interdisciplinary Tim O’Reilly, CEO, O’Reilly “There's not a single business model. There are really a lot of opportunities and a lot of options and we just have to discover all of them.” “The absence of consideration of business models in economic theory probably stems from the ubiquity of theoretical constructs that have markets solving the problems that in the real world business models are created to solve”

(Teece 2010, p.175) “Get the business model wrong, and there is almost no chance of business success”

(Teece 2010, p. 191). “Business model research is proving to be a useful alternative for enterprise and industry analysis”

(McGrath 2010) Business model Business success New industries If business model take technological development properly to the market Value for society Sustainable Business Model 77 countries high fashion at low cost
new cloths twice / week
locally targeted design Age: 25-35 (female)
follow latest fashion
& limited budget lead time
scarcity ("fast fashion")
variety (30.000 designs/year)
limited advertising cost (0,3%)
high turnover Economic logic & business model fast international expansion proximity & control
remarkable supply chain
uncommitted production capacities
extensive market research
creative teams
feedback system Core competences & activities of value chain Environmental sustainability Eco-efficient stores (-30% energy, -50% water)
Zero-Discharge (eliminate hazardous chemicals)
Code of Conduct for external manufacturer & suppliers Internal sustainability Culture of communication & open discussion Business Strategy and
Innovation , David J.Teece (2010), Long Range Planning 43 By Beck Florentina & Bernabeu Rocío Service Industry IT & Communications Warehouse & Logistics TEMPE (Elche, Spain)
Design and distribution center
Accessories for Inditex group (worldwide) Plant: 63.000 m2
Total area: 105.0000 m2 300 suppliers receive materials twice / week
10 countries & provide accessories 24/48 h Distribution center Flexibility TECHNOLOGICAL INNOVATION PROCESS INNOVATION Open Innovation Provisional Business Model Entrepreneurship Profiting from Innovation Framework What limitations/improvements do you see in the Zara's and D'arbo's Business Models? PROCESS INNOVATION Technological Innovation Business Model Innovation Fashion follower 1.000 designs / month D'arbo 3 weeks < 48 h Warehouse: 72 h rule Twice x 52 weeks = 104 new session / year 6 months 4 Speed to market is everything... ...otherwhise, you are wearing yesterday's fashion! Continuous trend monitoring and feedback
Uncommitted production capacity: 40-50% (10-20%)
Unsold items are moved out of store in 2 weeks Would you send half empty truck across Europe? Would you pay airfreight cost to Japan twice a week? Would you move your unsold items after 2 weeks out of the store? Risk taking Amancio Ortega Amancio Ortega did Founded Zara in 1975 Third richest man in the world 2013 Forbes "I wanted to be a different businessman" Age 13: shop assistant Son of railwayman 1985 Sustainable growth and brand (Brand Life Award) Quality and sustainability of raw materials
Environmental compatibility
Responsible use of resources
Quantity and efficiency of the packaging and transportation routes economical
sustainability environmental
sustainability internal
sustainability satisfied employees Everybody into
jam, honey, syrup and
fruit preperation 62 countries innovative products in harmony with the nature
recognizable design Sustainable growth selection of high quality resources and transformation into products
family business Innovations
Product extentions PRODUCT INNOVATION Tea syrup Small portions for the hotel industry New flavours Online shop in cooperation with How confusing was the topic/presentation ? Focus on market research Should they consider Open Innovation. How? "Eyes and ears have to be close to the consumers
in order to satisfy their needs with new answers,
namely innovations." (Martin Darbo) "No handling of teabags anymore,
no letting the tea brew, no waiting,just intensive taste and individual portions." (darbo.com 2013) Family business
since 1978 Martin Darbo Innovative, risk-taking and creative (Teece 2010) "...Plan A, what you think will work, often never does. Persistent, successful entrepreneurs go to Plan B or even Plan F..." (Mullins and Komisar 2010, p.) "What business models pioneers often possess - or develop - is an understanding of some ‘deep truth’ ..." (Teece 2010, p.188) Review of BM research (1996-2010) (tirv1.orf.at 2012) Supply chain leader unsold items > 2 weeks (lecture: Innovation& Entrepreneurship 2012) REFERENCES D'arbo
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