Title of Article: “The First Step of Business Model Innovation: Focus”

Links: https://www.forbes.com/sites/freekvermeulen/2018/01/11/the-first-step-of-business-
model-innovation-focus/#100dcd165022

Concepts related to class discussion: Value Proposition, Customer Segment and Key
Resources, Key activities.

Brief Summary

This article discussed about the importance of how a focus on customer segment, value
proposition etc. help business succeed in present competitive business environment. It provided
an example of how a business named “Hotel Chain Citizen” founded in the Netherlands in 2008,
decided to focus on one particular group of customers only and able to provide affordable luxury
service to their customers who are willing to make a few trade-offs for a reasonable price. This
helps the business to differentiate it from other competitors.

Analysis

The key activities component of a business model is necessary in order to determine the value
that will be placed in value proposition. Focusing your value proposition on specific customers
or group of people can bring about innovative trade-offs. According to the article, customers are
often more heterogeneous than the companies who serve them, who often try to be a one-stop-
shop in their attempt to appeal to a wide spectrum of customers. The key activities performed by
“Hotel Chain Citizen” in delivering right value to its customers includes offering comfortable
open space in their facility where customers can hang out, eat sushi, sip a cappuccino, and a very
comfortable hi-tech bedroom for a reasonable price.

Conclusion

This is an example of a business opportunity that involves breaking similarities with other
competing businesses. For example, in an industry where most business are alike, and the norm
seems to be that you have various facilities and offerings in your value proposition that appeal to
a wide spectrum of customers, at some point in the future a competitor will disrupt this industry
by developing a superior value proposition for a very particular customer segment and that is
exactly what “Hotel Chain Citizen” has done.

The point here is that focusing your value proposition enable business to make innovative trade-
offs. Innovation is not about emulating the bigger businesses in same industry but about making
more clever use of the heterogeneity in the business.

Finally, I believe that a consistent delivery of value to customer segment is a key to generating
sustainable business revenue.

Part 2 - Key Takeaway

The 3 key “Takeaway” concepts that I learned from the first week class video are Strategy,
Business Model, and “The 9 Building Block” of business systems and processes.

Strategy is significant because it describes what a business or person is going to do or why they
do what they do rather than how to get there or when. It’s a strategic planning analysis and an
important skill in any successful business.

Business Model describes the rationale of how an organization creates, delivers and captures
value. It allows companies to view the entire business on a Page; it is like a blueprint for a
strategy to be implemented through organizational structures, processes, and systems.

“The 9 Building Blocks” includes customer segments which explain how an organization serves
one or several customer segments. Value proposition seeks to solve problems and meet needs
with value propositions. Channels explain how value propositions are delivered to customers
through communication, distribution and sales channels. Customer Relationships deals with how
customer relationships are established and maintained with each customer segment. Revenue
Streams is the result from value propositions that is successfully offered to customers while Key
Resources is the assets required to offer and deliver the previously described elements. Key
Activities are number of activities performed by a business organization and Key Partnerships
refers to some activities that are outsourced and some resources that are acquired outside the
enterprise. Cost Structure refers to business model elements that result in a company cost.

Interestingly this week, I applied one of the “Takeaway” from the course to real life situation. I
used the value proposition cost reduction to save on purchases. I am responsible for ordering
some major household items. Usually, we always ordered a week supply at a time to keep costs
low. I had to decide whether to keep doing this or buy six month's supply and get a discount for
ordering such a big volume and escape possible future price increase. I did some research and
worked out we could reduce our costs by buying for six months, especially since the amount we
used remained practically unchanged month to month. I was right, the prices went up by 10%
and we were able to save some money.