IBM Executive

Development Programme

IBM Global Services and the IBM Executive Business Institute

Strategic Innovation Business Design

Copyright IBM Corporation 2005

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IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Flow of Seminar
Ideas
and

Customers

Tools and Methods

Business Design Assessment

Innovation Capability Assessment Action Plan

Page 2

Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Business Design
Answers these questions:
Who are the customers you choose to serve ? What is your value proposition to those customers ? How do you make a profit from your value proposition and your targeted customers ? What is the scope of your activities, i.e., what do you do and what do others do, in delivering your value proposition ? What is your strategic control point ?
Page 3
Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Current Business Design

Customer Selection
What customer segments do you choose to serve w/your offerings ? Which segments do you choose not to serve ? Who are the most profitable customers, and which have the highest profit growth potential ? What is the specific customer value proposition for your offering ? What will the customer truly value ? How will you achieve competitive differentiation ?
What job is the customer trying to get done ?

Value Proposition Value Capture

How will you make money ? What value nets are currently active in your business area ? Who are the key participants and what is your role today ? What alternative value net roles have you explored ?

Scope of Activities

Strategic Control

What significant value-add activities will you perform ? What dependencies, if any, will you have on your value net partners ? What roles will they play, if any? What alternative value net roles have you explored ? For each alternative value net, describe how key value net partners would be satisfied and identify key risks. How strong is your position vs. established and emerging offerings and standards ? How effectively are you positioned to capture value w/in your value net How might you benefit from taking disruptive or preemptive action to enhance your competitive position ? To what extent are you exposed to innovative/disruptive competitors ?
Copyright IBM Corporation 2005

Page 4

Sources: A.J. Slywotzky & D.J. Morris, The Profit Zone, and, IBM Corporation

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Some Universal Value Propositions

.
Customization Innovation Price Quality Service Speed Variety

Page 5

Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Current Value Net

The generic value net shows the elements of a value net 1) your company or unit 2) Your customers 3) your suppliers 4) Your complementors (partners/alliances) 5) Your competitors or substitutors --These elements are selected and formed into a value chain to deliver your product or service to your selected customers.

Page 6

Source: IBM BCS Research

Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Madden Graphics
Current Business Design Customer Selection
Any commercial customer desiring printing Purchasing Personnel

Lowest price

Value Proposition

Value Capture

Gross margin Price per image

Printing Operations

Scope of Activities

None

Strategic Control Page 7

Source: The Profit Zone, A. Slywotzky + D. Morrison, and IBM
Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Future Business Design

Answers these questions:
Who are the future customers you choose to serve ? What is your future value proposition to those customers ? How do you make a profit from your future value proposition and your targeted customers ? What is the scope of your future activities, i.e., what do you do and what do others do, in delivering your value proposition ? What is/are your future strategic control point/s ?

Page 8

Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Future Business Design

Customer Selection
What customer segments do you choose to serve w/your offerings ? Which segments do you choose not to serve ? How will you manage the tension between currently served markets and new segments ? Who are the most profitable future customers, and which have the highest profit growth potential ? What is/are the specific customer value proposition(s) for your new offering(s) ? What will the customer truly value ? How will you achieve competitive differentiation ? What job is the customer trying to get done ? How will you make money in the future? What value nets are currently active in your business area ? Who are the key participants and what is your role today ? What alternative value net roles have you explored ?

Value Proposition

Value Capture

Scope of Activities

Strategic Control

What significant value-add activities will you perform ? What dependencies, if any, will you have on your value net partners ? What roles will they play, if any? What alternative value net roles have you explored ? For each alternative value net, describe how key value net partners would be satisfied and identify key risks. How strong will your future position be vs. established and emerging offerings and standards ? How effectively are you positioned to capture value w/in your value net ? How might you benefit from taking disruptive or preemptive action to enhance your competitive position ? To what extent are you exposed to innovative/disruptive competitors
Copyright IBM Corporation 2005

Page 9

Source: The Profit Zone, A. Slywotzky + D. Morrison, and IBM

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Future Value Net

New Competitors ?

The generic value net shows the elements of a value net 1) your company or unit 2) Your customers 3) your suppliers New Suppliers ? 4) Your complementors (partners/alliances) 5) Your competitors or substitutors --These elements are selected and formed into a value chain to deliver your product or service to your selected customers.

New Customers in New Accounts ?

New Customers in Current Accounts ?

New Partners ? How manage Old Partners ?

Page 10

Source: IBM BCS Research

Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Additional Future Business Design Questions

What customer and economic assumptions underlie your future business design ? What might change these assumptions ? What would the impact of the change ? Odds ? What are your future customers most important priorities and how are they changing ? What technology shifts are occurring and what will be their impact on you ? Can the future business design capture new sources of value, and sustain the capture ? What differentiates your future business design from that of your competitors ? Are you building on existing strengths ? Do you have any hidden assets you can leverage in your future business design ? Are any new organizational capabilities required, and can you acquire them ? What job is the customer trying to get done ?

---------Do changes in one element of your future business design, impact other elements ? How do you manage both your current and future business designs simultaneously ?

Page 11

Source: The Profit Zone, A. Slywotzky + D. Morrison, and IBM

Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Madden Graphics >>>>Madden Communications

Current Business Design Customer Selection
Any commercial customer desiring printing Purchasing Personnel

Desired Business Design

Few, profitable customers Line Management + Purchasing Execs Retail channel executives + Managers

Lowest price

Improved profits Shared Risk/Reward

Value Proposition

Value Capture

Gross margin Price per image

Shared Risk/Reward Broader Services Offering

Printing Operations

Scope of Activities

Fully Integrated Promotional Execution Service many key partners

None

Strategic Control Page 12

Source: The Profit Zone, A. Slywotzky + D. Morrison, and IBM

One of few printers in the USA capable of offering a complete solution, a fully integrated set of services

Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Organizational Ambidexterity: Current and Future Business Designs

Current Design

Future Design

Page 13

Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Current and Future Business Design - Workshop # 5

Activity:
Objective: - Diagnose and document your organization's current and future business design using the five key elements of business design - customers, customer value proposition, value capture, scope of activities, and strategic control. Process: - Fill in the templates with your organization's current and future business design elements for the part of your organization that will originate the innovative business initiative. Output : - A completed current and future business design template for the organization selected and an understanding of the business design elements of that organization. Be prepared to discuss your business designs.

Approximate Timing:
- Preparation - Discussion
Page 14

50 min 10 min
Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Current Business Design

Current targeted customers

Customer Selection

Current value proposition

Value Proposition

Current value capture

Value Capture

Current scope of activities

Scope of Activities

Current strategic control

Strategic Control

Page 15

Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Future Business Design

Desired Customers

Customer Selection

Desired Value Proposition

Value Proposition

Desired Value Capture

Value Capture

Desired Scope of Activities

Scope of Activities

Desired Strategic Control

Strategic Control

Page 16

Copyright IBM Corporation 2005

IBM Executive
Development Programme

IBM Global Services and the IBM Executive Business Institute

Coffee/Tea Break

-- 15 Minutes

As part of the Activity Period

Page 17

Copyright IBM Corporation 2005