Summary – Reinventing your Business Model

After reading the case “Reinventing Your Business Model” by Johnson, Christensen and Kagermann I put some quick notes about their roadmap in this post: Start thinking about how to satisfy your customer who needs a job done and not about a business model. The second step is to construct a blueprint which will point out how your company will fulfill that need of a profit.

1. Define Value for the customer – Customer Value Proposition (CVP)
2. Define value for the company by creating a profit formula

-> Revenue model (price x volume)

-> Cost structure (direct costs, indirect costs, economies of scale)

-> Margin model (contribution needed from each transaction to achieve your desired profits)

-> Resource velocity (what you will need to change on your existing company)


Now define how the value will delivered by the people and the company:

3. Key resources – Assets such as people, technology, products, facilities, equipment…)

4. Key processes – Operational and managerial processes that allow them to deliver value and scale it

The third and last part of the roadmap is to compare that model with your existing one to see how much you have to change to take the opportunity.

A fact besides: Fully 11 of the 27 companies born in the last quarter century that became part of the Fortune 500 did it through business model innovation. But nowadays still no more that 10% of innovation investment at global companies is focused on developing new business models.

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