Developing innovations with winning business models

Article 3 of 3 on the cost of innovation. Monitoring an innovation portfolio from a financial perspective. Is attention being given to the right technologies, to the right markets, etcetera?

Article 2 of 3 on the cost of innovation. Be aware of the financial impact of slow project execution, your NPV just melts away! On managing the financials of innovation and the financial impact of innovating slowly.

Article 1 of 3 on the cost of innovation. Given the forecasted business case of 1 innovation, what R&D budget is still worthwhile? What is an acceptable size of R&D budget for one innovation?

Innovation and financial management tend to be uneasy partners. Financial people like predictability and hate surprises. Innovators hate being squeezed into the corset of detailed deadlines and budgets.

What is ‘Developing innovations with winning business models’?

Developing innovations with winning business models is a well-tested approach that lets you uncover insights and real needs of the customer, and then move from idea generation to developing a solid value proposition together with a winning business model in an iterative way.

Why use ‘Developing innovations with winning business models’?

When you innovate there is no guarantee for success in the market. There are many unknowns: where are the best opportunities, what are the customer needs, what is the best solution, how will you make money? Using this approach you will develop successful innovations with winning business models, with less wasted effort and less risk.

How to develop innovations with winning business models?

Our approach is based on concurrent development with multi-disciplinary teams, involving customers or external experts in your project, and doing that in an iterative way.

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What are the 3 key benefits of our way-of-working?

  • Successful innovations with great business value
  • Less wasted effort through early decision making, clear focus, and multi-disciplinary involvement
  • Reduced risk through early customer interaction and validation

In the spotlight

Idea to Market training

Our colleague Roel Berkhout together with his colleague Aly Syed proudly delivered an idea to market training for an inspiring group of students and entrepreneurs in Nairobi. Incredible drive and inspiration among the group to bring new (medical) devices to the African market.

Many thanks to Kenya Ministry of Health, Kenyata National Hospital, Unicef, Concern, Gearbox, University of Nairobi Makerspace and Philips Foundation for driving this initiative.

Idea to Market Training photo album

idea to market training

“The team effectively employed excellent methodological frameworks to address our business questions, had great access to data, were resourceful, extremely open-minded and creative. They learned about our business needs very quickly and it was clear from the get-go that they are going all-out to help us achieve the answers we needed.  It was a pleasure to work together and I look forward to our next join work!”

Tamar Schirman
Director of Oncology Informatics Marketing, Marketing ICAP
Philips

“You guys are great enablers for our business. You put new ideas in our heads and widened our view of how to become a more services oriented company. Having a central team with these capabilities that are not present in the business units is crucial for the future success of our company.”

Jason McKenna
Head of Human Resources
Philips Sleep & Respiratory Care

“With the Value Network tool, Industry Consulting helped us to clearly identify where we sit in the value chain, who the critical players are, and how we evolve to have a stronger presence. A simple but effective tool in mapping our Value Network.”

Andrew Bower
Senior Consumer Marketing Manager
Mother & Child Care, Philips Consumer Lifestyle

“Especially the support in business model innovation yielded plausible business model options that we use to define our go-to-market strategy. It highlighted our strengths but also pointed out what we need to make this new business a success in China and globally.

Georgio Mosis
Principal Scientist
Philips Healthcare, China

“I enjoyed working with the people from Philips Innovation Services – Industry Consulting. They were highly professional and determined to fully understand our business case and deliver results. Communication, an essential part of working with any contractor, was frequent, and I experienced our sessions as very pleasant and highly useful. We obtained results that are immediately actionable for our business.”

Dirk Verhagen
Application Specialist Digital Pathology Solutions
Philips

“In a very initial phase of the project Philips Innovation Services – Industry Consulting delivered a high quality and convincing business track (business modelling and business case) by applying their pragmatic, structured approach.

Hanneke Hoogewerf
Consumer Marketing Manager Digital – Air
Philips

“Industry  Consulting worked fast and very focused, delivering excellent work on a complex topic in a short timeframe.”


Strategic Design Consultant
Philips

“The tools and methodologies that Industry Consulting brought to the table in this project were extremely helpful in helping us shape our value proposition and business model.  The team helped us formulate hypotheses about our proposition and planned market approach, and also to test them with relevant stakeholders through qualitative interviews. We were able to quickly create an effective cross-functional working group, distributing responsibilities among members so as to produce results relatively fast. Thank you very much!”


Senior Product Manager
Philips

“Straight deep dive into content based analysis, eager to get results and professional attitude – highly recommended!”

Ruud Roelofsen
Field Marketeer
Digital Pathology Global Markeing & Sales Support, Philips

“The Industry Consulting team helped us transform an idea into a realizable concept. This focus on delivery and execution made the difference in our short project timeline which aimed to answer difficult questions in a mature and highly regulated market. This is critical in today’s time when data volume is often huge, insights are all around us but what is lacking is how to use those ingredients in a recipe to provide a worthy result with meaningful insights.”

Sami Ahmed
Sr. Business Development Manager
MR Global Product Marketing, Philips

“I like the flexibility Philips Innovation Services. This was quite a fussy project with an ongoing changing scope. Which required a constant pivoting of plans. But the consultants could very well think along in what were valuable business deliverables at this stage in the project.”

Hanneke Hoogewerf
Strategic designer
Philips

“I worked with the Philips Innovation Services team during the Breakthrough Acceleration Program, and subsequent pre-seed venture stage. The Philips Innovation Services consultants were an integral part of the team, and with their business acumen and in-depth domain knowledge invaluable team members. I would like to highlight their professional communication style and impeccable diligence, which made interactions as pleasant as enriching.”

Carsten Schirra
Research and Development Director
Philips Research Americas

Meet our skilled and hands-on experts in developing innovations with winning business models

  • Driving innovation for products, services, and solutions
  • Leveraging learnings from bringing many successful innovations to market
  • Hands-on experience in B2C and B2B markets

Meet us:

peter van de berg
Peter van de Berg
Value propositions, business modeling, new business creation, digital transformation
majonne bokelman
Majonne Bokelman-Dumas
Market driven innovation, value proposition creation, competence management
jeroen de kempenaer philips innovation services
Jeroen de Kempenaer
Value proposition, business modeling, business case, roadmapping, portfolio management
rob de graaf
Rob de Graaf
Innovation strategy, portfolio management, idea management, business development

Developing innovations with winning business models

Innovation is about creating a solution with value for customers that is successful in the market and for the business

When you innovate there are a lot of unknowns. Who are the customers, what do they need, which influencers, stakeholders, and partners should be involved, will they all see the value of the innovation, and do they want to pay for it and if so how? Will it be better than current alternatives or competitor products, will it work and what comes next? What capabilities to you miss, and will you be able to create value for the business?

A lot of questions and a lot of uncertainty. The risk of launching a product or service that will not be successful is high, but there is no alternative, innovation is key to survival and growth.

Innovation is about creating a solution with value for customers that is successful in the market and for the business. By understanding the real needs of the customer and moving from idea generation to developing a solid value proposition together with a winning business model, you will create successful innovations and reduce the risk in an iterative way.

Continuously combining three points of view: customer and ecosystem, solution, and business

The ‘Developing innovations with winning business models’ approach combines three points of view from the start: the customer and ecosystem, the solution, and the business.

You can start in two ways: A) look for new areas of opportunity, or B) further develop an opportunity area you already identified into a solid value proposition.

A)   Multi-sourcing insights

To look for new areas of opportunity you need to combine three types of insights:

1. Real insights into customers, ecosystems and markets

In this phase you will not only look at customer and consumer needs and insights, but also at insights and needs of ecosystem partners and stakeholders.

2. Solution insights from (new) technologies from inside and outside the company

You will bring in solution insights from (new) technologies, from start-ups, universities, suppliers or other industries. And you will take on board insights from the business, such as business models that you use now versus what others are using in your or parallel industries.

3. Business insights based on strengths of the company that can be leveraged 

You will also look at what strengths you have that you can leverage further. Strengths like assets, technologies, channels, relationships, etc.

By combining those three types of insights in what we call a ‘wall of insight’, new opportunities emerge, for which you can generate ideas for potential solutions.

B) Develop value propositions together with the appropriate business models

The next step is to develop value propositions and at the same time define the appropriate business models. If you had already identified an opportunity area you would start at this point.

  • A value proposition describes the value you will bring to your target customer on his or her need, with your product or service offering, and the unique selling points over alternatives.
  • The business model describes how you will make it work and make money with it.

Here again, you will once more combine these three points of view (customer and ecosystem, solution, and business) to answer the following questions interactively and iteratively, but now, in contrast to the first phase less divergent and more solution driven:

1. Customers and ecosystem: who are your target and stakeholders and what do they really need?
  • Target group and ecosystem
  • Needs and insights
  • Competition and alternatives
2. Solution: what is the solution that addresses the needs better than alternatives?
  • Product or service and benefits
  • Unique selling points
  • Roadmap
3. Business: what is the winning business model and what are the risks?
  • Business model
  • Strategic fit, capabilities, risks
  • Market size and  business case scenarios

This approach ensures your value propositions address a true customer need, for which a feasible solution can be developed in the ecosystem, and that leads to a viable business.

Through iterative loops you will create successful innovations and reduce risk, by validating the value proposition with customers and by understanding its business potential long before high investments are made.

Having a clear view on these three points of view is key for success.

However, these three points of view have become more difficult as there is often not just one customer, for which you develop a single standalone product and where you earn money by the difference between price and cost. ‘Developing innovations with winning business models’ addresses these complexities.

From a single end-user to complex ecosystems

In business-to-business, the number of stakeholders, with often different needs, can be high. But also in business-to-consumer, it is not only the end-user that determines the solution and business model nowadays. The digital transformation is opening up new opportunities. Many products and services are connected in platforms and several platforms form complex ecosystems.

In this approach, you will analyze these ecosystems. Through this, new opportunities to deliver value will be identified and possible barriers are taken away. Visualizing the ecosystems in our value network tool allows you to understand relationships between the different stakeholders and to look for possible partners to develop and launch your proposition in the market.

From products to services and solutions

Customers ask for solutions to their problems, not just a product. Product companies move into services. Data becomes abundant, allowing new value to be created. All this leads to the fact that a value proposition nowadays can have many aspects that need to work together seamlessly.

So developing the solution means product, software, service, data, etc. And this means that you need to have experience in developing innovations leveraging these areas. When developing the value proposition and the business model, you will address all the relevant parts, making the end result robust.

From price and cost to winning business models

Your new product or service should be great for your customer, but also good for your business. While understanding cost and pricing might have been enough in the past, business model innovation is part of the creating successful value propositions.

And there is more to consider. What assets and capabilities can you leverage and which ones do you have to build? What is your right to play and right to win? And do the earnings outweigh the risks?

A business model describes how a business or organization creates, delivers and captures value. It describes how your proposition will establish itself in the market (customer segments, customer relationships, channels, revenue streams) and what is required to do so (key activities, key resources, partnerships, cost structure).

These days there are many ways how to monetize your proposition. It is no longer solely selling products. It is always worthwhile to explore various business models to ensure the winning model is chosen.

Concurrent and iterative

The ‘Developing innovations with winning business models’ approach combines proven methods like Concurrent Development and iterative Lean Start-up thinking.

  • Concurrent: making sure all parties are on board, from marketing, R&D, operations, IT, finance etc., so that the value proposition is developed in a concurrent way from the start.Making sure all parties are on board is key to prevent working on ideas that are not addressing a true customer need, or for which no feasible solution can be developed, or ideas that do not fit your strategy or do not deliver any viable business. Also, you should not hesitate to involve customers, partners or external experts in your project.
  • Iterative: short cycles of ideate – validate – learn, quickly honing into the right value proposition, making a pivot when needed, or stopping. The early customer and market interaction provides a clear focus and enables informed decision making. Listing the most critical assumptions of your idea allows you to do the right experiments to validate them. With the learnings and new insights, you will gradually sharpen your idea and build your value proposition. After each learning loop, there are three options:
1. Go

Your proposition is strong and you have evidence to prove it and go to the next loop.

2. Pivot

You believe in the idea but one or more elements in your proposition need to change.

3. Stop

You no longer believe that this is a big enough opportunity to pursue.

By following this approach you develop a solid value proposition for your innovation together with a winning business model in an iterative way.

Three benefits of developing innovations with winning business models

  • Successful innovations with great business value
  • Less wasted effort through early decision making, clear focus, and multi-disciplinary involvement
  • Reduced risk through early customer interaction and validation

We are Philips Innovation Services

As an innovation service provider, we want you to be successful in delivering your innovations to the market, where they can matter to your customers and society as a whole. Our mission is simple: to accelerate your innovation. Inside and outside Philips, from start-up to multinational. Being globally active with almost 1,000 specialized experts and 10,000 m² of high-tech infrastructure, we can accelerate your innovation with development, realization and consultancy.

Developing innovations with winning business models is one of the focal areas of Industry consulting, one of the eight key areas of expertise of Philips Innovation Services. We have a team of seasoned business and industry professionals. With a hands-on approach and expertise, we create tangible results that last: we are implementation-oriented. Working closely together with your employees, we create an on the job learning setting. This enables your organization to strengthen or develop its own ‘continuous improvement’ culture.

Innovations with winning business models news archive

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Thriving innovation? But what do you do about your own innovation culture? 5 actions to create a culture for winning value propositions and business models.

Value proposition design for business strategy development: translate strategy to tangible offers, explore strategic adjacencies and create learning loops.

The Internet of Things is growing rapidly. IoT disrupts current business models, enables companies to pursue new opportunities and to play a different role.

Uber is not just providing value propositions to its customers. It leverages its data to also provide value to its suppliers and build their ecosystem.

Strategy, idea, and product form the golden triangle, with culture of innovation as a key prerequisite.

A five-levered approach proven to effectively shift businesses from product to a more service orientation.

A creative look at your actual quality aspects as real game changers.

4 speakers from 4 different industries share their experience in creating digital innovations.

Contact us about developing innovations with winning business models 

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