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10 examples - 5 reasons
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Introduction Part 1 10 Business Models that Failed Part 2 5 Reasons of Failure Why do Business Models Fail ?
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
INTRODUCTION
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Publication
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Achievement: January 2013
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
BUSINESS MODEL What are the fundamental characteristics of the targeted Business Model? How well do they t the context and scenario specicity & uniqueness? How do they optimize the company strategy?
SCENARIO What are the specic organization objectives (Growth, Performance, Positioning, Differentiation, etc.). What is the internal context of the company (Specic competencies, Tension, M&A, Start Up)? These elements dene the foundation of the targeted strategy.
BUSINESS MODEL
CONTEXT The context highlights the critical elements to take into account in the external context of the company. What are the key market characteristics, socio-economic environment, consumer habits, etc. ? And how can it inuence the Go To Market Strategy of the organization.
CONTEXT
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
KP
KA
VP
CR
CS
KR
CH
Customer Segments (CS) The Customer Segmentsbuilding blockdenes the different groups of people or organization an enterprise aims to reach and serve. Different types of customer Segments exist: mass market, niche market, segmented, etc. Value Proposition (VP) The Value Propositionbuilding blockdescribes the bundle of products and services that create value for a specic Customer Segment. It solves a customer problem or satises a customer need. The Value Proposition can be characterized by its newness, performance, price, etc. Channels (CH) The Channelsbuilding blockdescribes how a company reaches its Customer Segments to deliver a Value Proposition. Channels can be direct or indirect: internet platform, sales forces, store, retailers, etc.
C
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Customer Relationships (CR) The Customer Relationshipsbuilding blockdescribes the type of relationships a company establishes with specic customer segments. Customer Relationships may be driven by different motivations: customer acquisition, customer retention and boosting sales. We can distinguish between several categories of Customer Relationships: personnal assistance, self-service, cocreation, etc. Revenue Streams (R) The Revenue Streamsbuilding blockrepresents the cash a company generates from each Customer Segment. There are several way to generate Revenue Streams: asset sale, subscription, usage fee, etc.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
KP
KA
VP
CR
CS
KR
CH
Key Ressources (KR) The Key Resourcesbuilding blockdescribes the most important assets required to make a business model work. Key Resources can be characterized as physical, intellectual, nancial, human, etc. Key Activities (KA) The Key Activities building block describes the most important things a company must do to make its business model work (development, maintenance, production, etc.) Key Partners (KP) The Key Partners building block describes the network of suppliers and partners that make the business model work. Reasons behind partnering may be diverse: Optimization and economy of scale, acquisition of particular resources and activities, reduction of risk and uncertainty, etc.
C
www.businessmodelgeneration.com
Cost Structure (C) The Cost Structure describes all costs incurred to operate a business model. They can be cost or value driven and be classied as xed or variable costs.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Iridium Copainsdavant.com
Internet 2009 Telecom 1998
2xmoinscher.com
Internet 2012
Spanair
Airlines 2012
Blockbuster Video
Movie rentals 2010
Vogica
Household furnishing 2010
Encarta
Publishing 2009
Kodak
Chemistry, digital 2012
Moulinex
Consumer Electronics 2009
Bic
Perfume 1991
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
1
copainsdavant.com
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
copainsdavant.com
Industry Internet - Social web Date of creation 2001 Corporation Benchmark Group Country of Origin France
Scenario Highlights
First mover advantage Search of protability
Context Highlights
Growing internet usage Nationwide efcient broad band infrastructure Social web growing interest New competitors
Cases period 2001 - 2012 Market type Mass market Revenues (2009) Group : 17 M / Website : 3,5 M Number of Employees (Group) 150
Reasons of Failure
Customer segment not buying a paid service Likelihood of protability Emerging competition
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
copainsdavant.com
Initial value proposition
Created in 2001, "Copains d'avant" is the Facebook made in France, and enable to reconnect with past classmates, publish school promotion pictures and communicate via internal mailing system. The company is quickly becoming the social web leader in France.
Deployed strategy
After 3 years of existence, with a full free access, the company is searching a path to protability. In 2004, the decision is made to monetize the site, and the internal mailing system along with additional functionalities are now provided as a paid service. Facing these new constraints, site frequentation is declining and the brand image of the company is hurt. If the value proposition is still attractive for users, they are not ready to pay for such services. The internal mailing system is the cornerstone of the interaction between schoolmates, and if too much constraints (price) exist, they stop to use it, loosing the benets of the entire value proposition. Things get worst : the growing Facebook platform is penetrating the European market with a modern design, increased functionalities and at no cost for the user.
New pivot
In 2007, the company acknowledges the failure of its business model, and re-open the full service for free. Revenues will be now generated by advertising. Additional services are created, and in 2010 the management of the company is changed and re-think its entire positioning and image.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
copainsdavant.com
BUSINESS MODEL
SOCIAL NETWORK RE-CONNECT WITH PAST CLASSMATES ON INTERNET FREEMIUM / PREMIUM BROAD BAND CONNECTION
INTERNET USAGE PENETRATION FIRST MOVER ADVANTAGE SEARCH FOR PROFITBILITY EMERGING SOCIAL WEB NEW ENTRANTS NATION WIDE EFFICIENT INTERNET INFRASTRUCTURE DEPLOYED
SCENARIO
CONTEXT
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
copainsdavant.com
KP KA
MAINTENANCE + PLATFORM PROMOTION SOCIAL NETWORK
VP
CR
EMAIL : 1 MILLION PER DAY MASS PERSONALIZATION
CS
MASS MARKET
KR
CH
COPAINSDAVANT.COM SALES FORCES
R
FREE SERVICE
ADVERTISING*
PAID SERVICE
www.businessmodelgeneration.com
Source :
La Tribune, Le Franais CDA rsiste toujours, october 2010 Capital, Petits meurtres entre amis chez CDA, june 2010 Studio Vitamine, CDA : Nouvelle version bta, february 2012
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
* Since 2007
2
2xmoinscher.com
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
2xmoinscher.com
Industry Internet - Marketplace Date of creation 2001 Group 3 Suisses Country of Origin France
Scenario Highlights
Cost reduction strategy for margin recovery
Context Highlights
Numerous emergent competitors Growing Internet Usage Nationwide efcient broad band infrastructure
Reasons of Failure
Cost reduction program targeting a core activity of the business (Management) Decreasing trafc (Model viability) Emerging competition (Environment)
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
2xmoinscher.com
Initial value proposition
Created in 2001, 2Xmoinscher is an internet platform that connect consumers (Buy/sell) along with professional (Sell). Users can buy or sell brand new or second-hand products. During the transaction, 2Xmoinscher is positioned as trusted partner by securing and holding the payment between parties. After the transaction is closed without litige the cash transfer is proceed. The revenue model is based on a transaction fees after completion of the sales.
Second chance
The customer acquisition cost was becoming superior to the customer Lifetime value, making the business unprotable. In march 2012, the company communicates is going bankrupt, few months later Uncle Henry buys it and plans to re-open the platform the 15th of October 2012. Stay Tune...
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
2xmoinscher.com
BUSINESS MODEL MARKET PLACE BUY / SELL NEW AND SECOND END PRODUCTS Business Model Sustainability is based on sustaining trafc vouching generation of revenues. SECURED TRANSACTION TRANSACTION FEES POSITIONNING AS A TRUSTED PARTNER
EMERGENCE OF SIZABLE COMPETITION COST REDUCTION PROGRAM FOR MARGIN RECOVERY GROWING INTERNET USAGE NATIONWIDE EFFICIENT BROAD BAND INFRASTRUCTURE
SCENARIO
CONTEXT
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
2xmoinscher.com
KP KA
PLATFORM MAINTENANCE & DEVELOPMENT PLATFORM MARKETING & PROMOTION
VP
SELL / BUY & GENERATE REVENUE BUY HALF THE PRICE (NEW & SECOND HAND PRODUCTS)
CR
TRUST PARTNERS WITH SECURED TRANSACTIONS
CS
MERCHANTS & CONSUMERS
KR
HUMAN RESOURCES
CH
PLATFORM 2XMOINSCHER
www.businessmodelgeneration.com
Source :
Journal du Net, Fermeture 2xmoischer, march 2012 Tomsguide, 2xmoinscher, Actualit n2888 Journal du Net, Une page se tourne, 2xmoinscher ferme ses portes PC Impact, 2xfoismoinscher fait ses adieux, News n69448
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
3
Encarta - Microsoft
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Encarta
Industry Publishing / digital Encyclopedia Date of creation 1993 Group Microsoft Country of Origin USA
Scenario Highlights
Model viability Differentiation through content quality Multi platform products (CD, DVD, online)
Context Highlights
Improvement of web content in general (site, blog, media etc.) New Competitor enters the market with free content and a collaborative platform
Cases period 1993 - 2009 Market type Mass Market Revenues NC Number of Employees NC
Reasons of Failure
Protability of products (Model viability) Emerging competition (Environment) Business Model not developed further (Company culture)
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Encarta
Initial value proposition
Started in 1993, Encarta proposed a digital Encyclopedia available on multiple technology carriers (CD, DVD, online) and in multiple languages. This product by Microsoft established itself very quickly as the Market leader, competing with its 36'500 articles (2007) against large multimedia corporations.
Change of habits
In 2001, Wikipedia enters the market. The content is created and maintained by the users themselves on a free basis, which continuously improves the quality of the platform. Two years later, this platform overtakes Encarta by the number of articles. As a reaction, Encarta improves the content actuality and proposes a free light access to a limited amount of articles.
Fierce competition
These actions have no impact on the Customers behaviour. In 2009, Encarta has a low market share of 1.27%, against 97% for Wikipedia. At this time, Wikipedia has more then three millions articles in English. As a consequence, Microsoft decides not to continue its business model and exits the Market end of 2009.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Encarta
BUSINESS MODEL
UNIVERSAL MULTIMEDIA ENCYCLOPAEDIA RICH AND HIGH QUALITY CONTENT SALES OF DIGITAL PRODUCTS, SUBSCRIPTION FOR ONLINE ACCESS
SCENARIO
CONTEXT
ENTRY OF A COMPETITOR WITH A FREE AND COLLABORATIVE BUSINESS MODEL
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Encarta
KP KA
CONTENT PUBLISHING PROMOTION OF THE ENCYPLOPAEDIA
VP
MULTIMEDIA ENCYCLOPEDIA RICH AND HIGH QUALITY CONTENT
CR
CS
MASS MARKET
KR
HUMAN RESOURCES
CH
WEB PLATFORM CD / DVD
HUMAN RESOURCES
www.businessmodelgeneration.com
Source :
Premire, Encarta, coul par Wikipdia, ferme dnitivement ses pages, march 2009 NouvelObs, Lencyclopdie en ligne Encarta va fermer, march 2009 Clubic, Microsoft fermera Encarta cette anne, march2009
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
4
Iridium - Motorola
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Iridium
Industry Telecom Services Date of creation 1991 Group Motorola Country of Origin USA
Scenario Highlights
Take over Market leadership Deploy a large scale network Manage the world wide phone network Win a major technological challenge
Context Highlights
Development of competition Alternative emerging Technologies Cost reduction of Telecom infrastructure Rising customer demand
Cases period 1991 - 1998 Market type Mass Market Revenues NC Number of Employees NC
Reasons of Failure
Protability of the value proposition (Model viability) Emerging competition (Environment) Technological development (Environment) Project management (Management)
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Iridium
Initial value proposition
In 1991, Iridium starts building a mobile phone system which allows communication from anywhere. This system would cover any cities, any agglomerations and any square meter on earth, being at sea, in the jungle, in the mountains. The system, developed by Motorola, bases on an array of satellites displaced around the globe. This phenomenal project costs app. 6bn USD, and includes the launch of 15 rockets and more than 75 satellites. It started its operation in 1998.
Bankruptcy
In 1998, Iridium starts and 9 months later, the company goes into bankruptcy. Customers face technical failures, the product doesnt work in cars or buildings, as the usage is only possible outside, requiring a open connection to the satellite array. Moreover, the value proposition is very costly: access costs 7 USD per minute against 50 cents for a traditional carrier. To this adds the acquisition of the phone for more than 3000 $.
iridium
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Iridium
BUSINESS MODEL
CALL FROM ANYWHERE IN THE WORLD SALES OF PHONES SALES OF SUBSCRIPTIONS Development of terrestrial networks
TO BECOME THE WORLD LEADER ON THE TELECOM MARKET TO DEPLOY A LARGE SCALE NETWORK
RISE OF COMPETITION NEW EMERGING TECHNOLOGIES COSTS DECREASE OF THE TELECOM INFRASTRUCTURE INCREASE IN CUSTOMER DEMAND
SCENARIO
CONTEXT The initial customer segment is quite restricted. A mass Market is developing shortly after the Launch
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Iridium
KP KA
NETWORK DEVELOPMENT AND MAINTENANCE
VP
CR
CS
MASS MARKET
KR
FINANCIAL RESOURCES 6bn USD PHONE FROM ANYWHERE
CH
TELECOM NETWORKS 75 SATELLITES
www.businessmodelgeneration.com
Source :
Libration, Iridium menace de sonner dans le vide, March 2000 Steve Blank, No Business Plan Survives First Contact With A Customer, November 2011 Stphanie Legrand, Mmoire de recherche IAE de Lille, 2000
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
5
Spanair
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Spanair
Industry Airline carrier Transportation Date of creation 1986 Group IEASA (80,1%) - SAS AB (19,9%) Country of Origin Spain
Scenario Highlights
High variable costs Financial tension (debts) Cost reduction strategy based mainly on xed costs Airplane crash in 2008
Context Highlights
High competitive Market New entrants Cost of fuel Security norms & constraints
Cases period 1986 - 2012 Market type Mass Market Revenues (2009) 670 M Number of Employees (2008) 4 000
Reasons of Failure
Massive increase in fuel costs (Environment) High competitive forces (Environment) Costs reduction with major impact on the main value proposition (Management)
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Spanair
A new company
Spanair starts in Spain in 1986. Its rst ights are conducted in 1988. Quickly, Spanair develops to a major player in air transportation in Spain and soon gains a market share of 22%, directly behind the main player Iberia. Even though the main ights are domestical ights, the company proposes European ights with more than 100 destinations. At the end, Spanair transported more than 11 mio. passengers yearly, with more than 200 daily ights. During its whole history, the carrier transported app. 104 mio. passengers.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Spanair
BUSINESS MODEL
MAJOR VARIABLE COSTS FINANCIAL DIFFICULTIES, DEBTS FIXES COSTS REDUCTION AIRPLANE CRASH IN 2008
HIGHLY COMPETITIVE MARKET NEW ENTRANTS FUEL PRICE FLUCTUATION CONSTRAINTS THROUGH NEW SECURITY NORMS GROWING CUSTOMER AWARENESS OF SECURITY RULES
SCENARIO
CONTEXT
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Spanair
KP
AIRPORTS TRAVEL AGENCIES
KA
FLIGHT PROMOTION PASSENGER TRANSPORTATION AIRPLANE MAINTENANCE
VP
CR
REASSURE CUSTOMERS ON FLIGHT SECURITY
CS
INDIVIDUALS PROFESSIONALS
KR
AIR ALLIANCE AIRPLANES (75) PILOTS
CH
TRAVEL AGENCY INTERNET SITE OF SPANAIR
**
www.businessmodelgeneration.com
Source :
Le Monde, La compagnie arienne Spanair en faillite, tous ses vols annuls, January 2012, Air Journal, Spanair en faillite, January 2012, Lexpansion, Spanair en faillite, January 2012.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Scenario Highlights
Work against Market evolution Reinforce existing business model Introduce as many patents as possible to block the emerging digital Market
Context Highlights
Technology developments strongly enabling digital photography Photography is getting a mass product for individuals Rising customer demand New competitors in phase with changing Customer requirements
Cases period 1930 - 2012 Market type Segmented Markets (Individuals + Professionals) Revenues (1995) 15 Mds $ - (2011) 6 Mds $ Number of Employees (1954) 73 000 - (2011) 7 600
Reasons of Failure
Change in behaviour: Camera as a consumer good for mass markets (Environment) Technology development: digital revolution (Environment) Strong focus on Margin protection (Company culture)
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Collapse
At the end of the 80s, rst competitors enter the market with digital cameras. Between 1990 and 1999, Kodak introduces about 1000 patents in digital photography, but never achieves its nal goals, as digital photography is closer to Electronics than traditional photography. In less than 10 years, the company will reduce workforce by 63000. Handicapped by its own past, Kodak is not able to change direction, and Sony, Canon or Fuji will cause the collapse of Kodak in 2012.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
TECHNOLOGY DEVELOPMENT COUNTERACT AGAINST MARKET EVOLUTION PHOTO CAMERA AS CONSUMER GOODS IN A MASS MARKET CHANGE IN CUSTOMER REQUIREMENTS NEW COMPETITORS IN PHASE WITH CUSTOMER EXPECTATIONS
SCENARIO
REINFORCE THE EXISTING BUSINESS MODEL PATENT AS MUCH POSSIBLE IN ORDER TO BLOCK THE DIGITAL MARKET
CONTEXT
VP
ADDITIONAL PRODUCTS * Printers Ink cartridges Photo papers One-time usage cameras PHOTO CAMERAS PHOTOGRAPHIC FILMS R&D
CR
CS
INDIVIDUALS PROFESSIONALS
KR
PATENTS
CH
WWW.KODAKEXPRESS.COM RESELLER NETWORK
**
C
Source :
HIGH MARGINS
80 %
** ROYALTIES
75% of GB in 2011
www.businessmodelgeneration.com
* From mid 90s ** Commercialization in 2003
www.kodak.fr Le Figaro, Kodak se dclare en faillite, January 2012 Philippe Silberzahn, Fin de Kodak, victime dilemme de linnovateur, January 2012 Knowledge@Wharton, Whats Wrong with This Picture : Kodaks 30-year Slide into Bankruptcy, february 2012
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
7
Blockbuster Video
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Blockbuster Video
Industry Movies rentals Date of creation 1985 Group Echostar Country of Origin USA
Scenario Highlights
Offer a wide selection of movies
Context Highlights
Expansion of internet New comers
Reasons of Failure
New usage (environment): illegal downloading, streaming New comers (environment): emerging competitors New technologies (environment): internet, downloading, VOD
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Blockbuster Video
Innovation in services
In 1985, Blockbuster opens its rst movie rental store in Dallas. From VHS tape to DVD, the company will have an exponential growth. In early 90's, the demand is booming. Movie rental allows to compensate the limited TV channels at that time and offers a wide and attracting catalog of movies. 9 years after its creation, Blockbuster will be valued at $ 7.6 billion.
A changing environnement
In mid 2000, new signs of change are emerging in the environment. Customers' expectations are changing and new comers are disturbing the existing market. Competitors appear and offer mail-delivered movie rental with a wider catalog. Technological improvements will also disturb Blockbuster business model. Concurrently to internet development, streaming websites will explode along with all illegal downloading possibilities. In addition, more and more TV channels propose new offers such as video on demand.
An abrupt end
In 2009, Blockbuster creates an automated distribution network to rent movies. The goal of this mass deployment is to come back as a key player. For economic reasons, some shops will be replaced by machines. Despite this, the company led for bankruptcy in 2010. The company left behind more than 6000 franchised and proprietary shops spread over 18 countries representing about 48000 employees.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Blockbuster Video
BUSINESS MODEL
87 million customers + 6000 shops Twenty countries WIDE OFFER OF MOVIES RENTALS NEW MOVIES PROXIMITY WITH RESIDENTIALS AREAS AND MALLS
SCENARIO
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Blockbuster Video
KP KA
DEVELOPMENT OF THE CONTENT OF THE OFFER DEVELOPMENT OF NETWORK INFORMATION ON USER BEHAVIOUR STUDIOS
VP
CR
CS
KR
48 000 EMPLOYEES DEDICATED DISTRIBUTION NETWORK
CH
DEDICATED SHOP + FRANCHISES 6 000 SHOPS IN 18 COUNTRIES
INFRASTUCTURE EMPLOYEES
www.businessmodelgeneration.com
Source :
Le garo, 24 september 2010 ; Financial Times, 24 february2010 ; Le Monde, 17 february 2010 ; Lexpansion, 11 may 2007 ; The Times, 28 february 2010.
* On a dedicated period
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
8
Moulinex
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Moulinex
Industry Manufacturer of small appliances Date of creation 1937 Founder Jean Mantelet Country of Origin France
Scenario Highlights
Financials difculties in 90's Success story and recognizedd brand Worldwide presence
Context Highlights
Bursting of the family unit Development of women's employment Emergence of strong asian competitors Small appliances associated with feeling of pleasure
Cases period 1937 - 2001 Market type Mass Market Revenues (1998) 1,21 Billion Number of Employees (1998) 11 000
Reasons of Failure
Decrease of product sales with low margin (Business model viability) Emerging competitors (Environment) Financial management (Management)
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Moulinex
History of the group
In 1932, Jean Mantelet invents the vegetable mill. Wishing to end by nding lumps in mash potatoes prepared by his wife, he decided to create the famous "Potato Masher" or "PressePure". Manufacturing and distribution of these products are a great success. This new equipment allows solving a shared problem to all housewifes at that time. In 1957, it operates his business under the brand Moulinex. In 1962, appears a strong motto: "Moulinex free women" a period of thirty and mores the beginning of the consumer society. It means liberation of household chores and automation of dedicated tasks. Moulinex will then have huge opportunities to address these new needs. Within only few years, the brand will invent no less than 70 products among which we nd the coffee grinder, the multi-function robot, the iron or the microwave.
Pricing policy
In 1950, Jean Mantelet developed a different pricing strategy from its competitors. Instead of establishing a selling price based on cost price including depreciation of production equipment, he focused on the consumer. His approach is based on the consumer's ability to buy the product by dening a "democratic" price. The entrepreneur looks for a mass production to ensure low costs and a minimum protability.
Worlwide exposure
The exponential market growth allows Moulinex to be located in several countries. At the end 80's, Moulinex products are distributed in more than 135 countries. However, the company activity is largely based in France. Only 20% of the turnover is generated abroad against 40% for SEB, its main competitor.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Moulinex
BUSINESS MODEL IN 1931 BY THE FOUNDER, THE POTATO MASHER
SMALL APPLIANCES PRODUCTS MANUFACTURING MASS PRODUCTION LOW MARGIN STRONG INITIAL VALUE PROPOSITION INNOVATION IN PRODUCTS The increase of singleparent families promote the market growth
MARKET GROWTH DEPENDS ON HOUSEHOLDS NUMBER INCREASE OF WOMEN EMPLOYMENT DECLINE OF AVERAGE HOUSING SIZE EMERGENCE OF STRONG ASIAN COMPETITORS Looking for time savings in houshold chores
SCENARIO
CONTEXT
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Moulinex
KP
RESELLERS NETWORK ADVERTISING AGENCIES
KA
BRAND PROMOTION LOGISTICS DISTRIBUTION MASS PRODUCTION 180 000 UNIT / DAY*
VP
SMALL APPLIANCES EQUIPMENTS
CR
ADVERTISING
CS
WOMEN
KR
STRONG BRAND IMPORTANT REAL ESTATE RESOURCES HUMAN RESOURCES Unskilled labor Mainly women
CH
SMALL APPLIANCES STORES MASS-MARKET RETAILING
135 COUNTRIES
ADVERTISING BUDGET
SELL EQUIPMENTS WITH REASONNABLE PRICE PRESSURE ON PRICE LOW MARGIN 20% OF TURNOVER DONE ABROAD
www.businessmodelgeneration.com
* Production for 16 plants in 1980
Source :
Marketing MagazineN144, Saga Franaise succs, 2010 ; Ministre de lindustrie, Approche sectorielle - lectromnager, 1999 Mmoires dentreprises, Moulinex,1993 OuestFrance, La bataille des millions, 2009 Stratgies, Moulinex se robot que je ne saurais voir, 1998.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
9
Cuisines Vogica
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
VGC Distribution
Industry Furniture fabrication Date of creation 1976 Leadership William Ego Country of Origin France
Scenario Highlights
Financial difculties Strong decline of customer satisfaction
Context Highlights
Economic Crisis Highly competitive environment
Reasons of Failure
Financial Management (Management) Failure of key partners (Business model execution)
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
VGC Distribution
Value proposition
Located in "Les Vosges", VGC Distribution group combines manufacturing and distribution activities of kitchens and bathrooms. After various takeovers and restructuring, the group wants to be one of the key players in this business. With 45 stores located in France, VGC Distribution addresses two different customer segments. On one hand, it offers individuals the construction and installation of custom kitchens. It can also include appliances. On the other hand, it addresses major retailers such as Castorama, But or Brico-Dpt by providing kitchens in kits.
Final closure
Delivery delays and lower product quality caused a growing customer frustration. In addition, VGC Distribution is facing chronic nancial difculties and a major economic crisis. As a result many orders will be canceled. Unable to pay Nevelt, its supplier, the group go into receivership for several months before its liquidation.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
VGC Distribution
BUSINESS MODEL
CONSTRUCTION & ASSEMBLY KITCHEN AND BATHROOM FURNITURE OWN DISTRIBUTION NETWORKS CUSTOMIZED RELATION
FINANCIAL DIFFICULTIES FAILED PARTNER NEGATIVE CUSTOMER REPUTATION DECLINE OF HOUSEHOLD CONSUMPTION STRONG COMPETITION CONTEXT
SCENARIO
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
KA
LOGISTIC Routing orders
VP
KITCHEN & BATHROOM CUSTOM ASSEMBY KITCHEN & BATHROOM FURNITURE KIT
CR
PERSONNAL AGRESSIVE BUSINESS PRACTICES
CS
INDIVIDUALS
Appliances Supplier
KR
CH
MANUEST VOGICA 45 stores Delivery within 8 weeks
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Source :
Le garo, 8 november 2010 ; Hufngton Post, 27 september 2010 ; Usine nouvelle, 28 september 2010 ; Le Point, 9 november 2010.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
10
Group BIC
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
BIC - Perfumes
Industry Consumer products Date of creation 1945 Leadership Bruno Bitch Country of Origin France
Scenario Highlights
Several success stories in marketing of disposable products Financial results of the group Capitalization on distribution network
Context Highlights
Product praised by the public Increase of perfume price Growing competitor products
Cases period 1988 - 1991 Market type Mass Market Revenues (2010) 1.830 Billion Number of Employees (Group) 9 200
Reasons of Failure
Mistake in distribution channel selection Inappropriate value proposition with customer expectations (VP/CS)
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
BIC - Perfumes
Diversity of products
Founded in 1945 by Edouard Buffard and Marcel Bitch, Bic group launches in its rst years the Bic Crysta ball-point pen. Today the group operates worldwide and in more than 160 countries. For almost 60 years, BIC has shown a real ability to diversify its activities and products. To date, the French group produces lighters, razors, and various water sport articles (windsurng, kayak...) in addition to pens. Since 2008, BIC also sells a mobile phone manufactured and distributed in partnership with Alcatel and Orange.
Innovation in products
In 1988, BIC launched its own range of agrances. This perfume is accessible for everyone, used by everyone at any time. Marketing teams rely on the practical side by offering small bottles shaped like lighters that are easily transportable. It also perfectly ts in a pocket or a handbag. Sold for 25 francs (3.5 ) for about 300 sprays, the product comes in 4 colors (red and blue for women, black and green for men). Each perfume targets a specic customer segment or a specic context depending of its avoring composition. After many marketing studies, it was decided to distribute the perfume on a large scale in Europe, USA and several countries in Africa. Leveraging on its large ligther distribution network, the bottles are proposed to the mass market through existing retail shops. In apparence, it seems convenient for the customer to combine the purchase of a lighter with a perfume.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
BIC - Perfumes
BUSINESS MODEL FRAGRANCE SMALL AND PRACTICAL FORMAT EASY TO USE LOW PRICE DISTRIBUTION THROUGH TOBACCONISTS
CAPITALIZATION ON THE DISTRIBUTION NETWORK SCENARIO SUCCESS STORY ON LOW PRICE AND PRACTICAL PRODUCTS GROWING STAGNANT TURNOVER 2,2% DECREASE IN 1987 FINANCIAL RESULTS OF THE GROUP INCREASE OF PERFUME PRICE COMPETITIVE PRODUCTS EAU DE TOILETTE CONTEXT
NEED TO RENEW
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
BIC - Perfumes
KP
PERFUMER EXPERT
KA
MANUFACTURING PROMOTION
VP
CR
ASSISTANCE IN SALES IN TOBACCO BARS AREAS PRODUCT EXPERIENCE DREAMS
CS
KR
MANUFACTURING DISTRIBUTION NETWORK STRONG BRAND
CH
ADVERTISING DISTRIBUTORS TOBACCO BARS
MANUFACTURING
ADVERTISING
LOW PRICE
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Source :
Bicworld.com, 6 dcembre 2012 ; LObs conomie, Le bide de bic, 17 novembre 1988.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Part 2
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Missmatch between the Value Proposition and the Customer Segments. The value proposition doesnt answer a real need or doesnt address a real problem of the customer.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Value proposition
BUSINESS MODEL
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
1
PC
RC
SC
Customer segment
RC
proposition
CX
C
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Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
The costs exceed the revenues generated making the business nonprotable. Dont confuse impossible protability with slow return. Example : customer acquisition cost or production cost too high etc.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
CONTEXT
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
2
KP
CR
CS
KR
Costs
Revenues
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Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Environmental constraints are not fully integrated with the design of the Business Model
Poor analysis of the environment : competition, technological trends, regulation and economics forces are poorly evaluated. Main environmental changes must be challenged prior to developping new business models.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
3
Environment
Environmental constraints are not fully integrated with the design of the Business Model
NOT integrated
CONTEXT
Key elements
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
3
nds Technology tre
Environmental constraints are not fully integrated with the design of the Business Model
e ts Financial mark New Entrants
PC
AC
PV
RC
SC
Competition
RC
CX
C
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Globalization
...*
Regulation
* Non exhaustive list
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Management team did not focus enough on execution by lack of competencies, poor governance, or low transformation support.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
4
Environment
Management
SCENARIO OF THE ORGANIZATION
CONTEXT
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
4
KP
Identification of opportunities
Execution
KA
VP
CR
CS
KR
CH
Management Failure
C
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Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
It is difcult for companies to break old patterns that made them successful in the past. And the temptation is strong to pursue what has worked before. The risk is to look at new opportunities thru the lens of current prots and performance yields.
The management does not take into account the necessity to adapt its business model. It stays unbalanced between a radical shift and incremental improvements.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
5
Environment culture
Management Organizational
SCENARIO OF THE ORGANIZATION CONTEXT
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
5
KP C
Potential profits
CR CS
KR
CH
KR
CH
C
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Actual model
Future model
Very profitable
Less profitable
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Mission
Elton-Pickford is a leading consulting rm specialized in Business Model Innovation. Our customers are large corporations recognizing the necessary investment in Business Model Innovation. We provide premium consulting services and unique experience workshops with a sole objective of improving clients condition. Today, reinventing its business models is not an option anymore. It is a path for a sustainable growth and new performance.
"Elton-Pickford is a facilitator and helps industry leaders to reinvent their business and explore opportunities for growth and new performance".
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Corporate Education
Building leadership in Business Model innovation starts with Education. So, change the rules of the game: Experience a full immersion in design thinking & corporate entrepreneurship and start looking at your business differently.
Business Experiment
Engaging in Business Model Innovation initiative can be challenging for any organization. We believe that the best way to achieve rapid results is to design practical experiences around company strategic concerns. We call them Business Experiments.
Industry watch
We provide organizations with critical insights on innovative business models used in key industries (Industry cases, Industry trends, Spot news)
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
Customer voice
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Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
He is an expert in economic intelligence and conducts regulary missions on this subjects for french Ministries of the Interior and the Defense. Antoine started his career as M&A consultant. He moved as Sales Director in the IT industry where he worked for large industrial and nancial clients (BNP Paribas, Oseo, Saint Gobain, Rieter Automotive). He conducts, on a regular basis, speaking engagements on Business Model Innovation. He contributed to the Blackbook - 10 Innovative Business Models, and wrote several case studies on disruptive Business Models. He followed the Executive Program in Management and Strategy to the ESCP Europe.
Acknowledgements
Peter Keates, Yannick Meriguet, Olivier Gemoets, Franck Louesdon.
Elton-Pickford I Business Model Innovation & Strategy I Business Models Do Fail - 10 Examples - 5 Reasons I 2013
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