Bus modelsandvaluegeneration

Business Models and Value Generation

Patterns of Value from User-Generated Content & Networks

Darius DunlapManaging Partner360c

Copyright Darius Dunlap, cc-by

Sunday, October 6, 13

All Slides CC-BY Darius Dunlap. For detail, see CreativeCommons.org

http://creativecommons.org/licenses/by/3.0/deed.en_US


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@dariusdunlap





A startup is a temporary organization in search of a scalable, repeatable, profitable business model...

Steve BlankThe Startup Owner’s Manual:

A step-by-step guide for building a great companyCopyright Darius Dunlap, cc-by




IntroducingThe Business Model Canvas





Alexander Osterwalderalexosterwalder.com

businessmodelgeneration.com



http://alexosterwalder.com


http://www.businessmodelgeneration.com




Alexander Osterwalderalexosterwalder.com

businessmodelgeneration.com

Business Model Innovation is about Creating Value









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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Fine Print. We print it BIG!



“At the outset, the startup business model is a canvas covered with ideas and guesses, but it has no customers and minimal customer knowledge.”




You don’t know. You are Probably Wrong.The Customer is the Key[next - Not a new idea...]



“With respect to the definition of business purpose and business mission, there is only one such focus, one starting point.

It is the customer.”

Peter F. Drucker



This is not a new idea. But now represents new possibilities...



Iterate until you Validate — Then Build.

CustomerDiscovery

CustomerValidation

CustomerCreation

CompanyBuilding

Pivot!


Customer Development

Business Model Canvas


But you can’t just make it up.

Business Model Canvas — think through the implications



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.



Create and re-create your canvas. Keep thinking about it.Keep iterating



Stay focused...


“A business model describes the rationale of how an organization

Creates, Delivers, and Captures Value”

Darius Dunlap


So let’s talk about Creation of Value



Product Value

• I have a product

• You Want the Product

• We Make A Deal

• Everyone is Happy

Copyright Darius Dunlap, cc-by Sunday, October 6, 13

UtilityFashionEntertainment



The world is made of CirclesAnd we think in straight lines

Peter M. SengeThe Fifth Discipline:

The Art & Practice of the Learning Organization



The Linear Transaction is only the beginning of the story



Think Different Types of Value Generation


Look at your customer and your product from different perspectives.

(etching by M.C. Escher, in case you didn’t know.)



Users Create ValueFor Themselves

• Stuff They Create

• Stuff They Curate


[The Trautwine engineering manual is from my Great-Grandfather, and represents an old-technology product that helps its owner create new value. ]



Value Users GenerateFor Each Other

• Stuff They Share

• Ideas & Discussion

• Remixing & Reuse


Sharing...Connecting...Generating New from the Old.



Value Multipliers

• Data Analysis Generates New Value

• Curation & Discovery


It’s valuable to me that Amazon knows to le me know that Dave Eggers has a new book!



Utility Value

• Some Specific Useful Function

• “Sent a Fax”


Customers want what it does, ongoing.



Transactional Value

• Enabled the User to complete a transaction


Paypal is another example.Now, Square.



Records Value

• User generated information kept as a record

• Information ABOUT user’s creations or activity, kept as a record


“Meta-Data”Data about Data.



Accumulated Value

• Gathered information accumulates and soon has its own value as a collection

• Especially true when enabled by powerful utilities for search and context.


When my pile of stuff reaches some critical mass,Now worth more than the direct utility valueof saving a note or clipping.



Network Value

• User building and defining a network

• Facebook Friends

• LinkedIn Colleagues

• Google+ Circles


Ref. Mike Elgin’s discussion of Facebook’s “Monopoly on Everybody”



Efficiency Value

• Tools and resources as part of a workflow


Efficiency comes from working as part of a bigger workflow.

[Screen snap from Editorial, an iPad text editor with workflow tools, and a python interpreter.]



Algorithmic Value

• My Data

• Our Data

• Everybody’s Data


Data Graph by Asymco - www.asymco.com(Doesn’t really have anything to do with the point of the slide, but Horace is brilliant.)



Interaction Value

• Algorithmic Prediction

• Surfacing Trends

• Activity Spikes

• Connection Flight

• Dynamics Graph

• The Changing Graph of Information Flows


Interaction between people and among groupscreates it’s own data flow and value potential



Collective Value

• Content Swarms

• Content Connections


Flow of content and the data about that flow...



"What the customer buys and considers value is never a product.

It is always utility, that is, what a product or a service does for the customer.”

Peter F. Drucker



If you haven’t, just read all the Drucker you can find.



Think, Adapt, Innovate...Black To Move...Honinbo Shusaku vs. Inoue Genan Inseki(1846)


You can’t anticipate every customer need, or every competitor’s move...

Black is about to make a surprising and highly effective move that white did not anticipate. Known as “the ear-reddenning move”, as Inseki’s ears flushed red when Shusaku placed his next stone.



What Value are you Creating? What are you making Possible?


Think big about what is possible.



What Value are you Creating? Who are you Disrupting?


Amazon was thinking bigger than just “sell books at a discount.

Extra credit: Find and read Jeff Bezos’ letter to investors, from each Amazon Annual Report. Great example of clear thinking and excellent business writing.



What Value Are You Creating? What’s your legacy?


That little thing you’re making... ?Does anyone really care?

[photo: Palo Alto Apple Store, shortly after Steve Jobs’ passing. cc-by Darius Darius]



Thank You!


Darius DunlapManaging Partner

360c.co

@[email protected]


All Slides CC-BY Darius Dunlap. For detail, see CreativeCommons.org



mailto:[email protected]


Customer DevelopmentBasics

More slides on Customer Development and Lean Startup


Iterate until you Validate

CustomerDiscovery

CustomerValidation

CustomerCreation

CompanyBuilding

Pivot!


Customer Development

Business Model Canvas




Getting out of the building means acquiring a deep understanding of customer needs and combining that knowledge with incremental and iterative product development






BMGBasics

More slides on Business Model Generation


Business Model Canvas can be Changed!

Some people change the model around





Does the relationship go the other way?





Some people change the model around


Customer Development Canvas (@TriKro)




But stay focused...


A business model describes the rationale of how an organization

Creates, Delivers, and Captures Value




Homework: Sketch at least 3 different Models!

Only make a first choice after prototyping and sketching through several alternative models





Homework: For each variant Model...

Identify critical hypotheses...

What, if not true, will kill the business model?





Remember...

Execution is not search

Execution FOLLOWS Search





Thank You!


Darius DunlapManaging Director

@[email protected]






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