Business Models

Paul Sturrockpaul.sturrock@gmail.com@PSturrock

G E T O U T O F T H E B U I L D I N G !

What is a Business Model?

Photo by Christopher Macsurak flickr.com

Show me the money

Why bother with a Business Model?

1. Why are we needed?

2. What difference do we make?

3. How do we reach our customers?

4. What is our relationship with customers?

5. Where does our money come from?

6. What is our unfair advantage?

7. How do we make our difference?

8. Whose help do we need?

9. Where does our money go?

10.Focus for innovation and difference

©2013 Paul Sturrock

Image from “Business Model Generation” Osterwalder & Pigneur

Cultivate Random Curiosity

➡Get your head out of your screen ➡Change your routine ➡Turn up! ➡Carry your pencil ➡Make lists ➡Take Pictures ➡Sketch ➡Eavesdrop ➡Ask for stories

©2013 Slingshot Venture Development

Adoption and Channels

EdTechAccelerator January 2014

One Tribe

- Same need - Same selection criteria - Same channels

image by Dylan Walters flickr.com

How do we reach them?

- Awareness

- Evaluation

- Purchase

- Delivery

- After Sales

Purpose Awareness Selection Purchase Delivery After Sales

Channels

Metrics: Cost, Time,

Results

Channel Mapping

What relationship do we have with them ?

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Photo by Davidlohr Bueso

page 12 of 13

Business Models

What relationship will you have with your customers?

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Photo by Christian Holmér

page 5 of 13

Business Models

What are your revenue streams?

CUSTOMERS X FREQUENCY OF PURCHASES X PRICE

TARGET: £100K

CUSTOMERS

1 Employer 1000 Followers 12 Disciples 150 Villagers 500 True Fans

REVENUE/CUSTOMER

£100K £100 (£24 quarterly) £8,333 (£694 month) £667 (£55 month) £200 (£17 month)

CREATIVE REVENUE MODELS

PRODUCTS

Sell Usage Subscription Rent License

SERVICE

Teach Consult Curate

Part 2: Execution & Efficiency

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Photo by Edward Dalmulder

page 2 of 3

Title

Activities: What do we do to make our difference real?

What is Strategy?

• Operational Effectiveness is not enough

• Strategy requires creation of unique position

• Unique activities create sustainable advantage

• Strategy requires making competitive trade-offs

• Choose what you won’t do

• Activities must fit and reinforce each other throughout the company

11

Southwest Airlines: Low Price & Convenience

Frequent, Reliable

Departures

Limited Passenger

Service

Very low ticket prices

Lean, productive

crews

High aircraft utilisation

Short haul routes

between midsize cities

12

Southwest Airlines: Low Price & Convenience

Frequent, Reliable

Departures

No Meals No seat

assignments

No connections

Employee Stock Ownership

Highly Paid employees

Short Gate Turnarounds

Limited Use of Travel Agents

Automatic Ticketing

Standardized Fleet

No Baggage Transfers Limited

Passenger Service

Very low ticket prices

Lean, productive

crews

High aircraft

utilisation

Short haul routes

between midsize cities

13

Strategy Implementation Map

Operational Objectives/Process!

High Aircraft Utilisation!

Frequent Departures!

Low Prices! Short Haul Routes!

Limited Service!

Short Gate Turnaround! X! X! X!No Meals! X! X! X! X! X!Limited use of Travel Agents! X! X!Standardized Fleet! X! X!No Baggage Transfers! X! X! X!No Connections! X! X! X!

Exercise: List your critical activities

�28

Resources

- Physical

- Intellectual

- Human

- Financial

Partners

ScaleExpertise Risk

Exercise: List your unfair advantages

Cost Structures

• Fixed vs. Variable

• Economies of Scale vs. Scope

DifferentiationThree Alternatives:

• Operational Excellence

• Customer Intimacy

• Product Leadership

What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive?

Through which Channels do our Customer Segments want to be reached? How are we reaching them now?How are our Channels integrated? Which ones work best?Which ones are most cost-efficient? How are we integrating them with customer routines?

For what value are our customers really willing to pay?For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues?

For whom are we creating value?Who are our most important customers?

What type of relationship does each of our CustomerSegments expect us to establish and maintain with them?Which ones have we established? How are they integrated with the rest of our business model?How costly are they?

What value do we deliver to the customer?Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment?Which customer needs are we satisfying?

What Key Activities do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue streams?

Who are our Key Partners? Who are our key suppliers?Which Key Resources are we acquiring from partners?Which Key Activities do partners perform?

What Key Resources do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue Streams?

Day Month Year

No.

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or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.

What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive?

Through which Channels do our Customer Segments want to be reached? How are we reaching them now?How are our Channels integrated? Which ones work best?Which ones are most cost-efficient? How are we integrating them with customer routines?

For what value are our customers really willing to pay?For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues?

For whom are we creating value?Who are our most important customers?

What type of relationship does each of our CustomerSegments expect us to establish and maintain with them?Which ones have we established? How are they integrated with the rest of our business model?How costly are they?

What value do we deliver to the customer?Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment?Which customer needs are we satisfying?

What Key Activities do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue streams?

Who are our Key Partners? Who are our key suppliers?Which Key Resources are we acquiring from partners?Which Key Activities do partners perform?

What Key Resources do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue Streams?

Day Month Year

No.

This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/

or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.

One Tool: Business Model Canvas

Q U E S T I O N S ?