Using the organizations business model to establish a competitive advantage

1. SUCCESSFULLY CHANGE AN ORGANIZATIONS
BUSINESS MODEL
FOR
COMPETITIVE ADVANTAGE
Creating Extraordinary Organizations, LLC
Atlanta, Georgia
Organizational Change Alliance
November, 2009
David L. Broussard
MBA, MTax, MS in Organizational Change
David@CEOagility.com

2. LEARNING OBJECTIVES
1. Differentiate Business Model & Strategy.
2. Develop a basic understanding of the 23 core
Business Models and how to analyze them.
3. Determine if a Business Model creates a
Competitive Advantage.
4. Participate in the design of a Business Model
for either a for-profit or non-profit
organization.
5. Outline a Business Model engagement for
internal and external OD & OC specialists.
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3. Organizational Growth Strategies
1. Increase Prices
2. Reduce Expenses: COGS, Employees, R & D, CapEx
3. Increase Sales:
 Existing Customers – Existing Products/Services
 Existing Customers – New Products/Services
 New Products/Services – Existing Customers
 New Products/Services – New Customers
4. Merge with or Acquire another organization
5. Go Public (Initial Public Offering)
6. Joint Venture or Alliance with another organization
7. Change the organizations Business Model
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8. Create a Competitive Advantage

4. A Business Model is simply the point where
the client/customers need for receiving
value meets the organizations need for
profit and sustaining financial viability. Not
firm specific.
Answers these Questions -
Who buys What you sell and Why, and How
do you make money?
Strategy is a matter of deploying a firm’s
resource bundle to meet the needs of the
marketplace while blunting the ability of
rivals to respond effectively in a
competitive envirnoment. Firm specific.
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5. Competitive Advantage…
When an organizations products and services can
be provided in ways that deliver more sales and
higher profitability relative to total assets used
creating a higher Return On Investment than
would occur if a competitor supplied the same
customer.
‹ ROI = (Sales/Total Assets) x (Net Income/Sales) ›
Characteristics…
1. Unique
2. Difficult to replicate
3. Superior to competitor
4. Applicable to multiple situations
5. Sustainable
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6. Review with your neighbor what a Business
Model is and be prepared to discuss with
examples such as your employer, clients or
organizations from your everyday life…
Does this organization have a Competitive
Advantage?
If so, what is it?
When & Why should an organization review
its Business Model?
See alternative organizations you may
consider handout.
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7. Alternative organizations you may consider:
Independent Bookstore (Bookstore) Borders (Bookstore) Amazon (Bookstore)
Apple (ipod/itunes/iphone/apps/Facetime/Icloud) ATT (Phone Service) M-Pesa (M-Banking)
Vonage (Long Distance Phone Calls) Skype (Free Phone Service) Go To Meeting.com (Online Meet)
Wikispaces/Google Docs/Huddle.Net (Collaboration Online Work Space)
Google (Information Search) Mozilla Firefox (Browser) LinkedIn (Online Personal Network)
Dell (Custom Built Computers) IBM (Information Services) HP (Information Technology)
Wal-Mart (General Retail) Home Depot (Hardware Store) IKEA (DIY Furniture)
Comcast (Cable Programming) DirecTV (Satellite Broadcasting) Hulu (On Demand Viewing)
Miramax/VIACOM/Disney (Entertainment)
ABC/CBS/NBC/CNN/FOX/CNBC/MSNBC/HBO/GPB/BBC (TV Broadcast)
Pandora (Customized Internet Radio) Sirius (Satellite Radio) NPR (Public) Radiohead (Free Music)
NYTimes/WSJ/FT (Print Paper) Huffington Post (Online Newspaper) Politico (Niche Publication)
Time (weekly Print) Newsweek (weekly digital) Economist (Print & Digital)
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8. Georgia State University/Georgia Tech(Public University) Emory (Private
University)University of Phoenix/Walden University (Alternative University)
AcademicEarth.org/Coursera/itTunies University (Alternative Learning)
Wikipedia (Open Encyclopedia) Encarta (Encyclopedia) Lulu.com (Self Publisher)
US Postal Service (Mail) FedEX (Private Mail) Cemex (Cement Delivery)
Microsoft (Computer Based office Applications) Google Apps (Online Office Apps)
Monsanto (User Agreements) Amazon (Kindle reader and books)
United Way (Non-Profit) Community Foundation of Atlanta (Personalized Philanthropy)
Gremeen Bank (Micro-Loans) Citigroup (International Bank)
Aravind (Free Eye Surgery) Emory Eye Center (Academic Practice)
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9. Core Business Models
(See Handout for Descriptions)
Competitors Management/Organization
1. Blockbuster 13. Entrepreneurial
2. Local Leadership 14. Value Chain
3. Relative Market Share 15. After-Sale
Suppliers Customers
4. Installed Base 16. Loss Leader
5. De facto Standard 17. Specialization
18. Brand
Economics of the Company Products/Services/Solution
6. Switchboard 19. Product Pyramid
7. Profit Multiplier 20. Multi-components
8. Transaction 21. Time
9. Cycle 22. Specialty Product
10. Experience Curve 23. New
11. Low-Cost Business Design
12. Freemium
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10. Transaction Business Model
Number 8
Players
▪ Company
▪ Client
Company to Client Company
▪ Product
▪ Service
● Solution
▪ Experience
▪ Reputation
Client to Company
Product Money
▪ Money
▪ Less Money
▪ No Money
▪ Attention
▪ Exposure
Analysis
> Who
> What
Client
> Why
> How
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11. Installed Base Business Model
Number 4
Players
▪ Company Company
▪ Client
Company to Client
▪ Product More Money
▪ Service
▪ Experience
▪ Reputation Product Product
Client to Company
▪ Money
▪ Less Money Less Money
▪ No Money
▪ Attention
▪ Exposure
Analysis
> Who
> What
> Why
> How
Client
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12. Switchboard Business Model
Number 6
Players
▪ Company
▪ Client
Company to Client Company
▪ Product
▪ Service
▪ Experience
▪ Reputation
Money
Client to Company
▪ Money
▪ Less Money
▪ No Money
▪ Attention Experience/Reputation
▪ Exposure Product/Service
Analysis
> Who
> What
> Why
> How Client Client
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13. Freemium Business Model
Number 12
Players
▪ Company
▪ Client
Company to Client Company 1
▪ Product
▪ Service
▪ Experience
▪ Reputation Money
No Money
Client to Company Service
▪ Money
▪ Less Money Experience
▪ No Money Reputation
▪ Attention
▪ Exposure
Analysis Exposure
> Who
> What Attention
> Why
> How Company 2 Client
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14. Art & Science of Business Model Analysis
WHO – Customer Selection WHY – Value Capture
►Customer Characteristics ►Customer Value to Company
● Number ● $ Value of Sale
● Repeat Sales
● Changing Priorities ● Ongoing Sales Support
● Ease of Finding
● Spending Patterns ►Company Value to Customer
● Value Proposition & Configuration
● Main Competition ● How Important
►Customer Acquisition ● Price to Value Relationship
● Entry Points
● Sales Support Requirements
● Promotional Activities
HOW – Strategic Control
● Revenue & Cost Models
WHAT – Scope ●
●
Cross Selling Opportunity
Ongoing Profit Structure
● Products/Services/Solutions ● Customer Relationship Management
● Functions/Activities (In-house) ● Distribution Channels
● Core Capabilities
● Functions/Activities (Out Source) ● Infrastructure
● Functions/Activities (Sub Contract)
● Functions/Activities (Joint Venture)
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15. Potential Conflicts for New Business Models
1. Risks cannibalizing the existing customer base.
2. Risks undermining existing distribution network.
3. Risks compromising the quality of current offerings.
4. Risks damaging company’s reputation or brand.
5. Risks destroying organizations culture.
6. Risks confusing employees and customers.
7. Risks diffusing organizational focus.
8. Risks shifting customers/clients from high-value to low-
value activities.
9. Risks legitimizing the new business model thus creating
an incentive for other companies to enter the market.
10. Risks diluting financial and infrastructure resources.
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16. Business Model Protection Strategies
‹ Make Competitive Advantage Sustainable ›
1. Create Moats – (Qualcomm)
2. Establish Long Term Contracts (ATT)
3. Create Multiple Revenue Streams (Disney)
4. Create Recurring Revenue Streams (Kindle)
5. Own the Standard (Microsoft)
6. Product Differentiation (Louis Vuitton)
7. Bargaining Power Over Suppliers (Wal-Mart)
8. Own the Customer (SAP)
9. First Mover Advantage (Apple)
10. Open Source Development (Linux/Red Hat)
11. Barriers to Entry and Exit (Boeing)
12. Global Reach (IBM)
13. Brand Loyalty (Coca-Cola)
14. User Agreements/Patents (Monsanto)
15. Cost Advantage (IKEA)
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17. OCA Business Model Exercise
1. Select an Organization for reviewing its Business Model.
Alternative: Design a new Business Model for newspapers.
2. Reassemble into teams with similar objectives.
3. Determine Core Business Model design (s).
4. Illustrate the Business Model with three component visual.
5. Analyze the Business Model (Who, What, Why & How).
6. Determine Competitive Advantage.
7. Select a team spokesperson (s).
8. Using the flip chart present & illustrate your Business Model.
9. Explain the thought process used & Competitive Advantage.
10. Address what risks your new Business Model faces.
11. What can be done to protect the Business Model?
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18. Business Model Design & Analysis Process
1. Determine Current Core Business Model Design
2. Create Business Model Illustration
3. Analyze (Who, What, Why & How)
4. Determine Competitive Advantage
5. Identify Current Business Model Risks
6. Develop Strategies to Protect Business Model
7. Repeat Steps 1 – 6 for New Business Models
8. Select Most Viable New Business Model
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19. Business Model Engagement
► Part 1: Know Where You Are
Step 1: Identify & Analyze Current Business Model
Step 2: Assess Current Business Model Integrity (SWOT)
Step 3: Conduct a Strategic Thinking Assessment
<Strategic Thinking is the generation & application of business insights on a
continual basis to achieve competitive advantage >
(Market Forces, Industry Dynamics, Key Trends, Macroeconomic Environment)
►Part 2: Design the Business Model Desired
Step 4: Design a Competitively Advantaged Business Model
Step 5: Realign the Organizations Leadership Team
Step 6: Position Business Model Relative to Organization
►Part 3: Create & Manage New Business Model
Step 7: Set Goals, Implementation Plan and Scorecards
Step 8: Align People, Execution, Culture & Business Model
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20. SUCCESSFULLY CHANGE AN ORGANIZATIONS
BUSINESS MODEL
FOR
COMPETITIVE ADVANTAGE
THANK YOU!
Creating Extraordinary Organizations, LLC
Atlanta, Georgia
404.226.1964
CEOagility.com
David L. Broussard
MBA, MTax, MS in Organizational Change