20121006 slp experiences and business models

Starcher Group

© Starcher Group LLC For the sole use of client

Bruce Starcher | Managing Director, Starcher Group LLC | 312 823 7065 | [email protected] | www.starchergroup.com

Linking User Experience and Business Models

Startup LeadershipChicago, October 6, 2012

mailto:[email protected]



Starcher Group


Background

10 years of business model innovation consulting

Hewlett Packard - Imaging and Printing Group

Motorola Mobility

ACCO Brands

Starcher Group LLC

With different business groups

CEO

Program Management Office

Advanced Research Lab

Research and Development

Marketing

Product Discovery

Innovation

Across industries

Mobile Devices

Digital Imaging

Digital Entertainment

Consumer and Commercial Printing

Print Finishing

Medical devices

Hospitality

Cosmetics

At different levels

Product

Business

Ecosystem

Starcher Group


Function and Experience

3.5mm jack

10,000 songs

5 Mp camera

Site landing page

I can use any headphones

I can load my entire collection

I want to post of Facebook

______________________

Function Experience

Should we design the function or the experience?

Starcher Group


Awareness

Choose

Order

Install

LearnUse

Replenish

Support

Dispose

Consumer Experiences

Customer Experience is the customer’s physical and emotional

memories created over time, based on their interactions with

employees, products, services and partners across all touch points and every consumer lifecycle.

Starcher Group


Linking Use Cases and Experiences

Use Cases (What) Value Delivery System (How) Experiences

Social

Emotional

Functional

How the solution gets to market

How the organization works

How the organization creates the solution

What are our consumers trying to accomplish?

What are the activities that our consumers have to perform in order to meet their goals?

What different choices do our consumers have for each activity?

What are the ways to use the site, device, accessories, services and/or … to accomplish the different scenarios?

It Works

It brings me emotional satisfaction

I want to belong

Use cases

Scenarios

Activities

Consumer goals Business System

Total Product Solution

Channels

Starcher Group


Consumer Experience Choices

Awareness &Consideration

Selection &Purchase

InitialExperience

Usage &Learning

Repurchase &Recommendation

Functionality

Usability

Interoperability

EmotivityHow well does the solution

evoke feelings?

How well does the solution communicate with software and

hardware from multiple vendors?

How do consumers interact with the solution and accomplish goals?

Does it perform the functions that the consumer wants it to?

The business perspective

Starcher Group


Business models at the intersection of Customer, Technology and Business

• What high-value customers (or potentially high value customers) are targeted?

• For what reasons will customers pay a premium, switch suppliers or increase their loyalty?

• What is the differentiated Business Model value proposition?• What profit model is used to capture value? How does high profit

happen? Where are or will the Profit Zones” be?• How can we maximize the sustainability of out-year cash flows?• What economics and performance systems are required to execute?

• What technology exists today to enable my business model?

Business

Customer Technology

Is it desirable? Is it possible?

Is it viable?

• What likely technology innovations would enable business model innovation?

Starcher Group


The evolution of business model thinking

1990 2000 2005 2010 20151995

Adrian SlywotzkyBusiness Design, Profit Models, Value Migration

RotmanDesignWorks

OsterwalderBusiness Model Canvas

Joan Magretta: Why Business Models Matter

Deloitte: Deconstructing the Formula for Business Model

Innovation

MIT: Do Some Business Models

Perform Better than Others? Gerry Lameiro: A

Guidebook forDesigning Business

Models

HBR: How to map

your industry

profit pools

KPMG: Rethinking

the business model

Christensen: Skate to where the money will be

Chesbrough: The role of the business models in capturing the

value of innovation

Afuah: Business Models: A Strategic Management Approach

Chesbrough: Open Business Models

Schools of thought

Contributions

Starcher Group


Moving towards network centric business models

1960 1970 1980 1990 2000 2010 2020

Logscale

1

10

100

1000

3000

Systems-centric

PC-centric

Network-centric

Customer-centric

Proprietary Systems

De facto hardware and

software standards

De jure internet

standards

Informationcontent andtransactionstandards

Source: David Moschella, The Economist “A survey of the IT industry

Stages of IT industry expansionusers, m

Shift in dominant profit models

IBM Mainframe Intel, Microsoft Skype, eBay

Starcher Group


Total economic equation

Product

Installation

Financing

Systems integrationFlexibility

Operation

Acquisition

Applications

Training

Related equipmentService

Repair

Monitoring

Insurance

Outsource Partners

Technology PartnersComplementary

Products

Substitute Products

Competitors

Customers

Non-customers

Regulatory

Stakeholders

Suppliers

Experiences

Consumer Economics

Consumer Goals

SolutionEcosystem

Moving beyond the traditional product mindset.

Starcher Group


The “job to be done”

In this slide, I use Customer to mean both customer and/or consumer

Job to be done

Customer Value Gaps

Gap in customer experience where they

will “pay”?

Customer Motivations

What is motivating the customer to get this job

done?

Customer Economics

Time, Money and Ease of Use

Customer Choice

What choices does the customer have?

Customer Context

What is the relevant customer context e.g.

Home, Driving, Airport, ….

Customer Social Networks

What customer social networks are relevant to the job to be

done?

What outcome is desired, whether

functional, emotional or social?

The consumer perspective

Starcher Group


Business Models

The Business Model process ties symptoms &/or opportunities to actionable operating plans. The outcome cannot be known at the outset so we focus on a repeatable process that yields excellent results time after time.

Where is there a gap in customer

experience, where the customer is

willing to pay to close the gap?

What Business Model will best leverage the value described by the

customer value gaps?

What strategies articulate the

implementation options?

What tactics operationalize the strategies?

How do I develop context around the

opportunity?

Starcher Group


Business Models

Context

What is the broader business context and where is the value?

Customer Selection

How do we select profitable customers for our value proposition?

Customer Value Gaps

Why will customers pay a premium, switch suppliers or increase loyalty?

Profit Models

How does profit happen?

Revenue Models

How will we generate revenue and further enable the profit models?

Scope

What activities must we perform & what assets must we own?

Strategic Control Points

How can we maximize the sustainability of out-year cash flows?

Economic Model

What are the economics of the business model?

Operating Model

What operating model is required to execute?

Organizational Model

What organizational design is required to execute?

Starcher Group


Customer Value Gaps Business Models Brainstorm Game elements Games

Low End Consumer 0. Invest in China•printer/pen price is not competitive (8) •installation is the #1 customer complaint (7) Olympics games 2008 •not enough channel coverage--city store location (6) - lock in early with HP as the 2008 Olympics partner 1A. Shift market sensitive functions to China•media coverage not extensive enough to give necessary information to consumer--reach and media cost (5) - partner, not just sponsor – one of the government’s priorities is to make the Olympics a success 1B. Differentiated national government partner 1. Competitive advantage through Chinese intimacy•current channel behavior is not trustworthy (3) 1C. Differentiated local government partner•product availability --especially for new products and supplies (3) 1. Enhance/Capture Value from Distribution Channel•inability and confusion over how to get necessary pre-sales information in IT mall, retail store (3) •printer has basic functionality (2) Individual entrepreneurs•channel reps do not have adequate knowledge (2) - Go after china in the way where you are part of the culture•friendly shopping experience (1) - Door to door like Avon (Wall Street Journal Brazilian market about indigenous sales force)•Four "p" information availability (1) •simple user guide; tutorial for printing activities; info on how to use special features with application (1) Microenterprise model•out of warranty repair price close to new printer price (1) Become a major employer via microenterprise -- let them find niches of what is successful•recycling/trade-in program for supplies (1) Kodak model ($12,000 puts you into a franchise business)

High end consumer 2A. HP branded retail•printing purchase doesn't seem exciting enough (I don't look forward to it) (7) 2B. Partner with Large format stores 2. Compress/Capture channel margin•cutting edge photo software bundle together with media solution for photo/vertical users (6) 2. Create profit from low-end ink 2C. Extend to grocery/convenience channels•installation is the #1 customer complaint (5) •friendly shopping experience (4) Refill service kiosk •driver should scan PC and know how to install (3) HP provides the complete station•Four "P" information availability (3) Refill kiosk or Re-man kiosk (or both)•product availability --especially for new products and supplies (3) Can re-fill be free vs. being for money?•not all products have path for disposal of old machine and replacement; trade-in/trade up (2) (like the free soda refills when you’re in McDonald’s dynamic)•media coverage/aos not extensive enough to give necessary information to consumer (reach and media cost) (2) Ink delivery + pen collection system (keep the old one)•inability/confusion over how to get necessary pre-sales information at shop front (2) Should we be selling new cartridges?•fuzzy logic, auto adjust for good photo quality borderless printing in all sizes (2) out of warranty repair price close to new printer price (1) •printer/pen price not competitive (1) Good/better/best solution in one kiosk•difficulty to understand which product meets my needs (1) - Refill – good

- Reman – betterLow End Business - Original – best 3A. HP Manual DIY refill ink

•not enough channel coverage (9) 3B. HP self service ink kiosks

•inability/confusion over how to get necessary pre-sales information at shop front (5) Sell HP ink in smaller portions – use the multi-chamber technology to just do a 1/3rd refill 3C. HP refill service 3. Extract value from ink•keep installation simple--install application separately (4) 3D. HP direct delivery service•mixed quality needs (4) Total print kiosk 3E. MED: door to door supplies sales/service (Avon)•effective GTM model to serve SMB customer --repeat purchase; loyalties discount (4) - Smart kiosk (add digital photo printing to the refill/reman/original•looking for prominent brand to re-affirm 'safe' purchase (3) - Offer a stripped down kiosk as well•out of warranty repair price close to new printer price (3) - What can we do with the with the pay phone/hot spots technology analogy?•AiO application advice for vertical market (3) •customer relationship marketing --if you run out of ink: where and how much to buy; reseller information (2) Work with banks to make refill/reman/purchase as easy as the ATM (only 3 banks that matter in China)•fuzzy logic, auto adjust for good photo quality borderless printing in all sizes (2) - what about lack of credit cards? Do they have enough bank cards?•cutting edge photo software bundle together with media solutions for photo/verticals (2) •refillable supplies (2) Work with others who have high foot traffic•outbound sales lacks focus on peripheral products (1) - internet cafes 4A. Move production to China

- power companies 4B. Align low end printer and pen performance /price with High End Business - dry goods grocery stores (moms and pops) where people already go customer demand 4. Squeeze margin out of low end printers/pens

•need to have evaluation units to demo products (8) (do the grocery shoppers also buy the printer cartridges or the refills? – would they?) 4C. Outsource low end printer/pen to local OEM•not differentiated support for HE business (5) 4D. "HP Inside" for white box printer/pen OEMs.•keep installation simple--install application separately (4) Where do people go daily where we can print for them? 4E. Global printer/pen recycling•difficulty to understand which product meets my needs (4) - Mom & pop grocery markets•AiO application advice for vertical market (3) •print gauge senses high user and prints coupon for cartridge/media. Gauge indicates how much time left and link to URL or 800# (2) Partner with infrastructure companies•printer/pen price not competitive (2) - Banks•convenient recycle center/recycle bin (1) - Electrical companies•no on-site service available for HE business (1) - Pay phones•hp brand awareness (1) 5A. Business specific inkjet products

Sell HP media with advertising printed on the back as cheap media, use it to lower ink prices 5B. Vertically focused SW applications and channels 5. Maximize SME/Enterprise value capture(or even print ads on the back side of the paper) 5C. Expand enterprise/SME services

5D. HP document/photo service shops.Shift who pays for ink

- print on backside of paper coupons – misc printing- like grocery store receipts here- banner ads or printing on the back of the paper

Barter for ink….- what else could people for alternatives to cash and ink?

Sell HP ink to refillers- franchise it

6A. Flank Epson in level 1/2 photo printers/suplpies6B. First mover photo in select level 2/3 cities

2.5 Total Supplies Hybrid Ideas (combinations of 2 + 5 + media + content) 6C. HP self service photo print kiosks6D. HP photo print service 6. Increase share of digital photo printing value

“Music match” lifetime free level of service (2 and 5) 6E. Electronic hosting/distribution- free black ink forever but buy into the photo option 6F. MED: digital photographers-

always free – not limited time free

Buy more/save more (2 and 5)- use more ink, save more- make visible up front -- how far from the next level the customer was- get usage from printer to get price cut on ink

Coupons (2 and 5)- after 3 refills you get a coupon

- let printer printout 25% off after it senses 3rd refill

Trust smart ink- printer recognizes authenticity of cartridges/ink- something in ink to provide authenticity

Ink tester- Create ink tester to test ink in home

Media value chain- Image cards - media is the ticket- “Daily frame” snapshots – every day in Britney’s life- Take image to friends- Printing trading cards- HP provides printing content

Create a coalition with other vending machine players (Coke, other) to create a “vending machine destination center” which, with shared vending machine service, can create greater proximity to the customer (2 and 5)

Avon lady system- door to door printer cart refill- home service – cleaning, dusting, and delivery

Dry powder tank packs- put in the ink powder- add water to get it to work

Perfume printer; scented media for each season/holiday (2 and 5)

Print on rice paper- is tree-based paper the most effective in china?- Hemp paper?

Emphasize photo quality on plain paper – lower cost media (2 and 5)

Get our ink near other cheap liquids ….gasoline, water, etc. Make them associated with an impulse purchase, a “daily addiction” and away from the positioning of a major purchase. Starbucks

- Create an emotional attachment to printing – make it a part of regular “addiction”- Mileage plus – the more Starbucks you buy, the less you pay for ink – collect cross credits- Is Starbucks catering to Westerners? How can we be culturally sensitive

Combine ink cartridge and money within ATM’s…. print the money(!!) (serious profit zone)

3. Squeeze profit from low-end printers

Sell re-man printers using the printers that we have in the US as our low cost printer- pre-certified printers, like BMW does with its used cars- legitimize

“Ink-bay” version of E-bay

Utility model – disposable, reusable;- get 10% profit @ point of sale- + lifetime supply of ink + pop

Lifetime upgrade offer – if you buy again, you get a discount

Take a different direction: Single use cartridge – we work with a partner and their cartridge on the low end

Play the Intel game (printer chip or printer head with our ink) with the white box manufacturers– like Intel has done with its white box– reference the market share of “others” in PCs– HP inside co-branding

Modularize printer- just upgrade individuals parts

Sell the parts to the consumer and let them make their own printers- reference the china consumer love of constructing their own technology items

Leverage innards of PC into the printer- low cost results

3.2 Combined Low-end Printer and Cartridge Systems Innovation (ideas from 2 + 3)

China as a collection point for TIJ 2.0 pens. Ultimate POP by using all of the TIJ 2.0 models from Europe and the US plus all of the unwanted cartridges and put them into china

- put high volume product lines there- call it something other than HP (or sub-brand it with HP)- dirt cheap- endorsed by HP but known for lower quality- Chinese partner involved- cut barriers to entry- cost near zero

HP participate in the whole value chain- supplier of ink to refillers- spare parts- a little profit in all pieces rather than high profit in just one- prices low but volumes high

OEM- pen tech available to all printer manufacturers- we supply consumables and ICs

Don’t try to make money in China- WW system – everything that needs recycling gets funneled into China- Solve environmental issues for HP in Europe- Give them great value- Slow other companies down- Cheap re-man.- Eventually make money (or not)- Free initial = in follow on == second product- But…. we want to avoid being know for the low end- Sell in the US and Europe as green products

4. Defend/Grow SME and Enterprise Value

Bimodal supertanker for SME- high speed draft mode - very fast- super economy mode- high quality output mode- high capacity ink

Case parts for business furniture solutions- woodworking custom cabinets- cheap labor

BMW oil change- pay one price with ink included- pay x and get y copies- gets cpp down, even if POP is higher- get backend payments right up front- eliminates bad experience and hassle- lease model – connect to service/warranty- this was tested on low end consumer but didn’t play – would it play in SME? The up front payment with a club is critical

Market differently- like shampoos – normal, dry, frizzy- right printer to the right segment- segment based on use

If we knew high use – based on usage we rebate- Actual vs. assumed usage- Make sure to get someone the right printer at the right price

High use segment based on use knowledge of the customer - if we knew who the high user was, we could rebate prices of products based on usage - actual vs. assumed usage - make swre to get the right printer

One stop shopping - Understand needs and then become the printer of choice

Non – classical partnership - office equipment (steelcase/herman miller) - built in printer - take advantage of infrastructure - drawers and shelves optimized for our form factor

Government - give them free printers if they outlaw competition

Utilities - meter reader for printer “ink in basement”

Printer design for China (non Western) - what does it take to print asian characters? Swath width - red – communist/mao red – no one has done a good job of achieving it yet - China’s commitment to communism is closely tied to nationalism and community (vs. real economics), so there is nothing that prevents HP from supporting its symbols

Network - can we/should be we more of a solutions player to these companies, not just a cross business printer? - can we get into business with Legend?

If we want to be perceived as an appropriately Chinese company, we have to look like more than a Western group trying to beat the Chinese groups

Should we buy Legend? That is a long-story, we have a history that goes way back. We need to get over that history.

High end print heads

Software for vertical industries in order to drive relevance and ink usage (we use in the US already)

Photoprinting meteor pack

Price for photo in china more aggressively

Content drives usage

HP involved in imaging technology with phone manufacturers

Dial up printer from cell phone (give the printers phone addresses to skip the PC)

Level 2/3 areas: Village printer/IT access person - Bangladesh – micro-enterprise lending to put into business someone who has a mobile phone wholesaling minutes - can you put a lot of people in digital photo and print business? - should you add PC access/interenet access to the mix? - government support - They get a digital camera and a printer - Tie to things like wedding photographer, an event printer (thermaprinter, can print real time

Marketing: HP sponsored events around imaging - how can we have competitions where we give rewards?

Buy Lucky China Kodak vs. Lucky China (HP), kick out Epson

in order to have a digital service leadership position over time?

More research needed on photo use in culture:HomesOutside

Time is right since broadband is not big—this is a huge opportunity

‘souvenir’ photos would take place

Phone as fashion accessoryPartner with Nokia

Share images across all devicesi.e memory stick in game boy

Game center example: networked gamed roomCreate photo center

Direct connect photo printing in Tier 3/4 cities

RSBTAiO as communication hub—high end phone/fax/photoBundle photo phone with low cost wireless device—low price printingModular add-ons (i.e. Virgin Mobile/MTV)

2 in 1 charger printer

Media sizes—photo sizesL size (3R size) 2.5x5

FadsCreate the latest fads

Do research on this—stay away from only focusing on the big cities

Ultimate photo printing machineMonster garage conceptLose the word “printer/printing”—photo maker; photo lab; lucky digitalEase of use—printer is harder to use than the digital camera

Printing villageEntrepreneurs get the photos “out”

“OnStar” model

HP entrepreneur paging systemTie product to support

China specific packagingPackaging (box) around Chinese new year (i.e. year of the ram and put these images on the box)Sample page has this unique cultural piece

SW bundles—china specific

Phogenics in ChinaDemoOlympics

Temporary photos

Non-HP branded franchise

Build a business model with a totally new business unit

Focus on where consumers are less price sensitive

Re-segment the market - take a different approach vs. the SIT

Lifestyle lifecycle marketing

Government cut taxes out (????)

Support service/biz model - Photo/SME - What can we do to support?

Event printing (continued)

Super premium brand

“Western” theme cowboy

Enterprise SME

Carly pro China, is willing to focus on this

We need to share the context of business model innovation with leaders - Paul - Larry - VJ Keep the issue in front of people/iterate this with people

Steve and Kathy’s staffs are going to China

Talk about success stories in China

1B

3E

6F

Dotted line connecting 3B to 6C

3B, 3C

6C, maybe 6D

These could be tactics for any number of ideas –4B, 5A, 6A, 6B

4D


4E

5A – please let me know the costs of the lab version of this!

Sort of in 6A – Lifestyle,

5A – please let me know any thoughts on cost!


1A/B – but quid pro quo is dead – sweetheart deals being appealed around the country , Pepsi in Sichuan example

Printer design for China in 4B, 5A, 6A, but not the specific red, etc.

5C

1A

Help?

5B

Possibly part of 6A, 6B

Could tie nicely to 6A photophone

Overengineering?

6F

6E

3B

3B

3B

Not explicitly included. Could be investigated later as part of 3B or 6C

Not explicitly included. Could be investigated later as part of 3B or 6C

Not explicitly included. Could be investigated later as part of 6A, 6B, 3E

3C

Could be patr of 3E downstream

Could be patr of 3B downstream

Could be patr of 3B downstream

4E


Ink part in 3C

4D?

Hard – Lucky China is 63% State Owned

Yes!!!!!! – ties to 6A, 6B

6A Photophone

Maybe a next step for 6A Photophone

Features for 6B

Features for 6A, 6B

1A

This was our definition for 3C

Would be in 1A

5C??6F??

6A Lifestyle

Strategy elements Strategy tree Implementation options (short description) Customer Technology Cost Mfg strategy Distribution Sales&Marketing Channel Service&Support Strategic Control Point SCP strength Profit Model Alliances/partnerships Aligned with Business Design

Franchise

Refill Service w/ warranty HP branded Retail

Original HP ink Vending machine

TIJ2.0 Refill service

prebate program Franchise

Non-HP Retailbranded

Vending machine

Business Model Brainstorm

Implementation Options

Strategy Options

Implementation Strategy Elements

Customer Value Gaps

Business Model ElementsBusinessModels

Business Model Alignment

A well designed Business Model aligns the entire system, from customer value gap through implementation, and ensures that there is internal consistency.

Starcher Group


Business Model Focus

Product Business Ecosystem

Starcher Group


Business Models and the Entrepreneur

Strategic Segmentation

Customer Value Gaps

Business Model Options

Profit Models

Strategic Control Points

Customer Selection

Revenue Models

Economic Model

Scope

Operating Model

Business Model Selection

Organizational Model

Consulting Hybrid coaching and consulting

weeks1 100

Starcher Group LLC Start-up business model design approach

Timeline illustrative as each client is unique

Starcher Group


Questions ?

Bruce Starcher | Managing Director, Starcher Group LLC | 312 823 7065 | [email protected] | www.starchergroup.com


