Business Model

[Bridgit Hawkins]

Your business model is a core part of what creates the value in your business. So, how can you construct a model that means that as your business grows, your business value grows. So, look around and see what other similar businesses are doing, how they're approaching it. Be aware of the hurdles, but don't let those hurdles put you off actually what's the right business model for the business you're trying to grow.

[Timothy Allan]

I think when we started out in 2015, one of the first things that I did was said we look we need a capital plan, and we a general business structure. I had this really simple diagram which was the product, or the vehicle as the platform, and then you had three connected products and services which was portable power subscription, software and accessories. For a subscription, it includes the vehicle, telemetry, software, the battery, and all of that in a simple monthly fee. Because the battery is about 30% of the actual production cost, so what a subscription does is it flattens the cost and then expands it over that time frame, meaning that you can get the benefit of that today.

So, the unit economics are quite strong and obviously for us it's quite a sticky business model, it creates closer working relationships and more direct relationships with the customer, and that then accelerates our learning. Because you know if you take a look at the way we work with a company like Dominoes, I mean we will issue an uptime report to them every week that takes into account of the whole fleet, everything that's going on with it, and we'd be pretty much above 95% now. And then in addition to that, we would meet you know pretty frequently with you know the key corporate people like Cameron and... be talking about all the things that we can do to improve that whole experience. And so, I think the business model is really important because... it's not just the commercial but it's also to do with sustainability because... I mean, I think it's really easy for someone who develops an electric vehicle to think of themselves as being green or sustainable, but the reality is you've manufactured a really complex electronic product that has a finite lifespan, and what are you going to do with it at the end. The subscription means that UBCO owns the vehicle for its life, once it finish its productive economic life, we can then... we are much better equipped to be able to take that product back and then get it remanufactured into something which continues to keep the value where it is. Because you know you're talking about rare earth materials, minerals, you know and also... high value materials like aluminum copper, stainless steel, and so all of these things are important for that whole concept of circular economy in the longer term.

[Sam Gribben]

So, I think... the main thing with pricing is you just don't know... um in fact the classic, kind of, line from 500 startups, so you get there and they're like "welcome, come over here, you can sit over there and first thing you should do is double your price, and just see what happens", and we were like "No! we can't possibly do that", but we did, sales dropped a little bit and revenue went through the roof.

[Mahmood Hikmet]

When you have such a new disruptive technology, the immediate benefits of it aren't going to be absolutely apparent to everyone right from the get-go. There's a bit of a proving step that you need to do. So, rather than try to push out technology in places or with partners that weren't really that supportive of it, or interested and exploring, or also had a fail-fast style of mindset, we instead chose strategic partners that understood what we were trying to do with the technology, how to best approach a problem. And in that way, you end up working together to try to find a solution, rather than convincing someone every step of the way why they should believe you about what you're trying to say.

[Sam Burton]

So, our business model approach is... going through distributors mostly, wholesale, going through an indent manufacturing model as well. So, we manufacture twice a year... we go through a, basically, a pre-order process with all of the distributors, so we'll present the range to them, they'll sell that in to all of their retailers um over the course of a couple of months, then give us the give us the orders and we'll manufacture that.

It's got... its kind of pluses and minuses, what we're trying to do now is increase the amount of manufacturing runs that we do per year, so we can get closer to the market... um and also get closer to our end customers. We've seen a huge growth in our e-commerce channel over the last couple of years, and we far exceeded our growth targets in Ecomm, which has been fantastic because it's giving us all of the data in terms of that product sales performance, so we can feed that back to the design team and actually have a lot more live data to work with.

What we do now is we work on market pricing, so we look at all of our competitors, um look at similar types of product, and then just benchmark that, then we'll obviously make sure we're getting a good margin, and massage that into place. As part of that product validation phase, we'll be talking to the in customers as well, and saying not just outright asking them how much they'd pay for it, but asking them about the experience, and then we'll be comparing that product experience to what else is out there in on offer, yeah. So it's a really multipronged approach of using data but then that that qualitative in-customer work as well.

Although we're market priced, we try and stay middle to top um sort of in terms of the premium. We spend a lot of time making sure that our quality is really really high and with that comes a cost using really high-quality materials. If we go too far down to the towards the bottom of the market there's just some compromises we're goning to have to make and we're not willing to do that. Um so to do that, we have a bit of a goal to move more towards value pricing, and really grow the brand and wrap those stories around the product um to really supplement that and make sure the end customers are really understanding the value and what we're providing.

[Aroha Armstrong]

Business isn't necessarily linear, but there are definite critical success factors that we know are helpful if you address those first. One is... we know that you really have to understand who your customer is, and what it is that they need. You need to understand what is your pathway to market, like how do you get your product to those customers, and how do you scale that, so that you can sell more and make more money. You have to know how to protect your idea, what else is going on and is it a good idea someone else doing it, and how do you sell it. If you don't have all of the building blocks, if you miss one critical step, you will find it a lot more difficult than you need to.

[Peter Montgomery]

Most of the businesses I deal with... they're not conversing with the business modeling, so they actually don't have a business model. They're running on instinct and they're very good at what they do, but they are lacking some structure, and they don't get enough time out to actually think about these things.

Typically, what I... am dealing with is companies that have diluted their intent and purpose in a way. So, they've kind of lost their way and they're not fully understanding where they're going. Part of that piece of that work is to help them re-understand or reconnect with their intent, reconnect with their purpose. And then from there, look at designing a business model underneath that, which is coupled to that intent and purpose.

[Philip Fierlinger]

Some of the great opportunities that still exist or wherever you see a spreadsheet, wherever you see people are emailing, texting, phoning... these are inefficient mechanisms for getting things done. Um and so... a spreadsheet is a particularly telltale sign. If people are running their business on a spreadsheet, now it's similar to Xero actually. With Xero, the major competition, as it turns out, wasn't the big incumbent accounting software companies. Spreadsheets were the biggest competition for Xero, and still are in many ways, it's still... that's why, you know, Xero share price is what it is because that's still there's such a massive opportunity there to win over from spreadsheets and to make these businesses run much more efficiently.

You don't quite appreciate the scale that the rest of the world operates on, and so that can impact your thinking in terms of, you know, the way that you architect a product, the way that you position a product, the way that you approach and market or sell. You know, things happen on different scales that you don't have uh insights into, and so in some
ways I do feel like that's an advantage that I, you know, grew up in the States and I innately understand those... those levels of scale and how the rest of the world operates, and most of the rest of the world, operates in those levels of scale.

[Leaft Foods]

You know for where we are in Leaft Foods, you know we've utilised the support of the Food Innovation Network and the plant equipment that they have, as well as you know lab space all across the country, at universities, at Callahan Innovation, at Cris. But we're always thinking about how this will look at scale and how we're going to transition from where we are to... scale because we're only successful if we can make this... something which is truly scalable.

[Claire Foggo]

We were a bit naive perhaps, you know, just going straight into a trade show with an MVP product, but if we'd been a bit more structured, I think we might have identified some patterns earlier, like for example we could have, if we'd realised that a lot earlier, we would have gone into Canada earlier um and Canada turned out to be our biggest market. Um so, perhaps you know being a bit more structured about recording feedback, and being a bit more um ridgid around that I think would have helped us earlier.

[Ross Pearce]

Most Innovation today is really about business model because people aren't inventing new things, they're reassembling existing things in a new way, and that's really the business model that allows that to happen. So, creating value is really at the heart of good Innovation practice. A large part of that is integrating all those other things that sit around the product that help make it successful, and the output of that is a business model which is different, perhaps, from your competitor. And that helps not only differentiate you but probably deliver more value to both your customer and to the business.

One of the other aspects that you can do now is make money in different ways. So the digital revolution that's happened has allowed us to charge for our services in completely different ways, from the SaaS model which is common with digital through to metered usage, through to auctions online. There's a whole bunch of different ways of making money where even 15 years ago it was pretty much a transaction. It's much different now, it can be micro payments, it can be a whole range of things. And when you think about that, that means you can engage with your customers in different ways too, and vice versa if you can think of a different unique way of engaging with your customer, it might allow you to make money from them in a different way. So these things start to build out a differential business model.

I think if you've got a product which has got a high capital value, an example of that at the moment is Solar, so there's a high capital value in putting a solar panel array on your roof and the battery backup, and so there are plenty of business models that have been around for a while now which take that capital cost out and... the way you pay for that is by through the electricity usage. So there's a premium on the kilowatt hours that you use which pays for that capital cost over a period of time and then at some point you own it and power becomes cheaper. And when you balance it against the ever increasing, in that particular case, the ever increasing cost of power through the network and you're on a fixed price power plan which is paying back the capital cost... it's a very compelling proposition. And so when you think about how you charge people, you can actually add value in the actual cost of the product as much as the performance of the product.

[Adrian Packer]

Probably one of the simplest things to think of alternative scenarios around is your business model. And often times, this is a thing that's left right till the last minute, right. The logical conclusion... the logical thought process is 'let's have an idea, let's see if we can develop it, then let's think about how we're going to sell it', right. And ,of course, changing that can bring some great benefits, so for example if we're going to enter into a new geography, should we do that um by setting up our own supply chain or our own manufacturing capability? or should we partner with different people? or should we look to license? All of these decisions can be evaluated right at the front of your Innovation process to really get into the different scenarios that make most sense. The longer you leave this thinking, the harder it is to unravel any decisions that have already been made.