Business Model Innovation Quiz with Mini-Caselets (Your Help/Examples Wanted)

Alan Smith, designer of Business Model Generation, and myself are currently working on a playful, but useful toolkit for business model innovation. One of the things we came up with is a little quiz with a deck of cards that helps you to quick-start your business model thinking.

This is how it works: On a card you have an extremely short story/caselet of a business that has a business model issue. On the flipside you have the answer outlining what they've done.

Example (source: Henry Chesbrough, 2003):

Q: In the late 50s Chester Carlson developed the first modern-day photocopying machine at a company called Haloid. The copier could make thousands of copies per day rather than 15-30 as with current machines installed in companies. However, at an estimated production cost of $2'000 the new photocopiers were also about 7x more expensive to make and thus practically impossible to sell to customers. What should Haloid do with this new technology?

A: Haloid brough the photocopier to market with a new business model. Customers could lease the machines for $95/ month and get an allowance of 2000 free copies, but pay 4 cents each for additional copies. As a result the machines were affordable for customers, who started making 2'000 copies per day. Haloid, which would later become Xerox, experienced revenue growth of 41% compounded for next 20 years, starting with this initial photocopier called Xerox 914.

What do you think of such a question/answer quiz? Do you like it? Would you play it?

More importantly: Help us generate and list such examples with question/answer caselets. What are the Q/A examples you can think of that we should integrate. We really need your help to generate as many cards as possible!

Mobilize all your business model (innovation) knowledge and pitch in your examples... THANKS!

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Good idea. But let me suggest that you go a little further. Design the Business Model Generation board game where the board has the 9 boxes and you pile 10 cards on each box. Five cards have questions and five have answers. At the end of the game you have 45 answers. You can have up as many as 9 players, one for each box! The winner is the one who has the most number of right answers!

Just to play around, Here is a project I put together about 4 years ago following your format.

Q: What does a company do when it invested in too much in building space in its factory in China? He could wait for expanded business, but that would take years.

A: Promote to small companies that must stop producing at least part of it products because of cost constraints that the space is available. Rent them the space. Supply them employees. Provide them import/export expertise. Provide them raw material purchasing expertise. And do all this will very little risk to the renting company. All they have to do is transfer their production to the new space. They can keep all their production technology in a controlled environment, but they reduce their cost by probably 80%.

This has been one of my most enjoyable projects in China. I hope to add to this success.

Ron in Tokyo
Airlines and fleet operators are under a lot of pressure to increase (or keep) the quality of their air planes while reducing the total costs of ownership. This is not only felt within these companies; it also affect their relationships with suppliers. How can a supplier see this as an opportunity, rather than a threat?

Rolls-Royce created the "Power by the Hour" (PBH) scheme targeting the the after-sales activities by offering performance based contracts and providing superior, cost-effective maintenance and support services involving the redesign of the customer-supplier relationship and stimulating incentive alignment.

For more information see, for example, 'Power by the Hour': Can Paying Only for Performance Redefine How Products Are Sold and Serviced? Knowledge@Wharton (2007)
Another nice example can be found in HBR, 1998, The Power of Virtual Integration: An Interview with Dell Computer’s Michael Dell.
Alex and Alan:
Great idea! However it seems more of a business history lesson than a game. So, here's a slightly different spin for your consideration to make it more of a game - and in the bargain more fun to play. In your book, BMG, you offer five business model patterns. Following that format, turn your game into a thinking person's game by using this game flow: 1. Card side one tells the dilemma being certain to set the context stage as you did in your example; 2. Players then choose a BM card from your selection of five being sure to include enough BM cards so that every player could chose the same BM; 3. The results side of the card is shown; 4. Players who chose the "correct" BM, earn one point; 5. Players with the most points win!

Adding a few hypothetical companies and the situations they are dealing with might add to the fun factor.

I hope this helps Good luck. I think it is a neat tool and I would play/use it.

I like this idea a lot. Only problem, what if the recommended 'answer', as has been experienced in real life, is a combination of patterns, rather than a single one? Theoretically it is possible, right?
I like the idea of the quiz cards. If they were to include some category labels with some guidance on the type of modeling focus, they may be even more powerful. For example, here is what I would include on them:

Context - The company is focused on increasing revenue, cost reduction or both - having each context item focus on a specific objective may guide the discussion with a bit more focus and for the more advanced business modelers a combination can be suggested

Givens - provide some given variables to help guide the discussion as they pertain to the strategy / vision of the company, i.e. no other such product exists, the company's main focus is on this segment and wants to find a model supporting its vision

Customer Segmentation - a guiding point on what customer sgements they are dealing with today can create a more focused view on what they might to within this segment or branch out into other segments as supported by the company strategy
Great Idea Alex,

Some of the case studies could be from the following companies.

Kiva, Etsy, ebay, BetterPlace, Threadless, , Innocentive, 37Signals, Kindle, HP's Printers & Ink, Sodexho, Southwest Airlines , Microsoft (Building Partners), Bharthi , Index Mutual Funds, Startbucks (for raising prices), Nike (for raising prices), Blackberry, Samsung (Fast Follower), LG (Blue Ocean), Tesla motors (electric cars), Tata nano, X Prize, Semco (organization design), Dyson , Qualcomm (for building an R&D engine of royalty payments from patents).
Hi Alex;

I see good value in building caselets and management games to build thinking- the business model way. I have following suggestion.

1. Introduce the vocabulary of the BM canvas in the caselets.
2. The question and answers may be framed such that it is easy to visualize the caselet on the BM canvas.

3. the approach to understand the question could be to first, to identify the building blocks of the 'BMl canvas" and then attempt to solve the arising problem.

For example, the quiz in your example relates at generic level to " a value proposition of high performance photocopier that delivers 100x copies per day. When the value proposition is offered to the customer (segment), in the current 'business model' it leads to over 7x price (costly)."

Ans: Haloid re-evaluates the customer needs(customer segment block). It realizes that the requirements of the customers is 'to have photocopies' and not photocopier. The insight reveals that the customers actually require a service. When the math (revenue model and affordability) is done, the direction of solution is a combination of product and service offer. Hence, Haloid innovated its business model such that customers could lease the machines for $95/ month and get an allowance of 2000 free copies, but pay 4 cents each for additional copies. As a result the machines were affordable for customers, who started making 2'000 copies per day. The innovation was in "revenue model". Haloid, which would later become Xerox, experienced revenue growth of 41% compounded for next 20 years, starting with this initial photocopier called Xerox 914.
shridhar lolla
Yes, what he said. All of this needs to build on the model.
I'd propose this caselet but I got no correct answer yet other than observations... :-(

Q. Google recently launched Nexus One, their very first smartphone. Before that, they offered for free a mobile version of their OS, Android. Based on this, quite a few manufacturers launched Android based copycats of the iPhone, incl. Motorola; however, only Nexus One (manufactured by HTC) became Google's 'official' smartphone. Nexus One is only available from Google via online purchasing. Also, there's no human interaction with users for support issues. The phone screen is said to be better than iPhone's, but the Android SDK forces far less discipline upon developers to respect GUI 'standards'. Users complained that the GUI of various apps is 'all over the place'. Google has done absolutely no TV ads for Nexus One at all. Unless you are a geek, you probably haven't heard of Nexus One, three months after its launch. Users complain about no seamless user experience for OS updates and other uses. Nexus One looks like a badly done iPhone copycat, only counting on Google's brand and viral marketing and the hope that sales will take care of itself... Needless to say, sales figures to-date are appalling compared to iPhone's figures for the same equivalent period right after launch..

A. Contrary to Apple, Google appears to value and respect developer freedom exactly like Microsoft does, thinking that software is made for developers rather than for users. Nexus One is one of many Android smartphones available on the marketplace. No worth mentioning value added differentiation among competitors other that it comes from Google... but Google has no 'brand' track record for hardware. Other than Key Resources (Brand, Android OS, albeit with poor libraries) and Key Partners (HTC, developers), their other Canvas blocks seem to be left alone to their destiny and good fortunes. Single channel for purchasing, appalling self-service customer relationships, virtually no channel for after-sales product support, and no Awareness Channels (other than geeky viral marketing), a Value Proposition only targeted to developers (guaranteeing total freedom as an answer to Apple's strict verification and approval of submitted apps), and an apparent overall 'strategy' for going only after the iPhone, which in itself seems to operate in perfect Canvas conditions. Google should probably withdraw from this market and stick to their own core BM patterns.
Referring to p. 85 of the book, Apple took a while to evolve the iPod business model. Also, Google's development model is centered on rapid releases and evolution - very much in the Microsoft vein but generally in the cloud (so doing it on a piece of hardware is new for them).

Perhaps Google's answer is to leverage its core asset: the dominant position in the online advertising market. They should start with a price-sensitive segment of the mobile market - pre-paid - and offer a partly subsidized service based on how much customers actually use the advertising that appears on their Android phone. That's a segment that current market participants are totally ignoring, but there's no doubt the mobile market is becoming much more price sensitive (in the US) as competition for market share replaces growing the market.


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