What is business model innovation? What are the characteristics of business model innovation? I share the organized business model innovation with you, welcome to read, just for reference oh!
What is business model innovation
Tamos defines a business model as a complete system of products, services, and information flows, including each participant and the role it plays in it, as well as each participant's potential benefits and the corresponding sources and methods of revenue.
Business model innovation, as a new form of innovation, has become no less important than technological innovation and so on. In recent years, business model innovation has also become a popular term in China's business community.
Business model innovation refers to the innovative changes in the basic logic of enterprise value creation, which may include changes in the components of multiple business models, as well as changes in the relationship between the elements or the power mechanism. In layman's terms, business model innovation means that companies make money in new and effective ways.
Characteristics of Business Model Innovation
The concept of innovation can be traced back to Schumpeter, who proposed that innovation refers to the combination of a new factor of production and the conditions of production? new combination? introduced into the production system. There are five specific forms: the development of new products, the introduction of new production methods, the opening of new markets, access to new sources of raw materials, and the adoption of new forms of industrial organization. Relative to these traditional types of innovation, business model innovation has several obvious characteristics:
1, business model innovation focuses more on the customer's point of view, from the fundamental thinking about the design of the enterprise's behavior, more outward and open perspective, more focus on and involved in the economic aspects of the enterprise's factors. The starting point of business model innovation is how to fundamentally create increased value for customers. Therefore, the starting point of its logical thinking is the customer's needs, and according to the customer's needs to consider how to effectively meet it, this point is clearly different from many technological innovations. A technology may be used for a variety of purposes, and the perspective of technological innovation is often based on the characteristics and functions of the technology to see what it can be used for and to find its potential market use. Business model innovation, even if it involves technology, is mostly related to the economic aspects of technology, and the economic value and economic feasibility of the technology, rather than purely technical characteristics.
2, business model innovation is more systematic and fundamental, it is not a single factor of change. It often involves multiple elements of the business model at the same time big changes, the need for enterprise organization of the larger strategic adjustment, is a kind of integrated innovation. Business model innovation is often accompanied by product, process or organizational innovation, and vice versa, may not be sufficient to constitute business model innovation. For example, the development of a new product or a new production process is usually considered technological innovation. Technological innovation is usually for the production of tangible physical products. However, today is a service-oriented era, such as the United States in 2006, the proportion of the service industry as high as 68.1%, the traditional manufacturing enterprises, service is also far more important than before. Therefore, the business model innovation is often reflected in the service innovation, manifested in the content and mode of service, and organizational form and other aspects of innovation and change.
3, from the performance point of view, business model innovation, if you provide a new product or service, then it may create a new profitable industrial field, even if you provide existing products or services, but also more able to bring more sustainable profitability and greater competitive advantage. Traditional forms of innovation can bring about localized internal efficiency improvements and cost reductions, and it is easy to be imitated by other enterprises in the shorter term. Business model innovation, although also manifested in improved efficiency and reduced costs, is more systematic and fundamental, involving multiple elements of simultaneous change, so it is more difficult to be imitated by competitors, and often brings strategic competitive advantage to the enterprise, and the advantage can often last for several years.
Three classic cases of business model
(1) Belle Shoes, the king of China's retail market capitalization
1. Among the brands of women's shoes in China, four of the top ten belong to Belle's brands, namely: Belle (Belle), Teenmix (Teenmix), Tata (Tata), Staccato (Staccato). The company represents 28 footwear brands, including: Bata, ELLE, BCBG, Mephisto, Geox, Clarks, Merrell and so on. Belle is also one of the largest retailers of sporting goods in China, acting as an agent for sportswear brands including: Nike, Adidas, LiNing; also acting as an agent for casual denim brand Levis.
Belle shoes are beauty shoes. Not only lesbians can not escape Belle, gay men soon can not escape Belle, because Belle acquired China's famous men's shoes brand Jiangsu Senda. After Belle's control in the department store, customers in the mall to choose and choose, and ultimately choose Belle's products. The combined gross profit of Belle's shoes reached 62%. Many high-tech entrepreneurs are very surprised to hear that Belle's gross profit margin reached 62%, because the gross profit margin of many enterprises is very low.
2. Belle how to realize the breakthrough
Why Belle can achieve such a breakthrough? It comes from the fact that it has realized the control in the retail terminal. 71% of China's branded women's shoes come from department stores, and Belle controls the retail terminal of department stores through four private brands. In every department store, behind different brand counters, many are Belle. A lot of female customers say: ? I don't like Belle, I like Scarto. In fact, choose to choose, choose or Belle's products. Belle's name is taken from the French Belle (beauty), listed on the action code for? Cinderella? (Cinderella), it is the power of capital to realize the enterprise across the vision of the feelings jumped.
3. The core of Belle's business model
Belle is not relying on a single product to gain profits, it relies on the business model, as management master Peter Drucker said, the 21st century is a new era. As the management master Peter Drucker said, the competition of 21st century enterprises is no longer the competition between products, prices and services, but the competition between business models. Belle is a very classic embodiment of such a value.
? Firmly control the terminal
Belle's advertising is very little, unlike Aokang, red dragonfly ads flying all over the place, but such a company seems to be obscure, in fact, it is firmly in control of the retail terminal. Some companies advertise, grasp the production, in fact, in the manufacture of tanks, cannons, and Belle company in the manufacture of nuclear weapons, the manufacture of atomic bombs, it is obscure, but firmly in control of the terminal.
Many department stores, women's shoes counter, less than one-third, more than two-thirds, usually half are attributed to Belle. It controls the terminal in this way, it is firmly in control of the customer, you can get 62% of the gross profit.
Belle's profit is 10 times the traditional shoe company, it is a model that can be sustained for 10 years, because it is firmly in control of the terminal, the terminal is not only to do the footwear industry can not get, and even to do other products of the company is also very difficult. For example, health care products are also very high profit, and credit is also very good, but want to enter the first floor of the department store, sorry, no chance. Because Belle will not give you this position.
? Do into the internal real estate business
Why venture capital see chain is very concerned, venture capital is called venture capital, that is, see a good project is crazy. A project that can make venture capital crazy is chain. The essence of the chain industry is real estate. When Belle firmly occupied the department store retail counter, the latecomer has no chance. Not only the shoe industry in the field of latecomers have no chance, any other field of latecomers have no chance. When it has the unique scarcity of real estate, control, it has the pricing power, so it can get 62% gross margin, and it can 10 years or even long-term control of the platform.
China's real estate companies look at the money earned, in fact, earn is not big money, because it is difficult for real estate companies to go to the capital markets to develop. Why is it difficult for Chinese real estate companies to develop on the capital market, because the business model of Chinese real estate companies is simple and crude, the Chinese real estate company's model is to take land, building, selling buildings, end, each project to come back again and again, such a model in the capital market is not popular. On the other hand, more than 40% of the world's final profit source of the project is precisely the real estate, or it is a core source of profit among the support is from the real estate.
Belle is a classic example of a real estate company. McDonald's is also a major source of profits from real estate, and the two are complementary. This is what we have to think about when designing our future business model. Our business model inside there is no real estate as a support point for the elements, and the essence of the chain industry is real estate, is within the real estate, so it has found the support point, and our other industrial sectors can not also find such a support point, which is the case of Belle to our inspiration.
? Expand the terminal advantage through capital operation
Belle not only by firmly controlling the terminal of the department store, at the same time, Belle is also very good at expanding its terminal advantage through capital operation, so Belle in the financing of Morgan Stanley and Tinghui fund investment. Stanley and Dinghui fund investment, May 23, 2007 in Hong Kong, listed on the day of raising funds of 10 billion yuan, the market value of the stock reached nearly 80 billion yuan, the market value of Gome was only 36 billion, it is therefore called the footwear industry Gome.
As of 2008, Belle's sales have exceeded 17.8 billion, its net profit, standardized net profit has exceeded 2.2 billion, that is, its after-tax net profit margin of about 12% at this level. Such a behemoth in the past two years, still maintain a high rate of development each year, which stems from its mergers and acquisitions strategy, Belle in the listing, 380 million acquisition of FILE, 600 million acquisition of Miaoli, 1.6 billion acquisition of Jiangsu Senda, 1.5 billion acquisition of Hong Kong-listed company Beauty Bao, and Beauty Bao itself has the right to multi-brand footwear retailing, which further expands the Belle's retail chain capacity. So the company is still growing rapidly, although it is already a nearly 20 billion company, such growth stems from Belle's firm control of department stores.
4. Belle's extraordinary performance
Now Belle's shoes have nearly 7,000 to 8,000 retail terminals, and its apparel has nearly 3,000 retail terminals, 71% of China's branded women's shoes sales come from department stores, Belle's multi-branded control of 1/3 to 1/2 of the counters in department stores, and the Belle's super-chain counters? Non-chain localized department stores. China? King of shoes? Belle (01880.HK) released its annual report, 2008 operating income and profit surged to 17.855 billion yuan and 2.279 billion yuan, an increase of 53.0% and 29.9%, respectively, in addition to the OEM segment, the various business segments have achieved substantial profits. Research shows that the reasons for buying women's shoes: 44% style, 22% quality, 14% brand. (Advertising slogan) As long as women pass by the place, there should be Belle! As long as women often patronize the place, Belle is going to control! Belle is already a retail chain with more than 10,000 stores, rather than a shoe seller, it is more accurate to say that it is a retail chain.
(2) China Moves (Kappa), net interest rate of 40% of the growth miracle
China Moves the name of the company, may be very strange to many people, but China Moves the brand is very familiar to many people, such as Kappa back to back the development of this brand is a miracle.
1. Miracle of growth
China Dongxiang entered the Chinese market in 2002, and it is an Italian brand. At that time, Li Ning Company as its general agent in China, in 2008, the sales of China Mobile is 3.3 billion yuan, its scale is not particularly large, Li Ning Company is now 6.7 billion sales scale, but China Mobile's profit margin is extremely amazing, gross profit margin is 62%. Its 62% gross profit margin is very different from Belle's, because Belle's is a vertically integrated enterprise, from the production chain to the retail chain it all do, so its 62% gross profit margin which contains the profit of the production chain and the profit of the retail chain.
2. Sources of Profit
China Moves production is all outsourced, so it has no profit in the production process, and its retail process is all outsourced, and it carries out its retail business through distributors. Its 62% profit comes from its branding and R&D and design capabilities. So its 62% gross profit margin is even higher than Belle's. The company's after-tax net profit margin is even higher than Belle's. This company's after-tax net profit margin is 40%, which is no different from a money grab. This company has a very small headcount, and before the acquisition of the Japanese company, the Chinese company had only 500 or 600 people, yet it was able to generate $1.3 billion in net profit per year. All these financial data, are far more than Li Ning company.
3.? China Movil? The origin of the company
China Moves used to be a business invested by Li Ning, but Li Ning later spun off this business, the price of the spin-off was 10 million yuan, and the company's stock market capitalization reached 30 billion in Hong Kong in 2008, and only 10 million yuan in 2004 and 2005, which is an increase of 3,000 times in just two or three years.
? Li Ning divestment reasons
The reason why Li Ning put this business at such a low price, there are a variety of reasons, two of the main reasons, the first is that at that time, the business of the Chinese movement Kappa did not see a very huge upturn, because it is the same as the other companies selling traditional sportswear, the business was in the red at that time.
The second reason is that Kappa's brand ownership belongs to Italy, which is a huge security risk for the listed company.
? The agony of nanny-type business
In the past, I have been working for Tsinghua Purple, a listed company, and we call this kind of business nanny-type business, and nanny-type business is more risky. Its risk does not lie in the start of the operation, but in the controllability, control is given to the brand owner, this child is not well raised, no one to talk to, dirty work are you dry, once the child is well raised, the girl raised with the beauty of the fish and geese, the son to Harvard University to read the law, which is when the pro-mother came out and said: ? The child was raised so well, really thank the nanny so many years of hard work, but I'm sorry, the child I have to take away. Nurse can only hide in a dark corner to cry and grieve.
In life, we would only say that this person is really poor, but for the listed company, this risk it can not afford, because if its brand owning company to take away this business, for the listed company, its performance will be a substantial decline, which is the listed company can not afford. So this kind of nanny type of business, for the listed company, the security risk is very big, unless there is only one way, is like Gome, adopt dozens of children, hundreds of children, and not afraid of you to take away which child, it will be a nanny into a specialty, into a business model, otherwise it will be very passive. At that time, Li Ning only had a Kappa brand agent, so it decided to bear the pain, and even at that time did not think it was a love, because at that time it was doing sportswear nothing special. After cutting this business off, China Movil was established.
4. After the establishment of the major transformation
China Movil did two things after the establishment of the company, making it from a chicken into a phoenix, carp jumped into the dragon door.
? The first thing is to make a major change to the product. Kappa as an Italian brand, in the past there are only two product lines, one is the traditional sportswear; the other is today's Kappa products, called sports fashionable products, this kind of product in the non-athletic occasions to wear the people and time is far greater than in the sports occasions to wear the people and time. The other one is Kappa products today, called sports fashionable products.
① Unique customer positioning and value appeals
Kappa's four theme words for this sports fashion product are: sports, fashion, sexy, taste. This kind of positioning is hard to associate it with traditional sportswear. Traditional sportswear are loose, breathable enough, no style, not fashion, but Kappa is different, Kappa's new positioning in China is the fashion of sportswear. It locates the people who wear Kappa sportswear, those who claim to exercise but never exercise, those who want to have the feeling of exercise, but do not want to sweat.
For example, some business people are its typical target customer group, these people have socializing, irregular work life, all have three highs, all have fatty liver, should be more exercise, but basically there are all kinds of reasons never to do exercise. Kappa back to back to find the needs of these customer groups, and then to go deeper, it has achieved rapid growth, and even far beyond the growth they originally envisioned.
In order to realize this change, the entire company has moved from a sportswear company to a fashion category culture, where they meet, not in the office, but in a bar in Sanlitun, so that they can find a sense of fashion.
② change credit sales to sales
China Movil is sold through distributors, so when it changed the sports model into a fashion model, its distributors were anxious, they begged them not to change.
After this major decision, China Dongxiang's products began to sell fire, and today the streets are full of people wearing back-to-back clothing. This is the fashionization of sports products. A lot of people wearing Kappa sportswear waving in the street, people think it is very fashionable, while if you see others wearing Li Ning sportswear wandering in the street, people will feel as if a little bit of dirt. This is its uniqueness.
? Financing
The second thing Kappa did was very insightful, and a key element of the fifth style of business modeling. Stanley raised $38 million to buy the rights to use Kappa's Chinese brand in perpetuity from the Italian company. Li Ning wanted to get the permanent license, but Kappa wouldn't give it to them. Later, after the financial crisis, Kappa's parent company was short of money and wanted to sell one of its subsidiaries for $85 million, while China Movil's cash on hand at the time was 10 million RMB. Buy or not buy? Do not buy the business can not be done; to buy, no money in the pocket. In the end, China Movil asked Morgan Stanley for $38 million in financing. Stanley financing 38 million dollars, of which 35 million dollars to the Italian Kappa, for the acquisition of the Kappa brand China ownership and global right of first refusal!
5. The key to the business model: control
China Mobile has raised so much money, their pockets have not been put hot, 98% of the money went to someone else, their own what is not used, so many entrepreneurs do not understand this kind of thing. In fact, the management of China Mobile is very professional, very smart, its stock is worth 30 billion yuan, in other people's place is a milkmaid type of business, in its place can be worth 30 billion, because it is a good business model. It's centrally related to its purchase of the Chinese perpetual rights to the Italian brand, because it has control that way, and its life is no longer in the hands of others, but in its own hands. So that its business can be long-term decades of development, at the same time its capital market value can be opened, it can be from a Li Ning company do not want the business, worried about the business, into a business is now worth 30 billion dollars, which stems from the identity of the change, which is the power of control.
In the business model, control is very important, there is no control, the two are worlds apart, what will happen to the enterprise five years later, there is control and no control is completely different, the capital market is to consider the status of the enterprise five years later, the investment is the future. So a profit with control and a profit without control are worlds apart, completely different. This is the second key to Kappa's success in China.
6. Future Direction
The future direction of China Mobile is the globalization of the Kappa brand and the diversification of the brand in the Chinese market. Kappa has acquired a company in Japan, which has the distribution rights of Kappa in Japan. China Dongxiang not only bought the permanent right to use the brand in China, but also bought the right of first refusal to buy the Kappa brand globally. The day China Movil wants to buy the global Kappa brand, the Kappa brand will be transferred from Italy to the Chinese. Is there such a possibility? The key to look at the Chinese move willing or not, because today Kappa's global stock market value of not more than 100 million euros, and the Chinese move the cash on the account of more than 500 million euros, China's move to buy Kappa's global brand is easy as a matter of hand, the key is willing to be willing to the problem. It's like Lenovo buying IBM and thinking that IBM's PCs aren't so good.
Kappa can have a gross margin of 62%, excluding production and distribution, with its positioning of this international brand is quite relevant, I call it called international brand premium, China in the future in the end how to go, I believe that it has its own planning, but the initiative, control, has been transferred in the hands of the China Mobile.
7. China Dongxiang to the inspiration of Chinese enterprises
After the financial crisis, brought a new trend and a new opportunity, Chinese enterprises to accelerate the internationalization. Once the financial crisis came, many real enterprises in Europe and the United States encountered problems of turnover, capital and profitability. This is the time for Chinese companies to acquire or participate in overseas European and American real estate companies. People may think that their strength is still small, swallowing an elephant will be indigestion. We don't want to swallow the elephant easily, but we can ride the elephant and lead the elephant, we can control a lot of our resources by getting hold of one or more core elements of the overseas entity, such as brand, technology, R&D system, customer relationship, channel network, expert resources, through equity participation or joint venture or purchase, not necessarily by swallowing the elephant. As the book "China Stream" says: Chinese enterprises can go international at low cost and low risk in this way. The case of China Mobile is certainly a classic one.
I think, so far, the manufacturing industry is the most misguided, the most misguided enterprises into the wrong way a term, which makes us a lot of enterprises to focus on the point of excitement on the manufacturing thing, in fact, to do business from the preliminary research and development, parts assembly, wholesale, marketing, retail, service is a set of systems. Chinese enterprises in the past only did the assembly of this link. This is a narrow understanding of the manufacturing industry, the real manufacturing industry or real business should be a long value chain management. With so many long value chains, it may be difficult for Chinese enterprises to grasp them. Only through globalization to formulate these core elements, the lack of brand to buy, the lack of technology to cooperate, the lack of marketing capabilities on the joint venture. This is a new thinking point for us to redesign our business model in the era of globalization, which is also an inspiration for us from China Trend.
(C) vancl (Vancl)
1. Amazing growth rate
Vancl (Vancl) was founded in July 2007, it is a through the Internet and catalog to sell clothing business, the early years is to sell men's clothing, today it sells men's clothing as well as children's clothing, in the summer of 2009, entered the field of women's clothing, strong. In one year, 2008, the first year vancl was open, it reached $300 million in sales. The second year, that is, in 2009, to reach 500 million to 700 million. Such a company, its growth rate exceeded the growth rate of China Moves in the early, the same period. It now has more than 10,000 orders per day and a daily turnover of more than 2 million dollars. For an e-commerce business, this growth rate is very impressive, and in 2008 it was founded in the first year, it has completed three rounds of financing, financing scale reached 30 million dollars.
2. Grasp the precise target customer group
The reason why vancl was able to rise in the e-commerce field, surpassing PPG, is that it thought more clearly about the business model, and was more professional in the systematic establishment of the business model. ppg had a lot of advertisements, which didn't translate into actual sales, whereas vancl did a better job of that. vancl has redefined clothing, and it has found a precise target customer group, and that precise target customer group is the lazy man.
Lazy man this word is not a derogatory term, it refers to the past many gay men lazy shopping, many gay men into the department store on the scalp numbness, hate to grab a piece of clothing on the escape in fear. So vancl sells men's clothing on the Internet for these lazy men who are afraid of shopping. All it takes is a phone call and the clothes are delivered to your door. Gay men's clothing styles generally do not change much, a lot of classic models can meet the demand, while the size of the difference is not big, more than a yard small yard difference is not big, unlike lesbians increase a point is long, minus a point is short.
Such a cut into the male market so that it has achieved initial success, of course, it also cut into the female market. 2009 summer, it is a strong push for women, online it launched a revolutionary product called underwear outerwear integration, that is, wear a piece of clothing, underwear and outerwear are solved, and only 59 dollars. In the summer, lesbians are willing to accept, lesbians are not too concerned about the length of the dress, there is only one point in time, is the summer. By making a strong cut into women's apparel this summer, I believe the company will soon cultivate another female online customer base. This will be important in driving vancl's long-term growth.
3. Changing the pattern of apparel consumption
The accurate grasp of the customer base has also enabled vancl to change the pattern of apparel consumption. In the past, we buy a shirt, often to wear two years, or even longer. But vancl advocates clothes are fast moving consumer goods, so that after the positioning, our clothes are not once to buy a piece, it is best to buy five pieces, every day to change a shirt, shirts and t-shirts are not two or three years to change once, as fast as a quarter, as slow as two quarters, half a year should be changed. After the positioning of this fast moving consumer goods, although the price of a single piece of clothing is relatively low, but the realization of a very important revenue model, that is, repeat purchases. When customers repeat purchase, although the unit price is very low, but the total sales may not be small.
4. Establish the threshold of competition
Vancl sells shirts, T-shirts, pants, shoes, skirts and so on these, all of which allow consumers to continue to achieve repeat purchases.
? Customer experience: goods to try on
Not only in the product, it redefined the customer's buying habits, but also in the customer experience, also made a very significant breakthrough, it is because of the breakthroughs in the customer experience, so that its network sales to be successful, but also make it set up a huge competitive threshold. For example, it took the lead in launching the goods to try on the service, clothes are not bought online to pay, can not try on. Many people feel that this is not realistic, we buy clothes in the mall will basically try, but buy clothes online but can not try, this is very annoying. So when it launched its goods-to-try service, as you can imagine, consumers were very satisfied and felt that it was really for their consideration.
Of course, this will bring the logistics company on its own management difficulties, but also to a certain extent will increase its costs, but such a service is very creative, but also set up the threshold of competition, so that the later if you do not go to follow up, the customer does not recognize; but if you follow up, you may be able to drag the later down. Goods to try on, it can be said that this is one of its killer app. It makes the customer satisfied, while setting up a competitive threshold, while leading the development direction of the logistics industry.
? Quality control: thread
Any great and wonderful dream, the last will come down to the reality of tedious step by step. Thus, the details and execution of the tiny elements often become the key point of success or failure watershed. For example, the thread problem, which affects the sense of quality of clothing, is dealt with when traditional clothing is sold in stores, while e-commerce must be checked before delivery. vancl company owner Chen Nian is a very meticulous person. Low profile, simplicity and attention to detail, this personal trait originating from Chen Nian's character, has now been implemented into every aspect of the execution of the VANCL brand. His attention to detail even reaches the point of harshness. For example, he said he doesn't like clothes with threads, and always feels that they are inferior, so he will ask a group of employees to carefully check, cut off the threads and pack them with cellophane before delivery. Chen Nian said: ? I hope that the clothes, if there is a nitpicking user, especially the real user, he really get to the authority to test, found that the original is really Coats line, the best line.
vancl has shaped its value by going beyond the customer experience, and so it has grown even faster than China Movil did in its early days. Today in the US, the hottest company is not Google, but Amazon, a B2C e-commerce company.
In the above three cases, Belle retail chain from production to retail vertical integration; China Mobile focused on product development, pioneered the original fashion of sports products, by outsourcing all the production and distribution links, to achieve rapid development; and vancl through the e-commerce as an emerging means of sales, business model, to achieve a more rapid and faster development. Through these three cases, we can see that, in fact, every fast business model is not the same, but each enterprise has ultimately achieved great success, in the next 5 years, 10 years, but also can be seen and felt success. This tells us: business model is promising, each of our enterprises should y understand, y grasp, and constantly grasp the essence and core of the business model.
Above is my business model innovation for you, I hope it can help you
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