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Building Business Models
on Customer Insights
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CUSTOMER INSIGHTS Companies invest heavily in market research, yet often wind up created a seamless music experience for customers, integrating
the iTunes music and media software, the iTunes online store, and
neglecting the customer perspective when designing products,
services—and business models. Good business model design
avoids this error. It views the business model through customers' the iPod media player. With this Value Proposition as the kernel of
its business model, Apple went on to dominate the online digital
128 eyes, an approach that can lead to the discovery of completely music market
new opportunities. This does not mean that customer thinking
DESIGN is the only place from which to start an innovation initiative, but The challenge is to develop a sound understanding of customers on
which to base business model design choices. In the field of product
it does mean that we should include the customer perspective
when evaluating a business model. Successful innovation requires and service design, several leading companies work with social
a deep understanding of customers, including environment, scientists to achieve this understanding. At Intel, Nokia, and Telenor,
daily routines, concerns, and aspirations. teams of anthropologists and sociologists work to develop new and
better products and services. The same approach can lead to new
Apple’s iPod media player provides an example. Apple understood or better business models.
that people were uninterested in digital media players per se.
The company perceived that consumers wanted a seamless way Many leading consumer companies organize field trips for senior
to search, find, download, and listen to digital content, including executives to meet customers, talk to sales teams, or visit outlets.
music, and were willing to pay for a successful solution. Apple’s In other industries, particularly those involving heavy capital
view was unique at a time when illegal downloading was rampant investments, talking to customers is part of the daily routine. But
and most companies argued that nobody would be willing to the challenge of innovation is developing a deeper understand-
pay for digital music online. Apple dismissed these views and ing of customers rather than just asking them what they want.
‹‹ Adopting the customer perspective is a guiding principle for the entire business model
design process. Customer perspectives should inform our choices regarding Value Propositions,
Distribution Channels, Customer Relationships, and Revenue Streams.
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