BMI Lab: Systematic business model development
Knowledge creates value. Dr. Oliver Gassmann is Professor of Innovation Management at the University of St. Gallen in Switzerland. For five years, his research team with Assistant Professor Dr. Karolin Frankenberger analyzed business model innovations by large corporations like Apple, Amazon, Ebay and Nestlé as well as by start-ups. The team found astonishing details under the microscope.
55 basic patterns
Gassmann et al. have pursued the question of how companies revolutionize their industries and create new markets with business model innovations. In 90% of all cases investigated, the team found the same 55 recurring patterns – in different combinations.
In other words, and with further thought added, their thesis goes like is: innovating business models follows certain basic patterns that you describe and therefore use systematically – similar to cooking recipes. One of these patterns is the famous razor and blade pattern. Here, a base product (e.g. a razor) is placed on the market cheap or free and then is financed through the sale of consumer goods (razor blades). All patterns are described in "The Business Model Navigator: 55 Models That Will Revolutionise Your Business" by Gassmann /Frankenberger/Csik, published by Hanser (executive summary in German, book in English).
BMI Lab in Zurich
The BMI Lab is located in a coworking space in the vibrant district of Zurich West. Zurich is centrally located in Europe with good connections in any direction (Germany, Austria and all of Switzerland of course), plus the airport for customers from afar – or for visiting customers and partners abroad. The BMI Lab has eight employees (as of early 2016) – ranging from young creators and thinkers to the seasoned business consultant. Since its foundation, CEO Felix Hofmann runs the daily business.
Guide to business model innovation
In addition to consulting and training, the BMI Lab offers companies (mostly large corporations or SMEs) action-based education. Another format is the business model think tank, in which a good handful of companies from various sectors meet several times a year. Guided and moderated by BMI Lab, the companies share information on their business model innovation work and learn from each other.
Also, the teacher learns from his students: in the business model think tank the BMI Lab analyzes the implementation of innovative approaches and makes findings available for reasearch via Gassmann and Frankenberger at the University of St. Gallen.
In the action-based education format, 55 cards come into play that the BMI Lab also provides as a set. The playing cards are based on the Business Model Navigator from Gassmann’s team and are intended to server as an impulse generator and accelerator of ideas for innovation brainstorming.
Quantitative approach – anything goes
CEO Felix Hofmann describes two principles according to which the BMI Lab works with the cards. When using the confrontation principle many of the 55 cards are played and the workshop participants apply basic patterns from other industries on their own business models.
In one or two workshop hours, easily 100 new innovative business model approaches pile up with this quantitative approach, including several ones with a high potential for implementation. The difficulty here lies rather in the selection. But also here, the BMI Lab accompanies the creative process and structures it as much as necessary.
When working according to the principle of similarity, the BMI Lab researches beforehand existing pains of customers, as well as industry trends, and identifies fitting patterns out the 55 as a means of impulse generation and acceleration. Using this method is another way to break through the dominant market logic at least conceptually and provide valuable groundwork for profound business model innovations.
Variety of methods
In addition to the 55 cards from their own forge, depending on the general task and customer profile, the BMI Lab employs other tools and methods as well, such as business model canvas, blue ocean strategy and design thinking. The main goal is always generating new ideas.
Next big thing: Internet of Things
In the early years of the end consumer Internet, virtual worlds and new digital products have emerged. The makers of BMI Lab say that IoT (the Internet of Things) might well be the next big thing – or at least one of the major future economic developments. By way of microchips and wireless data transmission, so far uncrosslinked commodities will become Internet users, such as refrigerators, cooking robots, bicycles, you name it.
Net with knobs
Felix Hofmann gives an example: the Amazon Dash button is so far available in the US only: consumers attach a wifi-enabled order button on the washing machine, tell Amazon their favorite detergent, and with a simple push of the button they order new supply when the detergent is near empty – without a login or need to launch an app.
At the cutting edge of developments
Perhaps it is no coincidence that the IoT Lab of Bosch is right next door to the rooms that the BMI Lab uses in St. Gallen. Also, the informal exchange helps Prof. Gassmann (and therefore the entire BMI Lab) to always keep in touch with the latest developments. Whether software or hardware, Agriculture 4.0 or Smart City – at the BMI Lab business model innovations themselves are the one next big thing.