How a Traditional Industrial Manufacturer Unlocked the Value of Software-based Solutions
Founded in the first half of the 19th century, Europe’s largest industrial manufacturer looks back on a long and eventful history. With the passing of decades, the company has grown into a truly global player with 350k+ employees and 200+ production facilities around the world.
Today, the constructor of the world’s first long-distance telegraph line stands firmly rooted in the 21st century, offering cutting-edge solutions in the fields of healthcare, energy, and building technologies. Recently, one trend has dominated all sectors: a shift from hardware to software-based services.
The Challenge
Zooming in on the building technology sector: by 2019, the legacy manufacturer had developed an impressive array of novel digital offerings for buildings. Their solutions ranged from tools for monitoring energy consumption, reporting on sustainability metrics, and measuring space utilization to predictive maintenance software. Yet, many questions around the offering of these services remained open. Which solution did their clients really need? How much would they be willing to pay? Would facility managers around the globe have different requirements for their smart building?
To answer these questions quickly and in a structured way, the company decided to partner with the BMI Lab, an advisory with years of experience in developing suitable revenue models and pricing mechanisms.
Our Approach
Over five months we ran a three-step business model improvement project to find a viable revenue model for the smart-building bundle. The client team joined three two-day workshops to learn the Business Model Navigator and met weekly to move tasks forward with our support. We began with Step 0, Project kick-off, mapping the full product bundle with key features, customer segments and current pricing, which produced an initial concept and a clear testing roadmap.
In Step 1, Best practices, we reviewed revenue models and pricing across industries, generating more than fifty ideas and a shortlist of key assumptions to test.
In Step 2, Internal needs, an online survey of local branches refined the model and led to a first prototype.
Finally, in Step 3, Customer validation, field interviews supported by a mock landing page confirmed core assumptions and shaped a workable pricing model.
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Impact
One year after launching the pilot program on the market, our client has been able to conclude that their advanced high-quality seeds meet the needs of farmers and open ways for creating and capturing new value.
Validated model
The agtech leader advanced seeds grow into robust crop using less water, land, and crop protection – added value justifying a new business model enabling the company to capture more of this value. The pilot program demonstrated that farmers benefit from the model, too: a value-based pricing model de-risks the transition to new seeds and the close way of working that goes hand in hand with such a model enables constant improvements to product and service.
Valuable insights
Accompanying farmers through an entire harvest cycle and receiving real-time feedback on their new solution brought our client a wealth of insights into the problems and needs of farmers and the actual performance of their seeds on the field. These learnings have allowed the company to improve their new solutions – but they also inform their other lines of business and customer offerings.
Innovation culture
Even beyond the current project, the BMI Launchpad has sparked change within the agtech leader. The drive for innovation, which has always been at the heart of the company's culture, has been expanded by another important dimension. Employees developing highly advanced products now also feel encouraged to reconsider how these products are distributed, what customer problems they solve and how they create value – they have learned to think in business models. This new skill has already resulted in several follow-up projects in various locations and departments will benefit the project participants, their colleagues, and the company well into the future.
Georg von der Ropp
Key Learnings & Next Steps
Testing revenue ideas with both branch offices and end users shortens time to market. The next step is to run small-scale pilots in three regions and keep fine-tuning price levels as usage data comes in.
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