Friday, March 27, 2009

Business Model Innovation using Ideality

Ideality is a simple yet powerful tool to generate new ideas for business models. It is a tool that instead of starting from current business model and current value propositions, starts from the theoretical ideal situation. The theoretical ideal situation can be defined as all potential benefits at no costs or other harms. Using Ideality helps you look at the constraints of a business model and creates out of the box ideas. The most common approach is to apply Ideality on value propositions and analyze the ideal value proposition from the value recipients’ perspective. However, Ideality can be used as a tool to improve all business model components.
  • Value recipient - Who would be the ideal customer and other value recipients?
  • Value Proposition - What would be the ideal value proposition?
  • Delivery - How would the values ideally be delivered?
  • Assets, Capabilities & Activities - What internal and external assets, capabilities and activities would be ideal?
  • External Relationships - What external relationships would be ideal?
  • Control Mechanisms - What would be the ideal way to protect value and profits?
  • Benefit and Revenue Model - What would be the ideal benefits, and revenue model?
  • Costs and Risks - What are all costs and risks that theoretically could be removed?
Ideal for who?
What is ideal for one stakeholder is often not ideal for another. Customers want perfect products and services for free, not to be in a lock-in and get the value delivered instantly while the suppliers want to provide better-than-competition products and services, and make a profit from it. By mapping out what would be ideal for the different stakeholders, contradictions and constraints can be identified. To solve contradictions is a classical way to improve business models. Below an example looking at the value proposition from the customer perspective.

Working backwards
With the ideal situation identified, the next step is to work backwards to something that is achievable. This is carried out by a systematically decreasing benefits and/or increasing costs and harms.

Further reading

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