Edengene Business Model Bible

Business Model Bible
Creating Value through Innovation
The art and science of innovation
Contents
Part 1: Introducing Business Model Innovation

The Edengene BMI framework 6 categories of BMI Critical success factors Whats being done Whos doing it Where its happening
Part 2: Business Model Innovation in Practice

Conclusions
Keeping customers at the heart of business model innovation
Index of Companies
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Business Model Innovation: challenging the assumptions a company holds about the way it creates value.
The Edengene Definition
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Introduction
The purpose of this document
There are thousands of ways to target new customers or create new value propositions. However, there are a limited number of structured ways that you can alter the way you play in the value chain, partner with your stakeholder network, align your product portfolio against customer need and therefore the way that your business makes money. Edengenes Business Model Bible lays out more than 50 ways of creating value or making money, illustrated by thought provoking global examples across a wide range of different industries. Innovation has never been more important. Edengenes Business Model Bible is designed to provide inspiration and act as a reference tool for any innovator.
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A corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is complete transformation.
Andrew Grove, Founder of Intel Corporation
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Part 1: Introducing Business Model Innovation
Piracy is a business model it exists to serve a need in the market for consumers. Pirates compete the way that we do through quality, price and availability. We dont like the model but we realise that [its] a major competitor going forward.
Anne Sweeny, Disney Corporation
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IBM is one company that has continually challenged assumptions about its business model
1893 1924
1940s
1960s
1980s
2000s
Computing Tabulating Recording Corporation
Weighing scales Automatic meat slicer Time keeping systems Punched card equipment
Browning automatic rifles MI carbine The Manhattan Project (atomic bombs)
IBM mainframes
IBM PCs
Chip sets Services Consulting Innovation R&D
Punched card data processing equipment
Since 2001, services and consulting revenues have been larger than those from manufacturing
(Source: IBM Annual Report )
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There are many ways to innovate around business model, all equally valid in the right situation
Simple
Pricing model changes, leaving the product or service the same
There are simple and complex ways to innovate the business model from changing the basic pricing model to entirely rethinking the way a company does business, requiring significantly less or more change to leadership and people, organisational structures, and business processes depending on the model chosen Every level of business model innovation can make a radical change to the way a company is perceived and how it performs Each organisation must judge for itself the degree of innovation appropriate to the underlying business model based on internal and external factors, incorporating industry circumstance, existing business capability and the commitment of the businesss leadership What is appropriate to one company will not be necessarily appropriate to another company, even at the same time in the maturity cycle, in the same peer industry Innovating along the business model spectrum from the simplest to the most complex of innovations can bring significant reward
Complex
Fundamentally change the rules in a given marketplace
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Circumstances, capabilities and commitment determine what type of business model innovation is appropriate
Business Model Innovation Considerations
Circumstance
How mature is the industry? What are competitors doing? How happy or unhappy are customers? The more an industry matures, the more opportunities there will be for disruptive market-based business model innovation Conversely, in young, fast-growth industries, there are often unique opportunities to connect to customers with smart pricing and product or service-based business model innovation
Capability
Where are the businesss strengths (and weaknesses)? What capabilities can be leveraged? What resources are required (and available)? What boundaries and options are available build, buy or partner? IBM employed all three of these approaches in its shift from manufacturing to services This is about a change in mindset at board level increased flexibility and then throughout the company. The CEOs role undoubtedly becomes more important
Commitment
What is the businesss leadership and employee bases appetite for change? The more disruptive the business model innovation, the more commitment required to deliver. Whilst obvious, this is critical Massive organisational and cultural change will be required for more disruptive business model innovation, as well as a more straight-forward change in activities
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At Edengene, we categorise business model innovation into six categories
Financial Models
Proposition Models
Distribution Models
Customer/Market Models
Operational Models
Relationship Models
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Business Model Category 1: Financial Models
Pricing is one of the most fundamental tenets of a business model, and also one of the most basic disruptors that an industry innovator can employ. Innovating around pricing models isnt about just changing pricing its about redesigning how money is made and how to monetise customers, hence the use of financial models as a title From cost-plus pricing, which calculates the cost of the product then includes an additional margin to generate profit, to value-based pricing which factors in how much a customer values the service and therefore how much they are willing to pay, as well as the adjacent market forces of competitors positioning, pricing depends on understanding the customer. Under pressure from entrepreneurial innovators and unable to protect core revenue models, many industries are beginning to experiment with pricing strategies. Loss-leading, skimming and discounting are all traditional pricing tactics. Innovative pricing models go further, not only reflecting the demand for popular products, but beginning to embed risk-reward mechanisms by creating more transparent contracts between supplier and customer. Key to the success of financial business models is to match customers perceptions of value with their ability to pay to maximise sales volume, revenues and profits.
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Vodafone Using pricing innovation to create a new market

Financial
Vodafone capitalised on a first-to-market position with a market leading product (the Vodafone network) to create a large installed customer base. Building from this success, the company expanded into multiple markets to maximise business model and product revenue streams. Vodafone did this by challenging industry conventions that driving up annual revenue per user (ARPU) was the only way to create value and that the way to do this was via monthly subscription. The company revolutionised the industry when it introduced its pay-as-you-go pricing option bringing wholly new customers into the market for mobile phones. Increased payment flexibility allowed the company also to further increase profitability.
Based
Pay per performance
Assumption challenged Pay the bill at end of the month

Demand-driven pricing
Results
Pay as you go
Massive market expansion
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Business Model Category 2: Proposition Models
Business model innovation based around proposition development and delivery is not necessarily about traditional new product development, i.e. beginning with opportunity area, developing concepts and launching those products that pass market testing hurdles. Proposition business model innovation uses customers as a starting point to understand what it is they want today and might want tomorrow, and then look at the current portfolio of products/services and explore how to best capitalise on untapped opportunities. Generating profits from existing (and future) product or service platforms can involve re-targeting existing products/services, or bundling in a complementary product or service wrap with an existing product, re-segmenting a customer group and then repositioning a range of existing/variant products. Tescos Product Pyramid is a classic example of an unmet customer need where the grocer saw an opportunity to sell eight pork sausages priced at anything from 49p (for Value lines) to 2.29 (for Finest traditionally made) providing each segment of their customer base with a relevant targeted product. Exemplar product innovation often meets the need that customers have yet to identify and fills it with an innovative and indispensible product or service: Starbucks famous Third Way created the caf environment that customers had not realised they were missing and offset a decline in coffee-drinking.
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Apple Building off existing capabilities to reinvent itself as a music distributor and a mobile communications leader
Proposition
Apple combined software and hardware production to found the personal computing market with a truly innovative product for the home or small business that specifically met those customers distinctive needs creating at the same time a generation of Apple brand champions. Since then, Apple has leveraged its hardware design and software capabilities and unique user interfaces to diversify into music distribution and, more recently, mobile communications. The company subsequently built the iTunes platform as a distribution channel for music downloads that would drive sales of its iPod MP3/4 player, where it makes the majority of its profit. Apple has made a further leap with the launch of the iPhone, which combines the companys trademark style-conscious design and user interfaces and has moved to open source coding to allow 3rd party companies to create applications that will run on the iPhone.
Based
Bespoke
Assumption challenged Credible cutting edge technology must be complex and aimed at the digirati
Bundling
Results
Profit multiplier
Achieved phenomenal success with the introduction of the iPod and portfolio of accessories
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Business Model Category 3: Distribution Models
Distribution represents the channels through which companies communicate and offer their value propositions to end consumers. Customer touch points and distribution channels have exponentially increased in the last decade giving companies unparalleled access to their consumers. Distribution-based business model innovation is far more than the opportunity to increase the number of channels to market. Distribution innovation provides a framework to create value chain disambiguation and reorganise distribution to make money in novel ways and make distribution a fundamental part of the customer experience. Dell introduced a direct-to-consumer sales model in 1992 and leapfrogged its rival Compaq to become the largest seller of personal computers in the USA within 7 years. Exemplar distribution innovation creates new market opportunities and represents a powerful tool for differentiation and competitive advantage.
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Nespresso Engaging with customers directly to guarantee their loyalty

Distribution
Nestl tackled the distribution problem that many consumer product companies face lack of direct access to their end consumers to break the stranglehold on distribution dominated by the grocery channel. Nestl pioneered the portioned coffee market. Together with manufacturing partners including Alessi and Miele, the company created stylish coffee machines sold as part of the companys Trilogy system.
Based
Delivering to demand
Assumption challenged Fast moving consumer goods are sold via grocery channels
Expert disaggregation
The product included the machine, exactly portioned Grand Cru coffees, and customized, convenient service, sold direct to individual consumer for in-home use, small businesses and on-trade customers.
Buyers of the Nespresso espresso coffee machine became Club Members buying Nespresso capsules on an ongoing basis, by phone, fax or post or direct over the Internet. The business has had a compound growth rate of 30% over the last 5 years and now has sales of over half a billion with high profits from capsule sales.
Results Nestl Nespresso surpassed one billion CHF revenue at the end of 2006 with year on year growth of 42%
Disintermediation
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Business Model Category 4: Customer/Market Models
Customer/Market-based business model innovation can revolutionise businesses and entire industries, breaking the mould and forcing competitors to adapt, follow or become obsolete.
This category of innovation often involves companies seeking to discover unsatisfied customer needs and new market opportunities and use their resources efficiently to make the most of what they discovered.
When Prudential created Egg as a standalone business, many analysts and commentators were sceptical about an insurer being able to challenge the existing order in banking not only was this highly disruptive example of business model extremely successful, it irrevocably changed the face of banking. Customer/Market-based innovation is generally easier for challengers than incumbents with substantial assets, customer bases and market perceptions. Kodak has been attempting to transform its business model for some years, as its fundamental market proposition for over 100 years disappears in the face of the digital revolution.
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Grameen Foundation Changed the world of banking and successfully implemented the concept of microfinance for the poor
Customer/ Market
Grameen Foundation has one simple goal: provide poor people, especially the poorest and those living in harder to reach areas of the USA, access to microfinance and technology. As a result of the access to these services, they can move themselves out of poverty. Grameen Foundation strongly believes that the poor have skills that are under-utilized, and by providing them that vital loan, they can make full use of such loan to take initiatives in business or agriculture, providing earnings and enabling them to pay off the debt. By 2006, Grameen Bank branches numbered over 2,100. Its success has inspired similar projects in more than 40 countries around the world and has made World Bank to take an initiative to finance Grameen-type schemes. The Bank today continues to expand across the USA and still provides small loans to the rural poor.
Based
Installed base
Assumption challenged Banks cannot provide loans to poor people

Second to market
Results
Philanthropic profit
Empowered millions of people, changed millions of lives
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Business Model Category 5: Operational Models
Operational business model innovation requires companies to conduct a thorough scrutiny of their operations, whether they need an incremental change or a transformational makeover to achieve better results. This category of innovation is typically disruptive, largely rethinking the way the way a company does business, often requiring significant change to leadership, people, organisational structures and business processes. Ryanair is a classic example of how one company can comprehensively transform its operations in order to meet the needs of its customers and quickly become the leader in the industry. It has done so by making its operations as efficient as possible to improve its turnaround times and optimise aircraft utilisation. This even includes aircraft moderations for faster cleaning and safety checks.
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Ryan Air Thinking the unthinkable and reinventing an entire industry with the creation of the budget airline
Operational
Ryanair re-invented the airline industry to become Europes 4th largest airline and largest budget airline by challenging the business assumption that air travel was a costly and therefore occasional method of travel, for which airlines had to provide a complete flying experience The company stripped out many of the accepted service elements, such as predictable pricing and seat allocation, multi channel access for booking and provision of food and drink for free to remove cost, creating a budget service for the functional traveller, thus enabling a much larger group of consumers (and businesses) to fly, and fly more often Ryanair also shook up the operational model of the industry, improving turnaround times to optimise aircraft utilisation While Michael OLeary concentrates on a cost leadership model, he does this with a keen eye on sustainable top-line growth, for example, boosting revenues by the hard pre-flight and onboard sale of add-ons
Based
Franchise
Assumption challenged Airlines must provide a complete flying experience

Rapid product cycling
Results
Cost leadership
Its 2010 traffic grew by 10% from 65 million to over 72 million passengers
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Business Model Category 6: Relationship Models
The concept of relationship business model innovation requires companies to evaluate their ecosystems, both closer and more distant ones, and see how they can make full use of tangible and intangible assets that they possess, including good relationships with customers. Leveraging brand power is an obvious illustration of how businesses can fully benefit from the intangible asset and create a halo effect to other products and services. Increasingly popular, businesses nowadays may simply act as a midpoint connecting different buyers and sellers and creating such relationships remotely thanks to the Internet. A classic example of this type of model is undoubtedly eBay. Pierre Omidyar, eBay founder saw a potential of the webs ability to connect people around the world and offer a platform where buyers and sellers could share information and engage in a transaction which otherwise would not be physically possible.
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eBay Created a whole new market, one that was not really there before
Relationship
Based
eBay is an online auction and shopping consumer-to-consumer website in which people and businesses buy and sell a broad variety of goods and services worldwide. Pierre Omidyar, eBays founder got an inspiration to create this website after selling a broken laser pointer for $14.83 to an anonymous collector of broken laser pointers. His creation produces a new marketplace for millions of people around the world, in which they can anonymously use their relationships with eBay to engage in a transaction with each other; the kind of transaction that otherwise would not be possible. Today, more than seven million new items are listed on eBay each day, and more than 112 millions items are available at any given time.
Network effect
Assumption challenged Anonymous individuals cannot trade with each other

Peer-to-Peer
Results
Marketplace
A multi-billion dollar business with operations localised in over thirty countries
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Part 1: Business Model Innovation in Practice
After I became CEO I looked at the world and realised that over the next 10 or 20 years there would not be much tailwind. It would be a more global market, it would be driven by innovation and a premium would be placed on companies that could generate their own growth. We had to change the company to become more innovation driven.
Jeffrey R. Immelt, Chairman and CEO of GE
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Business Model Innovation Categories and Models
Financial Models
Advertising Arbitrage Bartering Buy now, pay later Buy now, receive later Cost-plus Demand-driven pricing Freemium Hire purchase Pay as you go Pay for performance Pay what you want Shared ownership Simple pricing Subscription
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34 36 38 40 42 44 46 48 50 52 54 56 58 60 62
Proposition Models
Bespoke Build to sell Bundling Platform play Product pyramid Second purchase Value add
Page
68 70 72 74 76 78 80
Distribution Models
Delivering to demand Disintermediation Expert disaggregation Multi channel Sell in, sell out White label
Page
86 88 90 92 94 96
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Business Model Innovation Categories and Models
Customer/Market Models
First-mover advantage
Page
102
Operational Models
Co-operation
Page
118
Relationship Models
Aggregator Brand power
Page
142 144
Installed base
Intimidation Local monopoly Philanthropic profit Second to market
104
106 108 110 112
Co-operative
Cost leadership Franchise Landlord License Open source Rapid product cycling Residual management Vertical integration
120
122 124 126 128 130 132 134 136
Marketplace
Network effect Peer-to-peer Profit multiplier
146
148 150 152
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Financial models
Production innovation results in new or improved products and services, and may change the basis of competition. Production innovation allows some scope for premium pricing, and process innovation may result in price leadership.
Joe Tidd and John Bessant, Managing Innovation
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Financial models
Advertising

Arbitrage
Bartering

Yellow Pages Facebook Google Metro
Glencore International Bridgewater Associates Betfair Moneycorp
Google Barterzone Swap.com One Red Paperclip
Buy now, pay later

Visa DFS Ford Credit Littlewoods
Buy now, receive later Barratt

Cost-plus

Wal-Mart NASA Horizon BAE Systems
Kuoni Virgin Galactic Rolls Royce
Demand driven pricing easyJet
Freemium

Hire Purchase

Pay as you want

Pay as you go
37signals YouSendIt LinkedIn Skype
Vauxhall Beko Lease Corporation International Bright House
Radiohead One World Everyone Eats CROW Clothing Guggenheim Museum
Vodafone
eBay
Travelodge
Sky Sports
Progressive Insurance
Salesforce Zipcar
Pay for performance Google
Virgin Health Miles GE Healthcare Michael Owen
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Financial models (continued)

Shared ownership

Simple pricing

Subscription

RCI Netjets British Horseracing Authority Share to Buy
Poundland Iceland Taybarns Insure and Go
Fitness First O2 Readers Digest Sunday Times Wine Club
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Your most unhappy customers are your greatest source of learning.
Bill Gates, Chairman of Microsoft
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Advertising
Traditional advertising revenue where the provider sells an audience to companies who want to reach them.
Can be a sole business model or used in conjunction with others. Supports many of the emerging e-business models with $40bn of the world's $500bn advertising spending now online.
Which industries
Business services, online media, websites, newspaper
Who
Yellow Pages, Facebook, Google, Metro
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Advertising
Business services
Online media and technology

Facebook Pages and SocialAds are the primary sources of revenue stream to support the social networking site
The original free directory/ online services paid for by advertisers seeking a more visible profile
Websites
Its AdSense advertising model charging sponsors on a pay-per-click basis depending on the keywords
Newspapers
Use its revenues from selling advertising space to support free distribution of the paper
Arbitrage
A business model based on identifying market inefficiencies and exploiting these to generate value.
Which industries
Commodities, financial services, leisure, banking
In financial markets, this model takes advantage of a price differential between two or more markets and makes appropriate transactions to earn profits.
Who
Glencore International, Bridgewater Associates, Betfair, Moneycorp
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Arbitrage
Commodities
One of the worlds leading integrated producers and marketers of commodities benefitting from price differences in each country
Financial services
Hedge funds profits by reduce volatility and risk while attempting to preserve capital and deliver positive returns under all market conditions
Leisure
Internet bookmakers have given rise sports arbitrage where gamblers are able to use different odds on different systems to cover all possible outcomes of the event
Financial services
A foreign exchange and international payments specialist, making profits on foreign exchange price differentials in different markets
Bartering
The original (Bronze Age) business model.

Trade exchanges enable individuals and companies to barter, trade or swap products and services. Can be used to allow businesses to operate with alternative capital solutions. Revived by technology and commonly facilitated by eMarketplaces.
Which industries Online media and technology, business services, websites
Who
Google, Barterzone, Swap.com, One Red Paperclip
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Bartering
Business services
Australasian business barter exchange allowing SMEs to trade out across borders to increase their customer base
Barters search engine links for free access to content
Websites
The worlds largest swap marketplace, with members swapping millions of items per year
Miscellaneous
(In)famous barter of one red paperclip for a house through a series of 14 trades
Buy now, pay later
Credit works on the principle of granting finance to a borrower with deferred payments, generating debt which is then generally repaid with interest at a later date.
Which industries
Financial services, retail, automotive
Who
Visa, DFS, Ford and Ford Credit, Littlewoods
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Buy now, pay later
Financial services
Debenhams and several other retailers entered the credit market with store cards, essentially credit cards valid only in-store to encourage greater sales
Retail
Offers interest free credit with nothing to pay for 4 years to encourage consumers to purchase more expensive items than they might have otherwise bought
Automotive
Offer finance deals which give consumers the means to purchase and also are a revenue stream in their own right
Retail
The "home of big brands" - a catalogue based home shopping company offering branded and own label products with payment plans to spread the cost of purchase
Buy now, receive later
Users pay a proportion or all of the cost upfront to secure access to scarce resources or products and services in order to enable the supplier to commit resource to delivery.
Which industries
Property and construction, automotive, leisure
Who
Barratt, Kuoni, Virgin Galactic, Rolls Royce
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Buy now, receive later
Property and construction

Allows pre-construction reservation via deposit proportional to initial value. Investors purchase at a discount to the terminal value of the property in a rising house market
Leisure
UK's leading tour operator requires non-refundable deposits to secure premium destination holidays. Industry standard practice within the holiday market
Leisure
Has taken over $30million in deposits since plans for sub-orbital spaceflights were announced in 2004 without a set date for the first flight
Automotive
With a 2-year waiting list and worldwide pre-orders the 300K Phantom Coupe generated bids of 4 times the estimated sales value to secure an advance place on the 2009 delivery date
Cost-plus
Calculates the cost of the product, then includes an additional amount to represent profit. It is used primarily because it is easy to calculate and requires little information. One evident variety includes turnkey governmental projects.
Which industries
Supermarket, government contracts and public utilities, energy, defence and aerospace
Who
Wal-Mart, NASA, Horizon Nuclear Power, BAE Systems
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Cost-plus
Supermarket
Used a transparent cost plus model to expand its position in the healthcare market through its WMS Prescription Drugs Plan PBM
Government
The United States Space Program is funded on a cost-plus contract, since long-term quality is much a higher concern than cost
Energy
A joint venture between E.ON UK and RWE npower developing a new generation of nuclear power stations on a costplus contract with the UK government
Defence and aerospace

BAE Systems is the predominant supplier to the UK Ministry of Defence with many contracts arranged on a cost plus basis including and award fee
This model involves altering the supply and price based on the demand by understanding and making the most out of customers willingness to pay. New models factor popularity into pricing.
Which industries
Airline, e-Commerce, hotels, media
Who
EasyJet, eBay, Travelodge, Sky Sports
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Airline
Price is changed depending on demand ranging from 10 to 300 for the same flight depending on availability
E-Commerce
An online auction shopping website in which the price of products are determined by the demand from customers
Hotels
Media
Expanded its news and entertainment offerings to signing up high-demand sports content with higher prices charged for popular events
The second largest budget hotel brand in the UK, its room prices fluctuate according to the demand
Freemium
Offers basic services for free whilst charging a premium for advanced or special features rather than the older models of advertising-supported free services. The term was popularised by a venture capitalist, Fred Wilson, in 2006.
Which industries
Web technology companies, software developers, online media and technology
Who
37signals, YouSendIt, LinkedIn, Skype
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Freemium
Software developer
Offers four commercial and two free web applications with feature-limited free versions, time-limited trials and revenue-generating full access
Business services
Offers a "FedEx for the Internet" file delivery service for transferring large files with a free 100Mb version and three premium services

Provides free business network services and requires payment for premium services with online support. As of May 2008, it had more than 24 million registered users spanning 150 industries
Telecommunications
Provides computer-tocomputer calls for free and charges a low per-minute rate for calling landlines and mobiles.
Hire purchase
May also be referred to as closed-end leasing. This model allows buyers to pay the asked price for an item by monthly instalments instead of a lump sum. When the instalments equal the original full price (plus interest), the buyer may exercise an option to buy or return the goods.
Which industries
Automotive, household appliances, aviation, retail
Who
Vauxhall, Beko, Lease Corporation International, Bright House
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Hire purchase
Automotive
To ensure that its customers will always get to drive Vauxhall latest models, customers can pay a modest down-payment followed by fixed monthly payments, then return the vehicle at the end of their contract.
Household Appliances
A home appliances company offering customers to own its products like fridges, cookers, washing machines, etc. on a hire purchase basis.
Aviation
A commercial aircraft leasing company with offices in London, Dublin and Singapore, providing aircraft leasing services to national flag carriers including British Airways, Air France, Singapore Airlines, etc.
Retail
The leading rent-to-own company in the UK, providing quality branded household goods to customers in affordable weekly payments through over 220 retail stores nationwide.
Pay as you go
Requires prepayment prior to consumption of the product or service. Originally an ideal model for accessing credit-constrained consumers, this model is gaining popularity in the economic downturn. This model can also provide extra convenience for customers.
Which industries
Telecommunications, insurance, business services
Who
Vodafone, Progressive Insurance, Salesforce, Zipcar
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Pay as you go
Telecommunications
A pioneer in Pay As You Talk tariff, which provides an easy way for customers to pay without committing to a monthly contract
Insurance
Offers a Pay as you Drive car insurance option related to the amount and type of driving undertaken by the customer
Business services
Provide customer relationship management (CRM) and collaboration applications on over the internet on a pay-as-yougo basis
Business services
A car-sharing company providing pay-by-thehour cars in the US, the UK and Canada. Pay-bythe-hour cars are provided including insurance, tax, fuel and maintenance.
Pay for performance
Money is made by creating a more transparent contract between supplier and customer.
Higher performance levels result in either lower costs or better service. A type of risk sharing model long-standing model in human resources and more recently deployed in online advertising.
Which industries
Human resources, healthcare, advertising
Who
Google, Virgin Health Miles, GE Corporate Healthcare, Michael Owen
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Pay for performance

Charges advertisers differing rates dependent on the number of clicks the link receives. Trialled a new pay for performance (CPA - cost per action) style advertising system in 2006
Healthcare
Offers policy reductions, rebates and HealthCash for each successive level of activity Reward Levels achieved
Conglomerate
Uses the Bridges to Excellence model to pay physicians on quality of care and performance related criteria such as improved IT systems
Miscellaneous
Michael Owen joined Manchester United in 2009 on a pay-as-you-play contract, given his injury problems
Pay what you want
An evolution of the demanddriven pricing model, this model also varies price based on demand by factoring in satisfaction. Although the pay what you want model is associated with non-profit organisations, it is gaining in popularity in a commercial world as well.
Which industries
Media, restaurants, clothing and apparel, museums
Who
Radiohead, One World Everybody Eats, CROW, Guggenheim Museum
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Pay what you want
Media
Radioheads 7th album In Rainbows released as a digital download available only via the band's web site. Price is determined by what individual consumers want to pay so profit is dictated by the customer
Restaurant
One World Everybody Eats is a non-profit caf in Salt Lake City, Utah, with a nomenu, no prices model. If customers cannot afford to pay, they can volunteer at the caf instead.
Clothing and apparel

An eco-friendly clothing company, setting a minimum and maximum price range for every item and lets the customer decide what they are willing to pay
Museums
Internationallyrenowned art museum where visitors decide the entry price in forms of donation
Shared ownership
Money is made by making expensive products and services more affordable.
Which industries
Recreation, aircraft, real estate
Customers will own only a certain part of the product or will have access to the services for only a certain period of time.
Who
RCI, Netjets, British Horseracing Authority, Share to Buy
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Shared ownership
Leisure
A global provider of leisure travel services and vacation exchange with its global community of more than three million timeshare owners worldwide
Aircraft
One of the first private charter jet and aircraft management companies selling fractions of specific aircraft
Sport, Leisure
Real Estate
Provide various options for racehorse co-ownerships to suit different needs of customers
An online portal offering affordable sharedownership properties
Simple pricing
Simple pricing stimulates easier decision making from customers, as it gives them a psychological benefit of knowing exactly how much they are paying for a particular product or service.
Which industries
Retail, supermarket, restaurant, insurance
Who
Poundland, Iceland, Taybarns, Insure and Go
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Simple pricing
Retail
The original, biggest and most successful single price discount retailer in Europe. Poundland currently operates a UK nationwide network of over 260 stores
Supermarket
One of Britains fastest growing retailers, focusing on its clear-cut prices for all the products
Restaurant
An all-you-can-eat experience offering amazing value, choice and convenience, with its famous 34-metre long food counter displays
Insurance
Provides customers with cheap, convenient and comprehensive travel insurance
Subscription
Revenues per customer are fixed for a certain period of time as customers are tied into contracts.
Which industries
Developments include metered subscriptions allowing purchasers to access content in metered portions.
Increase the chances of vendor lock-in.
Leisure, magazines and newspapers, telecommunications, recreation
Who
Fitness First, O2, Reader's Digest, Sunday Times Wine Club
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Subscription
Leisure
Gyms require large membership bases to generate cash flow for operations achieved by locking in customer for a year with monthly fees irrespective of usage
Telecommunications
Consumers receive substantial savings on minutes and mobile phones plus other privileges in return for signing a contract to bind them to O2 for a certain number of months
Magazine
A monthly general interest family magazine which uses a subscription model with a readership of over 80million in 70 countries in 21 languages
Recreation
Subscription based wine club in operation for 35 years providing premium membership-based wine offering for Sunday Times readers for annual fee
Proposition models
The shift from hard product to digital services is a huge challenge and a very hard transformation history says very few companies have made it... You have to burn the boats we have had to throw out our most cherished notions no longer will we fool ourselves that product innovation would be sufficient to be successful.
Antonio M. Perez, CEO of Kodak
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Proposition models
Bespoke
Build to sell
Bundling
Platform play
Product pyramid

Second purchase

SAAB
IBM Le Labo Moonpig
BTG
Cambridge Enterprises Lycra Endemol
Virgin Media
Ford Credit Microsoft Currys
Volkswagen
Intel Stardock Google
Tesco Fosters Gap BMW
Sony/Columbia iTunes IBM Caterpillar Financial Services
Value add

Thomas Cook Mintel Starbucks Dollond & Aitchison
Edengene 2008
65
Hard times can be the source of innovative inspiration. Some of the best products and services come out of some of the worst times In the early 1990s, tens of millions of dollars had gone down the drain in a futile effort to develop pen computing but tiny Palm Computing managed to revitalize the entire industry in a matter of months by transforming itself overnight from a software maker into a hardware company.
Chris Shipley, Executive of DEMO Emerging Technology Launch Pad
Edengene 2008
66
Bespoke
Demand is highly individualised, generally requiring more time and effort. This possibly results in higher profit potential on lower volumes of sale.
Which industries
Automotive, business services, consumer goods
Increasing in popularity with recent trends away from globalisation to localisation leading to efforts in mass customisation.
Highly consultative and used widely across the service industry.
Who
SAAB, IBM, La Labo Fragrances, Moonpig
Edengene 2008
67
Bespoke
Automotive
Allows customers to build their car online allowing greater degrees of customisation at a premium
Business services
Changed to a more consultative business solutions model that facilitates annuity revenue streams. Since 2001, services and consulting revenues have exceeded manufacturing
Consumer goods
Offers unique, personalised perfumes blended in front of customers at the time of purchase in an exclusive boutique setting
Consumer goods
Online personalised greeting card company that allows users to customise traditional paper cards with names, handwriting and photographs before delivering to the recipient
Build to sell
Creation of IP by a company unable or unwilling to commercialise it and effectively providing services to another company to deliver part of their business portfolio - a type of outsourcing model.
Which industries
Pharmaceuticals, academia, manufacturing, media
Who
BTG, Cambridge Enterprise, Lycra, Endemol
Edengene 2008
69
Build to sell
Pharmaceuticals
An international specialty pharmaceuticals company that is developing and commercialising products targeting critical care, cancer, neurological and other disorders.
Academia
A subsidiary of the University of Cambridge it is responsible for commercialising University discoveries through technology transfer, consultancy & venturing services as well as seed funds
Manufacturing
Lycra (elastane fibre) was commercialized in 1962, after two decades of research by DuPont. Now used under license from new owners Invista in textiles and other products e.g. nail polish
Media
Endemol, an independent TV production company, produces programmes to commissions (e.g. O2s Cell, the first ever made-for-mobile drama) as well as developing them in-house e.g. Big Brother, which are then sold to TV networks e.g. Channel 4
Bundling
Bundling a range of products together and then optimise margin per customer rather than per product to squeeze single product only competitors out of the market. In oligopolistic and monopolistic industries, product bundling can be seen as an unfair use of market power because it limits the choices available to the consumer.
Which industries
Telecommunications, technology, automotive and financial services, software, electronics retailer
Who
Virgin Media, Ford and Ford Credit, Microsoft Office, Currys
Edengene 2008
71
Bundling
Telecommunications
Virgin Medias quad play offers consumers digital television, broadband internet, landline and mobile telephones and better value the more services are taken
Automotive and financial services

Bundle of car and manufacturer credit drove most major US retail banks out of the new car financing market
Software
Microsoft Office has become the de-facto standard in office software bundling a word processor, spreadsheet and presentation graphics program
Electronics retailer
Effectively offers bundled products and services plus additional extras like warranty services at better value
Platform play
Investing in a multi-product platform and then launch new services to share the overall platform cost across multiple products addressing multiple customers.
Which industries
Automotive, business services, technology, online media and technology
Who
Volkswagen, Intel, Stardock, Google
Edengene 2008
73
Platform play
Automotive
Uses the same automotive design and manufacturing platforms across Skoda, SEAT, Audi and VW brands to minimise cost
Technology
Uses the Intel platform and combines multi-core architecture with technology and scalable processing across the entire product and services portfolio

Created the Impulse digital distribution platform allowing users to quickly and easily find their favourite game or software and download it automatically to PC

Google uses its extensive customer data collection and analysis capabilities as the core platform of its broader offers e.g. Google Analytics
Product pyramid
Broad product offering pyramid. The base of the pyramid offers low priced high volume products and the apex offers high priced, lower volume products. The base plays a strategic role, often protecting the profitability at the top.
Which industries
Supermarket, food and beverages, clothing and apparel, automotive,
Who
Tesco, Fosters, Gap, BMW
Edengene 2008
75
Product pyramid
Supermarket
Employs a hybrid subbrand structure offering the Value budget range, standard own-brand lines and the Finest premium range
Food and beverages

Expanded its brewing interests into soft-drinks and wine-making including the purchase of the high profit Berringer Blass wine brand to build its product pyramid model

Offers several distinct brands at different price points, including popular names like Gap, Old Navy and Banana Republic
Automotive
Through its acquisitions offers high-performance cars across the entire value range including Mini (budget), BMW (mid range) and Rolls Royce (premium)
Second purchase
Establishing a business as a secondary purpose to add value to the core business. Key applications are assets financing with adjacent solutions created specifically to enhance or expand the market opportunity for the portfolio, and adjacent product platforms.
Which industries
Media, technology, business services, construction
Who
Sony/Columbia, iTunes, IBM Global Financing, Caterpillar Financial Services
Edengene 2008
77
Second purchase
Media
Purchased Columbia to leverage its media position to support new emerging Sony consumer electronics standards/products post BetaMax
Media
Digital media application interface established to support sales of the iPod. Acts as an interface to manage the contents on Apple's iPod and iPhone products
Technology
Provides specialist financing to support the sales of their core technology product portfolio covering stand alone acquisitions and IT business transformation projects
Construction and mining equipment

Offers a range of financing solutions covering their machinery, power, marine and project financing product ranges
Value add
Provides additional value into the main products and services (e.g. through bundling, analysing or branding) before selling to the end user for a premium.
Which industries
Leisure, business services, food and beverages, retail
Who
Thomas Cook, Mintel, Starbucks + WiFi, Dollond & Aitchison
Edengene 2008
79
Value add
Leisure
Bundles various elements that make up a holiday package from different suppliers, adding value by synchronising and coordinating the elements for holiday makers
Business services
Supplies consumer, media and market research, that is analysed and sold as coherent reports through three delivery platforms Premier (analysis), Oxygen (online analyst opinion) and Inspire (forecast trends)
Food and beverages

An international coffee house chain, providing free WiFi as part of its services. Arguably known for its Starbucks experience rather than the coffee itself.
Optical retailer
Dollond & Aitchison, like most opticians buy frames and lenses, then glaze and fit them together to their patients requirements, selling them at a substantial profit
Distribution models
Our philosophy has been to be fiscally conservative, so we can be operationally aggressive We're looking for something where we can make something happen: an industry where the competition is asleep, hasn't taken advantage.
Wayne Huizenga, Founder of Blockbuster Video
Edengene 2008
82
Distribution models
Disintermediation

Diet Chef
Dell Avon Waitrose Deliver Direct Line
Multi channel

Sell-in, sell-out

White label

Servisair
Pepsico Laithwaites Ann Summers British Airways
Unilever Walls Ice Cream San Pellegrino Bridgestone
Sainsburys Dixons, Currys Waterstones St Minver
Addison Lee
Star HBO On Demand
InfoCash
Bosch Capital One
Edengene 2008
83
Innovation is the blood of an enterprise. The question is: do we have enough red blood corpuscles?
Peter Brabeck-Letmathe, President and CEO, Nestl SA
Edengene 2008
84
This model involves products and services being brought directly to the people who require them, exactly when and where they are needed.
Which industries
Food and beverages, transport, business services, media
Who
Diet Chef, Addison Lee, Star, HBO On Demand
Edengene 2008
85
Food and beverages

Delivers chef prepared, healthy & calorie-controlled meals to people who want to lose weight for a subscription fee across the UK
Transport
Londons leading minicab company providing 10m trips a year using its fleet of 2000 vehicles to consumers and businesses. Various payment options, from cash on arrival to various account options
Business services
Provides on-demand computing and communication services (e.g. business hosting and content management solutions) to UK businesses
Media
HBO On Demand offers feature films, sporting events and entertainment programs to viewers on a pay-per-view basis
Disintermediation
Businesses can lessen dependence on intermediaries, discounters or traditional channels and serve directly to their customers. Internet has significantly enhanced the possibility of this business model, often as a result of high market transparency.
Which industries
Consumer electronics, consumer goods, supermarket, insurance
Who
Dell, Avon, WaitroseDeliver, DirectLine
Edengene 2008
87
Disintermediation
Consumer electronics
Introduced a direct-toconsumer sales model in 1992 and was able to leapfrog rival Compaq to become the largest seller of personal computers in the USA within 7 years
Consumer goods
Worlds leading direct seller of beauty and related products, sells through 5 million Avon ladies worldwide and, more recently, through its website
Supermarket
In 2008 Waitrose Deliver was launched, cutting out (and directly competing with) its previous delivery partner Ocado in parts of the UK where Waitrose stores are present
Insurance
Offers various types of insurance policies straight to end buyers with such deals not available on cost comparison websites
An extension of the disintermediation model, expert disaggregation identifies and specialises in a particular part of a service, which is generally bundled as part of a bigger overall offering, and instead sells this separately.
Which industries
Manufacturers, business services, financial services
Who
ServisAir, InfoCash, Bosch, Capital One
Edengene 2008
89
Business services
Provides alternative airport lounges throughout the UK and Continental Europe independent to tied airline lounges
Financial services
Independent ATM supplier with over 1,000 machines in operation throughout the UK and full ATM service support programme
Automotive
Produces highly profitable automobile components taking margin from the traditional auto industry value chain
Financial services
A financial services disaggregation separating the debit card from the chequing account and offer as a unique service
Multi channel
Same product or product class sold through with different distribution channels to different segments of the socio-demographic market, generally using differentiated pricing bands. Exploits the benefits of distribution channels and adds value for consumers. There is a risk of cannibalisation and lower margins.
Which industries
Food and beverage, clothing and apparel, leisure
Who
Pepsico, Ann Summers, Laithwaites, British Airways
Edengene 2008
91
Multi channel
Food and beverage

Employs different sales channels, e.g. vending machines, supermarkets, pubs. Each sales channel has a different price mechanism due to variations in demand
Retail
Retailer and home delivery wine merchant selling premium wines from small production winemakers. Also uses wine tasting and dinner events and markets through corporate wine clubs

Multi-channel retailer of lingerie and adult entertainments targeted at women. Uses mainstream and high street retail locations, markets products online and via catalogues and home parties
Leisure
Offers flights direct to end customers, as package holidays and through travel agents
Sell-in, sell-out
Enhancing competitive positioning through a dual strategy - sell-in: establish product dominance in wholesale and retail distribution, then sell-out: incentivise retailers to push the product in the market.
Which industries
Consumer goods, food and beverages, automotive
Who
Unilever, Bridgestone, San Pellegrino, Wall's Ice Cream
Edengene 2008
93
Sell-in, sell-out
Consumer goods
Used by 1 in 3 households in the US, Unilever built a dominant position for the Dove range and then used consumer loyalty and retailers to push the product
Food and beverages

UK market leader in impulse purchase "handheld" products. Best-selling ice cream that used its popularity to establish a network of independent vendors to promote and sell the product range
Food and beverages

Mineral water that established a strong market position selling in to key markets and then using restaurants to sell out as a premium dining product
Automotive
Used sell-in/sell-out to drive their market entry to the European retail tyre market
White label
New generation of the insourcing/ outsourcing model. A supplier packages an existing product or produces new products for another company which then brands and sells as their own.
Which industries
Supermarket, electronic retailers, booksellers, software developers
Who
Sainsburys, Dixons, Currys, Waterstones, St. Minver
Edengene 2008
95
White label
Supermarket
Sainsburys was among the original adopters of white label models using suppliers to deliver ownname products and build loyalty while managing cost
Electronics retailers
Maintain a sub-brand for mass-produced generic electronics (DVD, TVs) produced under white labelling production arrangements (e.g. Matsui and Saisho)
Booksellers
Used Amazon's website under a white labelling arrangement to enable a successful brand to offer a service without having to invest in creating the technology and infrastructure itself
Software developers
Offers fully managed white label gaming services for blue-chip media brands and integrated gaming solutions for European sports books including Virgin and Yahoo
Customer/Market models
Doing the things we do now and doing them better, cheaper and faster will take us so far. But it will not take us far enough. We're going to have to do new things in new ways.
Peter Bonfield, CEO British Telecom
Edengene 2008
98
Customer/Market models
First-mover advantage Eli Lilly

Installed base

Intimidation

Gillette Lexmark Brita BeerTender
Walmart De Beers Standard Oil British Airways
Local monopoly Tesco
Travelocity Yahoo Hoover
Odeon
Samsung
GlaxoSmithKiline
Philanthropic profit Bill and Melinda Gates Foundation

Second to market

Amazon Blackberry Verizon Dell
Product Red Grameen Bank Zwaggle
Edengene 2008
99
Value innovation is about making the competition irrelevant by creating uncontested market space. We argue that beating the competition within the confines of the existing industry is not the way to create profitable growth.
W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy
Edengene 2008
100
First-mover advantage can be instrumental in building market share and reaping near-monopoly status and high margins when potentially insurmountable advantage is gained by the first significant company to move into a new market.
Which industries
Pharmaceuticals, leisure, online media and technology, consumer goods
Who
Eli Lilly, Travelocity, Yahoo, Hoover, Virgin Galactic
Edengene 2008
101
Pharmaceuticals
Market leading reputation for being first to market with novel drug classes. Prozac was the first SSRI anti-depressant on the market with three years of exclusivity
Leisure
Travelocity.com was the first website that allowed consumers to access fare and schedule information, but also to reserve, book, and purchase tickets without the help of a travel agent
Online Media and technology

The first popular directory and search engine. Used its first mover position with an easy-to-remember brand name and aggregation of content
Consumer goods
The first 'electric suction sweeper' on the market, the Hoover brand name became synonymous with vacuum cleaners and vacuuming
Installed base
Commonly referred to as the bait and hook model. Profits on initial product sales are usually low/zero or small loss, but the profit margins made are generally from follow up sales. Requires building a large initial product base profits, which are realised on repeat business.
Which industries
Consumer goods, electronics goods, food and beverages
Who
Gillette, Lexmark, Brita, BeerTender, Nespresso
Edengene 2008
103
Installed base
Consumer goods
A literal razor and blade model, in which Gillette sells its razors at a very cheap prize and generates profits from its blades
Electronics goods
One of the largest suppliers of home inkjets and business printers, using the printer as the installed base and benefits from high-margin refill cartridges
Consumer goods
Sells water filters which require refill cartridges. These are relatively expensive compared to the price of the initial product and need to be replaced every four weeks
Food and beverages

A state-of-the-art appliance developed by Krups which dispenses fresh draught beer from Heineken mini kegs
Intimidation
Competitive model used by market leaders to either drive down costs of suppliers and/or increase price to consumers. Also used by suppliers of unique non-substitutable consumables.
Which industries
Supermarket, retail, oil and gas, transportation
Who
Walmart, De Beers, Standard Oil, British Airways
Edengene 2008
105
Intimidation
Supermarket
Drive down supplier prices to increase profits and maintain their cost leadership position. Walmart has significant power relative to the suppliers
Jewellery retailer
Controls a majority of the worldwide diamond market, creating an artificial scarcity of diamonds enabling them to control pricing.
Oil and gas

Used its dominant value chain position to gain cost advantage from secret rebates from the railroads shipping oil to the refineries; gaining preferential treatment as a high-volume shipper
Transportation
Used position as dominant national airline in the 1990s to lobby against the dismantling of London Air Traffic Distribution Rules preventing new UK carriers such as Virgin operating out of Heathrow
Local monopoly
Created as a result of either a natural or artificial lack of strong competition in a particular area. The prospective consumer has very little choice but to accept the price and products due to the absence of available substitutes.
Which industries
Supermarket, leisure, pharmaceutical
Who
Tesco, Odeon, Samsung, GlaxoSmithKline
Edengene 2008
107
Local monopoly
Supermarket
Creates an artificial monopoly through dominant market positions in certain regions, squeezing smaller local competitors
Leisure
Being the only cinema in many towns makes it a local monopoly by itself. It can charge pretty much anything for movie tickets, confectionary prices and also prevent customers from bringing their own snacks
Banking
Pharmaceutical
Zantac was covered by over 400 patents compensating for the high cost of development while creating a natural monopoly protecting GSK from me-too competition
Local banking bus for rural areas
Creative model encouraging peer-to-peer social change. Embeds the principle that the more good that gets done, the more attractive the business is to its customers, and the more profitable it becomes.
Which industries
Financial services, consumer goods, websites
Who
Bill and Melinda Gates Foundation, Product Red, Grameen Bank, Zwaggle
Edengene 2008
109
Poverty reduction
Urges business leaders to integrate philanthropy into their business efforts. Supports initiatives in education, world health and population, and community
Consumer goods
Brand licensed to partner companies who creates a product with the Product Red logo selling products in return for a percentage of the profit given to the Global Fund
Financial services
Microfinance organisation and community development bank started in Bangladesh. It makes small loans to the impoverished without requiring collateral.
Websites
A national network of parents who gather online to share their childrens gently-used toys, books, clothing, etc. with other families
Second to market
Waits for the first-mover to take all the risks and learn through those mistakes or problems.
Exists in non-IP/patented industries where the first mover is not protected by the creation of artificial barriers to entry. This model also reduces the marketing task of having to educate the public about the new product or service
Which industries
Online media and technology, telecommunications, IT services
Who
Apple, Blackberry, Verizon, Dell, Internet Explorer
Edengene 2008
111
Second to market
E-commerce
Followed Charles Stack Online Bookstore, making a significant entrance into the online book market and has dominated the market ever since whilst branching into adjacent markets
Telecommunications
Blackberry smart-phones replaced Palm handheld computers as the global leader in mobile computing devices using a better platform technology
IT services
Compuserve's dial-up service provider was supplanted by AOL, succeeded in turn by third to market Verizon, an internet cable provider which now dominates the broadband market in the US
Technology
IBM created the personal computer market followed by Compaq as a fast follower later succeeded by Dell with the introduction of a better business model
Operational models

Edengene 2008
113
Creativity doesnt care about economic downturns. In the middle of the 1970s, when we were having a big economic downturn, both Apple and Microsoft were founded. Creative people dont care about the time or the season or the state of the economy; they just go out and do their thing.
Howard Lieberman, serial entrepreneur and founder of the Silicon Valley Innovation Institute
Edengene 2008
114
Operational models
Co-operation OPEC

Co-operative

Cost leadership

Franchise

Interflora The Co-operative Organic Milk Cooperative Energy4All
Takeda/ Abbott Smart Sony Ericsson
Ryanair Primark Lidl, Aldi IKEA
McDonalds Hampton Hotels Dial-A-Husband 7-Eleven
Landlord Savills
License

Enterprise Rent-ACar
Coca Cola Disney Major League Baseball National Geographical Merchandise
LoveFilm.com
WishWantWear.com
Open source Life Ray

Red Hat MySQL Trolltech
Rapid product cycling Reckitt Benckiser

Residual management LeasePlan

Vertical integration American Apparel

Swatch Zara Procter and Gamble
Iron Mountain Waste Management Inc. Cartridge World
Apple Exxon Mobil Reliance Industries
Edengene 2008
115
Lets be honest. Theres not a business anywhere that is without problems. Business is complicated and imperfect. Every business everywhere is staffed with imperfect human beings and exists by providing a product or service to other imperfect human beings.
Bob Parsons, CEO and founder of The Go Daddy Group, Inc.
Edengene 2008
116
Co-operation
A co-operation between businesses in similar or different industries to create new products or services together or to set certain agreements.
Which industries
Oil and gas, automotive, pharmaceuticals, consumer goods
Who
OPEC, Takeda and Abbot, smart, Sony Ericsson
Edengene 2008
117
Co-operation
Oil and gas
Automotive
Smart is a co-operation between SMH (makers of Swatch watches) and Daimler-Benz AG (maker of Mercedes-Benz cars)
OPEC members meet and agree on combined output levels in order to maximise profits from oil production
Pharmaceutical
Consumer goods
A mobile phone manufacturer, which is a joint venture between Sony Corporation of Japan and Ericsson of Sweden
Worked together to develop and distribute the cancer drug Gemzar (now marketed by Eli Lilly)
Co-operative
A collective business model in which smaller independent operators, who are unable to compete against larger firms or unable to bring a product/service to market alone, band together to work as a co-operative. These networks are able to pool resources, share information and provides other benefits including increased purchasing power for members of the cooperative network.
Which industries
Retail, agriculture, energy, financial services
Who
Interflora, The Co-operative, Organic Milk Cooperative, Energy4All
Edengene 2008
119
Co-operative
Retail
A group of organisations worldwide providing florists with a brand under which flowers can be purchased and delivered to 64 countries. Allows for huge geographical reach
Retail
UKs consumer cooperative with a diverse range of business interests, including Food, Travel, Financial Services, Healthcare, Funeral care, Legal Services, Motors and Online Electricals.
Agriculture
The largest organic milk cooperative in the UK linking together independent organic milk producers to create a collective better able to market the product
Energy
An umbrella co-operative founded to support the individual renewable energy co-operatives operating in the UK uniquely owned by the cooperatives it assists
Cost leadership
The no frills model. Classic new entrant strategy, entering a market with low costs can trump current providers e.g. supermarket brand category killers.
Which industries
Airlines, consumers goods, supermarkets, retail
Who
Ryanair, Primark, Lidl, Aldi, IKEA
Edengene 2008
121
Cost leadership
Airline

Targets young, fashion conscious under 35s, offering them quality fashion basics at valuefor-money prices
An Irish airline became one of Europes largest carriers with its no-frills low-cost service.
Supermarkets
European discount supermarket chains. Generally stock staple items such as food, beverages and other inexpensive household items, focusing on cheaper products
Retail
The worlds largest furniture retailer, focusing on ready-toassemble products at affordable prices
Franchise
Think locally, act globally. Franchises operate through grants to sell or distribute products and services in a certain area for an agreed fee.
Reduces overall risk to parent company and increases local knowledge and geographic footprint. Employ standardised business methods, products and practices.
Which industries
Food and beverages, hotels, business services, convenient stores
Who
McDonalds, Hampton Hotels, Dial-A-Husband, 7-Eleven, Pink Ladies Taxis
Edengene 2008
123
Franchise
Food and beverages

70% of McDonald's worldwide restaurant businesses are franchises supported by operations, training, advertising, and marketing from the mother company
Hotels
Although being part of Hilton Hotels Corporation, most of the 1,700+ Hampton Hotels are operated by individual franchisees
Business services
The Dial-A-Husband system provides customers with quality workmanship at a fixed price regardless of the type of service. The business offers geographic specific franchises
Convenience stores
The worlds largest franchisor of convenient stores, with more than 39,000 outlets around the world.
Landlord
This model involves leasing out products and services for a fee. Customers may opt for this option to convert their costs into variable cost instead of otherwise fixed.
Which industries
Real estate, car rental, leisure, fashion
Who
Savills, Enterprise Rent-A-Car, LoveFilm.com, WishWantWear.com
Edengene 2008
125
Landlord
Real estate
Car rental
A global real estate services provider with more than 200 offices worldwide
The largest car rental company in the North America, with over 6,000 locations
Leisure
A UK-based provider of home video and video game rental through DVD, and on-demand streaming. It is currently a subsidiary of Amazon.com.
Fashion
A new start-up business offering designer dress rental services at a fraction of the recommended retail price
License
Companies with well-known products or brands granting permission to a licensee to distribute such products under a trademark, e.g. mass-distributed software used by individuals on personal computers under license from the developer of that software.
Which industries
Food and beverages, consumer goods, sporting goods, retail and media, software developers
Who
Coca-Cola, Disney, Major League Baseball, National Geographic, Microsoft Windows
Edengene 2008
127
License
Food and beverages

Produces concentrate, which is then sold to various licensed Coca-Cola bottlers who hold territorially exclusive contracts with the company and produce and distribute the finished product
Consumer goods
Licensed Disneybranded products featuring Disney and Disney-Pixar characters on healthy food, health and beauty items, baby and toddler products
Sporting goods
Major League Baseball (MLB) is expanding its licensing programs beyond the traditional mix of apparel, toys, video games, trading cards, memorabilia, etc.
Retail and media

Licensing is now the fourth-largest business at National Geographic including Interbrand, New York, for backpacks, travel gear, luggage and travel accessories
Open source
Also known as collaborative design. Offers open-source software with a free license, while using professional services, maintenance and support for these products to derive revenues. Second generation companies use dual licensing to combine free access with ownership and revenues for the sales of traditional licences.
Which industries
Web technology companies, software developers, telecommunications
Who
Life Ray, Red Hat, MySQL, Trolltech, Sugar CRM
Edengene 2008
129
Open source
Business services
Provides free documentation and paid professional service to users of its enterprise portal technology
Software
Customers co-developing and adapting the free Linux product with subscription-based support and consulting
Software
A second generation open source company using dual licensing for MySQL Server. Acquired for $1bn by Sun Microsystems in 2008
Telecoms
Developed the Greenphone, a smartphone using free and open source software. Acquired by Nokia in 2008
A model that deliberately accelerates the lifecycle of the product portfolio to better address customer needs and differentiate against competitors - even if it means that popular products are terminated or substantially cannibalised.
Which industries
Chemicals, clothing and apparel, fashion, consumer goods
Who
Reckitt Benckiser, SWATCH, Zara, Procter and Gamble, Unilever
Edengene 2008
131
Chemicals
A principle philosophy of the company which generates more than 40% of revenues come from products launched in previous 3 years

Offers limited edition watches as standard to stimulate demand and engender a feeling of product exclusivity
Fashion
Inditex owned Zara uses customisable patterns for its clothing, allowing for changes to be made quickly in response to changing trends meaning that product turnaround is far shorter than the industry average
Consumer goods
Use technology and customer experience to rapidly innovate and churn and constantly evolve well known product lines such as Ariel detergents
Residual management
Focus on generating upside benefit by extracting additional value from the residual value of an asset. Recycling and remanufacturing models are increasing in popularity and have become sufficiently wellestablished to challenge the primary industries they support.
Which industries
Waste management and (re)manufacturing, business services, automotive
Who
LeasePlan, Iron Mountain, Waste Management Inc, Cartridge World
Edengene 2008
133
Residual management
Business services
World's largest vehicle leasing provider which has opened new distribution networks and online systems to maximise the resell value of their stock
Business services
Offers comprehensive information management solutions, from data protection to secure destruction
Waste Management
North Americas leading provider of integrated environmental solutions, with a mission to maximise resource value and minimise environmental impact
Remanufacturing
Specialise in the remanufacturing of ink and toner cartridges. OEM manufacturers are embedding challenges into cartridge refill to combat the increasing market share of the remanufacturers
Vertical integration
Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need.
Which industries
Clothing and apparel, consumer goods, oil industry, petrochemicals
Who
American Apparel, Apple, ExxonMobil, Reliance Industries
Edengene 2008
135
Vertical integration
Clothing and Apparel

A fashion retailer and manufacturer controlling dyeing, finishing, designing, sewing, cutting, marketing and distribution of the products in a single building
Consumer goods
Apple owns many elements of the ecosystem for the production iPhone and iPad, including the processor and software
Oil industry
Active along the entire supply chain from locating crude oil deposits, drilling and extracting, refining and distributing the fuel to companyowned retail stations for sale to consumers.
Petrochemicals
Reliance has a complete vertical product portfolio from oil and gas production, refining, petrochemicals, synthetic garments and retail outlets.
Relationship models

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137
The Internet is based on a layered, end-to-end model that allows people at each level of the network to innovate free of any central control. By placing intelligence at the edges rather than control in the middle of the network, the Internet has created a platform for innovation.
Vinton Cerf, Chief Internet Evangelist of Google
Edengene 2008
138
Relationship models
Aggregator
Brand power
Marketplace

Network effect

Peer-to-peer

Profit multiplier

HSBC
Bank of America Ticketmaster Moneysupermarket .com
Coca Cola
Harley Davidson Versace Tiger Woods
eBay Paypal Zopa Zillow
Mastercard Flickr Bell Xbox Live
Skype YouTube BitTorrent Vuze
Apple Disney Corporation Virgin
Boeing
Edengene 2008
139
You need to be aware of what others are doing, applaud their efforts, acknowledge their successes, and encourage them in their pursuits. When we all help one another, everybody wins.
Jim Stovall, a blind American writer with his bestselling novel The Ultimate Gift and the Emmy Award-winning Narrative Television Network
Edengene 2008
140
Aggregator
A financial trader buys and sells financial assets without significantly transforming (or designing) them. Banks, investment firms, and other financial institutions that invest for their own account are included in this business model.
Which industries
Financial services (business and consumer), events, consumer finance HSBC, Bank of America, Ticketmaster, Moneysupermarket.com, Tesco Compare
Who
Edengene 2008
141
Aggregator
Financial services
Retail and business customers deposit money, which is then invested by HSBC. The customer does not pay for this service but instead receives an interest payment
Financial services
Focuses on financial management for high net worth individuals. Similarly Merrill Lynch invests money on behalf of their customers
Events
International ticket sales and distribution company Ticketmaster sells tickets supplied by its clients, venue owners, through often exclusive deals. No part of the ticket price is taken, instead a service fee is added
Consumer finance
Aggregates various financial services products (loans, mortgages, insurance) and allows consumers to compare prices and offers. Revenues come from commissions from financial service providers
Brand power
Brand creation drives profits as previous intangibles such as awareness, trust and recognition become tangible as a price premium. Include halo products which establish significant brand position, which enables complementary and adjacent products to be launched.
Which industries
Food and beverages, automotive, luxury goods, media
Who
Coca Cola, Harley Davidson, Versace Tiger Woods and professional sportsmen
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Brand power
Food and beverages

One of the most powerful brand names in the world. The brand alone was valued at $67bn in 2006 and currently markets 450 sub-brands in 200 countries
Automotive
Employs a brand synonymous with a particular lifestyle and attracts a loyal brand community with licensing of the Harley-Davidson logo accounting for almost 5% of the company's net revenue
Luxury Goods
From its start as a luxury clothing boutique Versace has used its brand to expand into accessories, fragrances, makeup, home furnishings and interior design
Media
One of the most successful golfers of all time who uses his personal brand for endorsement - by 2010 he is expected to become the world's first athlete to pass one billion dollars in earnings
Marketplace
Marketplaces create an online/offline trading venue where intermediaries allow multiple sellers to communicate with multiple buyers.
Which industries
E-Commerce, financial services, real estate
Marketplace brokers facilitate access to otherwise inaccessible buyers/sellers, and/or can reduce costs to both the buyers and sellers, a service which creates the value of the marketplace and its supporting revenue model.
Who
eBay, Paypal, Zopa, Zillow
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Marketplace
E-Commerce
Virtual auction house providing an online market place to buy and sell goods and services worldwide. Now hosts localised web sites in thirty countries as extensions of the original US site
Financial services
Sellers pay for a riskreduced transaction environment with Paypal taking fees based on the value of the business. Allows users to shop without disclosing financial details to vendors
Financial services
The worlds first borrowing and lending online money exchange allowing people who have money to lend to those who wish to borrow, instead of using savings accounts and loan applications at traditional banks
Real estate
Virtual estate agent created by founder of Expedia. Disrupted the online lending market with the launch of its Mortgage Marketplace providing personalised mortgage quotes from confirmed lenders
Network effect
Requires a critical mass before utility is valuable and individual users are able to access the full benefits of the network.
Which industries
Financial services, online media and technology, telecommunications, leisure
The value of the product and service increases proportionally with the size of the user base. Introduced by Bell Telephone in 1908 and revitalised by the advent of dot.com businesses.
Who
Mastercard, Flickr, Bell, Ethernet, XBox
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Network effect
Financial services
Provides credit and transaction processing services which only became viable once enough consumers and retailers are signed up to create a global payment transaction network

Image and video hosting website, web services suite, and online community platform hosting over 2 billion images managed by collaborative tagging supported by its contributing network
Telecommunications
Merged over 4000 local and regional telephone exchanges into the Bell System to create the modern day telephone network
Leisure
Microsofts Xbox 360 was revolutionary as it allowed users to play games online and download new content 25 million have been sold since 2005, while rival Sonys PS3s network has 14 million users
Peer-to-peer
Pools the cumulative assets (e.g. bandwidth, storage space) of individual users rather than conventional centralised resources.
Which industries
Software developers, telecommunications, online media and technology
World Wide Web was originally conceived as an P2P network.

Evolving business model which is still struggling to be profitable.
Who
Skype, YouTube, Bit Torrent, Vuze, Joost, Gnutella, Freenet, Kazaa
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Peer-to-peer
Telecommunications
Allows users to make free calls over the Internet to other Skype users worldwide. Revenues come from the charges to call a non-Skype user

Video sharing website allowing community of users to upload, view and shares video clips. Bought in 2006 by Google for $1.65bn

Includes BitTorrent WebStore (movie, TV, music and video games distribution), DNA (delivery network accelerator) and SDK (software development kit)

A BitTorrent client used to transfer files via theBitTorrent protocol. Vuze is written in Java and uses the Azureus Engine.
Profit multiplier
The profit multiplier model is used by firms which try to leverage their base IP (brand, trademark) and build multiple avenues to grow profitability. Unlike a multi-component business model which repackages the same base product, the profit multiplier uses the same base IP to expand the product portfolio.
Which industries
Technology, media, consumer goods, aircraft
Who
Apple, Disney Corporation, Virgin, Boeing
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Profit multiplier
Technology and media

Apple expanded the original iPod base technology to include other lines such as the iPod Nano, iPod Touch and associated accessories
Media
Disney characters continue to record profits for Disney nearly 100 years on
Consumer goods
Leveraged Virgin brand into various avenues; travel (Virgin Atlantic, Virgin Galactic, Virgin Trains), communications (Virgin Mobile), financial services (Virgin Money) etc
Aircraft
Boeing's main business is to manufacture and sell airplanes. However, it generates significantly more income by selling airplane components to other manufacturers around the world.
Conclusions
Amazon is building a new way of doing commerce: personalized, database-driven commerce, where the big value is not in the purchase fulfilment, but in knowing as much about a customer base of ten or twenty million people as a corner store used to know about a customer base of a few hundred.
In today's mass-merchandising world, that's largely gone; Amazon is trying to use computer technology to re-establish it.
Andrew Grove, Founder of Intel Corporation
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Keep the customer at the heart of business model innovation
Business models begin and end with the customer, from the oldest and most basic bartering and shop keeping models to the innovative technology-driven web models. Business model innovation may disrupt product lines, smash value chains or make entire industry practices obsolete but all are intended to provide a more immediate and ultimately profitable contract with the end customer. Lose that connection with your customer and you risk losing your business.
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Customers don't always know what they want. The decline in coffee-drinking was due to the fact that most of the coffee people bought was stale and they weren't enjoying it. Once they tasted ours and experienced what we call the third place... a gathering place between home and work where they were treated with respect... they found we were filling a need they didn't know they had.
Howard Schultz, Chairman of Starbucks Coffee
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Index
In my experience, in the real-estate business past success stories are generally not applicable to new situations. We must continually reinvent ourselves, responding to changing times with innovative new business models.
Akira Mori, President and Chief Executive of the Mori Trust
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Index
Category
37signals Abbey Addison Lee ADT Security Aldi Amazon AMGEN Amie Street Amstrad Ann Summers Apple Argos Asda Astra Zeneca Avon BAE Systems Bank of America Barratt Bell Ben and Jerrys Biffa Bill and Melinda Gates Foundation Bit Torrent Blackberry BMW Bosch Brand Beckham Bridgestone Bridgewater Associates Brita 142 76 90 132 118 134 60 44 110 106 72 42 124 64 92 42 98 40 108 100 76 130 146 134 70 96 72 136 38 130 Emerging technology markets Product/services models Distribution models Market models Market models Market models Product/services models Pricing models Distribution models Distribution models Product/services models Pricing models Market models Product/services models Distribution models Pricing models Distribution models Pricing models Distribution models Distribution models Product/services models Market models Emerging technology markets Market models Product/services models Distribution models Product/services models Market models Pricing models Market models
Business Model
Freemium Residual management Delivering to demand Risk mitigation Cost leadership Second to market Blockbuster profit Demand driven pricing Product / supplier Multi channel Product pyramid Cost plus Industry co-operation Build to sell Direct to consumer Cost plus Financial asset distributor Buy now, receive later Network effect Franchise Residual management Philanthropic profit Peer to peer Second to market Product pyramid Expert disaggregator Profit multiplier Sell in, sell out Arbitrage Installed base
Industry
Software developer Financial services Transport Business services Food retailer E-commerce Biotechnology Media Consumer goods Clothing and apparel Technology and media Retail Retail Pharmaceuticals Consumer goods Defence and aerospace Financial services Property and construction Telecommunications Food and beverage Waste management Poverty reduction Online media and technology Telecommunications Automotive Automotive Fashion Industrial goods Financial services Consumer goods
Edengene 2008
159
Index
Category
British Airways Cambridge Enterprises Capital One Cartridge World Cashbox Caterpillar Financial Services Centrica Coca Cola Coca Cola Congestion Charge CROW Currys De Beers Dell Dell DFS Dial-A-Husband Diet Chef Direct Line Disney Corporation Disney Foods Dixon Dolland & Aitchison Dualit Dude, Wheres My Used Car E Wie Einfach Easy Jet eBay Eli Lilly Elk Huis de Koop 106 64 96 76 96 78 130 62 102 118 46 112 128 92 134 38 100 90 94 72 102 112 80 110 148 120 44 104 122 86 Market models Product/services models Distribution models Product/services models Distribution models Product/services models Market models Product/services models Distribution models Market models Pricing models Distribution models Market models Distribution models Market models Pricing models Distribution models Distribution models Distribution models Product/services models Distribution models Distribution models Product/services models Distribution models Emerging technology markets Market models Pricing models Distribution models Market models Distribution models
Business Model
Multi channel Build to sell Expert disaggregator Residual management Expert disaggregator Second purchase Risk mitigation Brand power License Artificial monopoly Pay as you can White label Intimidation Direct to customer Second to market Buy now, pay later Franchise Delivering to demand Disintermediator Profit multiplier License White label Value add Producer / supplier Mash-up Cost leadership Demand driven pricing Marketplace First mover advantage Brokerage
Industry
Transportation Academia Financial services Business services Financial services Construction and mining equipment Energy and utility Food and beverage Food and beverage Business services Clothing and apparel Electronics retailers Miscellaneous Electronics Technology Retail Business services Food and drink Insurance Media Food and beverages Electronics retailers Optical Consumer goods Online media and technology Energy and utilities Airline Business services Pharmaceuticals Business services
Edengene 2008
160
Index
Category
Endemol Energy4All Ethernet Everyblock Facebook Fitness First Flickr Ford Ford Credit Fosters Free Broadband Fresh Direct GE Healthcare Gillette GlaxoSmithKline Night Nurse GlaxoSmithKline Zantac Google Google Google Analytics Google Maps Grameen Bank Green Dimes Harley Davidson Harrahs Entertainment Hoover HP HSBC IBM IBM Ikea 64 88 108 148 32 52 108 38 66 70 66 92 50 126 68 118 36 50 68 148 130 130 62 34 122 126 98 58 78 110 Product/services models Distribution models Distribution models Emerging technology markets Price models Pricing models Distribution models Pricing models Product/services models Product/services models Product/services models Distribution models Pricing models Market models Product/services models Market models Pricing models Pricing models Product/services models Emerging technology markets Market models Market models Product/services models Pricing models Market models Market models Distribution models Product/services models Product/services models Distribution models
Business Model
Build to sell Co-operative Network effect Mash-up Advertising Subscription Network effect Buy now, pay later Bundling squeeze Product pyramid Bundling squeeze Direct to customer Pay for performance Installed base Bundling squeeze Artificial monopoly Bartering Pay for performance Platform play Mash-up Philanthropic profit Philanthropic profit Brand power Arbitrage First mover advantage Installed base Financial asset distributor Bespoke Second purchase Produce/supplier
Industry
Media Energy Leisure Business services Online media and technology Leisure Online media and technology Automotive Automotive and financial services Food and beverage Telecommunications Foods and beverage Conglomerate Consumer goods Pharmaceutical Pharmaceutical Online media and technology Online media and technology Online media and technology Online media and technology Business services IT services Automotive Leisure Consumer goods Electrical retail Financial services Technology Technology Consumer goods
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Index
Category
Intel Interflora iTunes Itzbig Japan e-Market John Charcol Kuoni Laithwaites Laker Airlines Le Labo LeasePlan Levi Strauss Lidl Life Ray LinkedIn Littlewoods Lycra Magnatune Marijuana Home Delivery Mastercard McDonalds McDonalds Microsoft Microsoft Microsoft Xbox Mintel Moeller-Maersk Moneysupermarket.com Moonpig Morrisons 68 88 78 50 104 86 40 106 120 58 76 70 120 144 142 38 64 46 90 108 94 100 48 66 108 80 34 98 58 124 Product/services models Distribution models Product/services models Pricing models Distribution models Distribution models Pricing models Distribution models Market models Product/services models Product/services models Product/services models Market models Emerging technology markets Emerging technology markets Pricing models Product/services models Pricing models Distribution models Distribution models Distribution models Distribution models Pricing models Product/services models Distribution models Product/services models Pricing models Distribution models Product/services models Market models
Business Model
Platform play Co-operative Second purchase Pay for performance Marketplace Brokerage Buy now, pay later Multi channel Cost leadership Bespoke Residual management Product pyramid Cost leadership Open source Freemium Buy now, pay later Build to sell Pas as you can Delivering to demand Network effect Disintermediator Franchise Pay as you go Bundling squeeze Network effect Value add Arbitrage Financial asset distributor Bespoke Industry co-operative
Industry
Technology Retail Media Business services Business services Business services Leisure Food and beverage Airline Retail Business services Clothing and apparel Food retailers Business services Online media and technology Retail Manufacturing Online media and technology Healthcare Financial services Food and beverage Food and beverage Technology Technology Leisure Business services Shipping Consumer finance Consumer goods Retail
Edengene 2008
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Index
Category
MTV Networks My SQL Napster National Geographical Merchandise NFU Mutual Norwich Union O2 Oddcast Odeon One Red Paperclip One World OPEC Organic Milk Cooperative Ozone Paddy Power PayPal Pepsico Pfizer Philip Morris Primark Procter and Gamble Product Red Radiohead Readers Digest Reckitt Benckiser Red Hat Rolls Royce SAAB Sainsbury Sainsbury 92 144 146 102 132 48 52 142 118 36 46 124 88 36 34 86 106 60 110 120 74 130 46 52 74 144 40 58 112 124 Distribution models Emerging technology markets Emerging technology markets Distribution models Market models Pricing models Pricing models Emerging technology markets Market models Pricing models Pricing models Market models Distribution models Pricing models Pricing models Distribution models Distribution models Product/services models Distribution models Market models Product/services models Market models Pricing models Pricing models Product/services models Emerging technology markets Pricing models Product/services models Distribution models Market models
Business Model
Direct to consumer Open source Peer to peer License Risk mitigation Pay as you go Subscription Freemium Artificial monopoly Bartering Pay as you can Industry co-operation Co-operative Bartering Arbitrage Brokerage Multi channel Blockbuster profit Producer / supplier Cost leadership Rapid product cycling Philanthropic profit Pay as you can Subscription Rapid product cycling Open source Buy now, receive later Bespoke White label Industry co-operation
Industry
Media Software Online media and technology Retail and media Financial services Financial services Telecommunications Business services Leisure Miscellaneous Leisure Oil and gas Retail Business services Leisure Financial services Food and beverage Pharmaceutical Consumer goods Clothing and apparel Retail Consumer goods Media Media Chemicals Software Automotive Automotive Retail Retail
Edengene 2008
163
Index
Category
San Pellegrino Servisair Shell Simplyhired Sky Sky Sports Skype Sony/BMG Sony/Columbia South West Airlines STA Travel Standard Oil Stardock StMinver Sunday Times Wine Club Swaptree SWATCH Symantec Taiwan Cement Takeda/Abbot Telegraph Tesco Tesco Tesco Thomas Cook Ticketmaster Tiger Woods Toucan Travelocity Trolltech 136 96 60 148 32 44 146 60 78 120 100 128 68 112 52 36 74 132 44 124 32 70 118 124 80 98 62 80 124 144 Market models Distribution models Product/services models Emerging technology markets Pricing models Pricing models Emerging technology markets Product/services models Product/services models Market models Distribution models Market models Product/services models Distribution models Pricing models Pricing models Product/services models Market models Pricing models Market models Pricing models Product/services models Market models Market models Product/services models Distribution models Product/services models Product/services models Market models Emerging technology markets
Business Model
Sell in, sell out Expert disaggregator Blockbuster profit Mash-up Advertising Demand driven pricing Peer to peer Blockbuster profit Second purchase Cost leadership Franchise Intimidation Platform play White label Subscription Bartering Rapid product cycling Risk mitigation Demand driven pricing Industry co-operation Advertising Product pyramid Artificial monopoly Industry co-operation Value add Financial asset distributor Brand power Value add First mover advantage Open source
Industry
Food and beverage Business services Oil and gas Business services Media Media Telecommunications Media Media Airline Recreation Oil and gas Online media and technology Recreation Leisure Retail Clothing and apparel IT services Construction Pharmaceutical Magazines and newspapers Retail Food retail Retail Leisure Events Media Telecommunications Leisure Telecoms
Edengene 2008
164
Index
Category
Umbrolly Unilever United Co-operative Verizon Versace Visa Virgin Virgin Galactic Virgin Health Miles Vision Express Vodafone Volkswagen Waitrose Deliver Walls Ice Cream Wal-Mart Wal-Mart Waterstones Weight Watchers Whizzgo William Morris Agency Yahoo Yellow Pages You Tube YouSendIt Zara Zara Zillow Zoom Shop Zopa 90 136 88 134 62 38 72 40 50 94 48 68 96 136 42 128 112 126 48 86 122 32 146 142 42 74 104 102 104 Distribution models Market models Distribution models Market models Product/services models Pricing models Product/services models Pricing models Pricing models Distribution models Pricing models Product/services models Distribution models Market models Pricing models Market models Distribution models Market models Pricing models Distribution models Online media and technology Pricing models Emerging technology markets Emerging technology markets Pricing models Product/services models Distribution models Distribution models Distribution models
Business Model
Delivering on demand Sell in, sell out Co-operative Second to market Brand power Buy now, pay later Profit multiplier Buy now, receive later Pay for performance Disintermediator Pay as you go Platform play Disintermediator Sell in, sell out Cost plus Intimidation White label Installed base Pay as you go Brokerage First mover advantage Advertising Peer to peer Freemium Cost plus Rapid product cycling Marketplace License Marketplace
Industry
Consumer goods Consumer goods Retail IT services Clothing and apparel Financial services Consumer offers Leisure Healthcare Retail Telecommunications Automotive Retail Food and beverage Supermarket Food retailer Booksellers Healthcare Business services Business services Online media and technology Business services Online media and technology Business services Clothing and apparel Clothing and apparel Business services Retail Financial services
Edengene 2008
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About Edengene
No one has ever accused us of lagging behind. In fact, I am willing to turn an entire company upside down if it's time to do that. We're in perpetual evolution.
Richard Branson, Founder, Virgin Group
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Edengene
Edengene is a leading innovation consultancy that has helped some of the worlds most prestigious organizations connect better to their markets, transforming their ability to achieve sustainable and profitable growth through better market and customer focus Edengene combines a unique mix of entrepreneurial passion, industry experience and commercial acumen, to deliver lasting competitive advantage for clients We generate and take strategic concepts through to execution, to achieve sustainable results. As well as developing executable strategy, we collaborate with our clients on business model innovation and execution. Edengene take pride in our synergistic approach to the knowledge and skills transfer that releases the talent within clients to build a permanent, lasting legacy as well as better capability to connect to customers and markets
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Introduction to Edengene
Our company
Our clients
Our people
Established in 2000 in London, in the vanguard of smaller specialist consultancies challenging the large, established brands A specialist growth and innovation consultancy, serving major UK and European companies Delivering smart and practical solutions to business problems Helping companies re-connect with their customers, the only real and sustainable source of value Working in close collaborative teams with our clients and their staff Combining innovative thinking and creativity with commercial astuteness and rigour
Edengenes clients include over a third of the FTSE 100 and some of Europes most prominent companies Drawn from a wide variety of sectors, each is seeking new ways to grow and satisfy their customers All share a desire to be the best in their peer groups
Outstanding talent dedicated to the best interests of our clients Recruited from both commercial and consulting backgrounds, bringing practical experience to a strong knowledge base Deep skills and experience in innovation, strategy, marketing and change/programme management Market-leading capability in innovation, NPD and new proposition design Supplemented by an associate network with specialist industry knowledge and experience
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Our services
Strategy & Foresight
Developing customer-centric strategies for growth and competitive advantage

Innovation & Propositions

Conceiving, engineering and delivering compelling new business opportunities and business models

Strategy formulation and development Foresight, future market visioning, scenario planning and opportunity identification Growth strategy and roadmap design
Customer propositions, product and services Proposition portfolio diagnostic & strategy Business model innovation and re-engineering Incubation and new business ventures
Organisational effectiveness and operational model innovation/redesign
Compelling growth strategies and business plans
Smart, differentiated customer-led innovation
Marketing
Designing brand, marketing and sales strategies to communicate and realise business plans

Innovation capability
Deploying and embedding leading innovation processes and skills in your business

Customer insight Brand visioning and strategy Strategic marketing plan development Sales and channel planning
Enterprise innovation strategy, design & implementation Innovation training Innovation centres of excellence Coaching and mentoring
Competitive advantage through marketing

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Customer-centric innovation skills & processes

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Edengene
Solving problems

Innovative thinking with commercial acumen and rigour Creative yet smart, practical solutions to business problems Measured guidance from experienced advisors
The work we did with Edengene to put the Chemist back into Boots gave us the momentum and confidence to transform the company into the European healthcare leader it is today Finding such a can-do attitude in an agency partner, combined with quick minds and a focus on results, has been very refreshing
Delivering results, not just reports

Converting opportunities into more and better propositions that satisfy customers now and in the future Driving margin, market share and brand value Focussed on achieving substantial and measurable outcomes
More than just a consultancy; this was groundbreaking team working. Edengene led a business model innovation process for BTs small business team, resulting in the creation of BTs flagship pricing model: BT Business Plan
Co-working, not just consulting

...proactive, efficient, insightful and they delivered solutions which we will implement. I enjoyed working with them and recommend them Edengene enabled us to build a 3-year propositions pipeline capable of delivering tangible, sustainable growth Edengene supported an internal E.ON team with the rapid development of new pricing models for micro-generation products Edengene helped us turn broad areas into clear and concise market opportunities. They combine open creative minds with deep analytical rigour, all within a clear and easy-to-understand process
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Collaborative model, working in joint client-consultant teams Bringing expertise, energy and belief to our clients Releasing creative potential
Leaving a valuable legacy

Driving customer-centric attitudes throughout client organisations Transferring key skills and capabilities to enable sustainable success after we have gone
Edengene 2008
We can believe that we know where the world should go. But unless we're in touch with our customers, our model of the world can diverge from reality. There's no substitute for innovation, of course, but innovation is no substitute for being in touch, either.
Steve Ballmer, CEO of Microsoft
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Edengene Business Model Bible

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Edengene Business Model Bible

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Business Model Bible

Creating Value through Innovation

The art and science of innovation

Part 1: Introducing Business Model Innovation

Part 2: Business Model Innovation in Practice

Keeping customers at the heart of business model innovation

The purpose of this document

Andrew Grove, Founder of Intel Corporation

Part 1: Introducing Business Model Innovation

The art and science of innovation

Anne Sweeny, Disney Corporation

Computing Tabulating Recording Corporation

Browning automatic rifles MI carbine The Manhattan Project (atomic bombs)

Chip sets Services Consulting Innovation R&D

Punched card data processing equipment

At Edengene, we categorise business model innovation into six categories

Business Model Category 1: Financial Models

Vodafone Using pricing innovation to create a new market

Pay per performance

Assumption challenged Pay the bill at end of the month

Massive market expansion

Business Model Category 2: Proposition Models

Business Model Category 3: Distribution Models

Nespresso Engaging with customers directly to guarantee their loyalty

Business Model Category 4: Customer/Market Models

Assumption challenged Banks cannot provide loans to poor people

Empowered millions of people, changed millions of lives

Business Model Category 5: Operational Models

Assumption challenged Airlines must provide a complete flying experience

Business Model Category 6: Relationship Models

Assumption challenged Anonymous individuals cannot trade with each other

A multi-billion dollar business with operations localised in over thirty countries

Part 1: Business Model Innovation in Practice

The art and science of innovation

Business Model Innovation Categories and Models

Business Model Innovation Categories and Models

The art and science of innovation

Joe Tidd and John Bessant, Managing Innovation

Yellow Pages Facebook Google Metro

Glencore International Bridgewater Associates Betfair Moneycorp

Google Barterzone Swap.com One Red Paperclip

Buy now, pay later

Visa DFS Ford Credit Littlewoods

Buy now, receive later Barratt

Wal-Mart NASA Horizon BAE Systems

Kuoni Virgin Galactic Rolls Royce

Demand driven pricing easyJet

Pay as you want

37signals YouSendIt LinkedIn Skype

Vauxhall Beko Lease Corporation International Bright House

Radiohead One World Everyone Eats CROW Clothing Guggenheim Museum

Pay for performance Google

Virgin Health Miles GE Healthcare Michael Owen

Financial models (continued)

RCI Netjets British Horseracing Authority Share to Buy

Poundland Iceland Taybarns Insure and Go

Fitness First O2 Readers Digest Sunday Times Wine Club

Your most unhappy customers are your greatest source of learning.

Bill Gates, Chairman of Microsoft

Business services, online media, websites, newspaper

Yellow Pages, Facebook, Google, Metro

Online media and technology

Commodities, financial services, leisure, banking

Glencore International, Bridgewater Associates, Betfair, Moneycorp

The original (Bronze Age) business model.

Google, Barterzone, Swap.com, One Red Paperclip