Date post: | 13-Sep-2014 |
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Business |
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BUSINESS MODEL GENERATION
Alaa Moustafa Business Development Manager, eSpace facebook.com/alaa.moustafa Twitter.com/alaamoustafa
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eSpace Profile
Agenda
• Business Model vs. Business Plan
• Business Model Canvas
• Business Models Patterns
• Business Model Design
• Business Model Design Process
Ref: Business Model Generation
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Business Model Business Plan Vs.
How an organization creates, delivers, and captures value from
customer.
A formal statement of a set of business goals, and how to reach those goals
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BUSINESS MODEL CANVAS A shared language for describing, visualizing, assessing, and changing business models.
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Business Model Canvas
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How can you
DESCRIBE DISCUSS DESIGN
CHALLENGE IMPROVE INNOVATE CHOOSE
your Business Model?
Business Model Canvas
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1. Customer Segments (CS)
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1. Customer Segments (CS)
• The Customer Segments Building Block defines the different groups of people or organizations an enterprise aims to reach and serve.
• Examples: - Mass Market - Niche Market (Car parts Manufactures)
- Diversified (Amazon) - Multisided (Credit Card: Holders & Merchants)
- Segmented (Banking Customer over $100,000)
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2. Value Proposition (VP)
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2. Value Proposition (VP)
• The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment.
• Examples: - Newness (Cell Phones) - Performance (Faster PCs )
- Customization (Custom Software Dev.)
- Cost Reduction (CRM Applications) - Price (Lower Price)
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3. Channels (CH)
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3. Channels (CH)
• The Channels Building Block describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition.
• Channels Phases:
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Awareness Evaluation Purchase Delivery After Sales
4. Customer Relationships (CR)
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4. Customer Relationships (CR)
• The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments. Relationships can range from personal to automated.
• Customer relationships may be driven by the following motivations: – Customer acquisition
– Customer retention
– Boosting sales (upselling)
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5. Revenue Streams (R$)
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5. Revenue Streams (R$)
• The Revenue Streams Building Block represents the cash a company generates from each Customer Segment. A business model can involve two different types of Revenue Streams: – Transaction revenues
– Recurring revenues
• Way to generate Revenue: - Asset Sale - Usage Fee - Subscription Fees - Renting/Leasing - Licensing - Advertising
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6. Key Resources (KR)
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6. Key Resources (KR)
• The Key Resources Building Block describes the most important assets required to make a business model work
• Key Resources can be categorized as follows: - Physical (Buildings – Machines – Point of Sale System)
- Financial (Cash – financial guarantees)
- Human Resources - Intellectual (Brands – Customer Databases)
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7. Key Activities (KA)
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7. Key Activities (KA)
• The Key Activities Building Block describes the most important things a company must do to make its business model work
• Key Activities can be categorized as follows: - Production (Manufacturing firms)
- Problem Solving (Hospitals)
- Platform/Network (Visa Card)
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8. Key Partnerships (KP)
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8. Key Partnerships (KP)
• The Key Partnerships Building Block describes the network of suppliers and partners that make the business model work.
• Reasons for creating Partnerships: - Optimization and economy of scale - Reduction of risk and uncertainty - Acquisition of particular resources and activities
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9. Cost Structure (C$)
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9. Cost Structure (C$)
• The Cost Structure describes all costs incurred to operate a business model. There are two Classes Cost Structures: – Cost Driven
– Value Driven
• Cost Structure Characteristics: - Fixed Costs (Salaries – Rents – etc.)
- Variable Costs (Depends on the produced service like Music Festival)
- Economies of Scale (Larger companies benefit from lower bulk purchase rates)
- Economies of Scope (Same marketing activities may support multiple products)
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Business Model Canvas Template
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http://www.canvanizer.com Free and easy tool to design, discuss and share your business model
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BUSINESS MODELS PATTERNS Classification for business models with similar characteristics, similar arrangements of business model Building Blocks, or similar behaviors.
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Business Models Patterns
Un-Bundling Business Models
The Long Tail
Multi-sided Platforms
FREE as a Business Model
Open Business Models
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Un-Bundling Business Models
• The concept of the “unbundled” corporation holds that there are three fundamentally different types of businesses
• The three types may co-exist within a single corporation, but ideally they are “unbundled” into separate entities in order to avoid conflicts or undesirable trade-offs
• Business Types – Customer Relationship Businesses – Product Innovation Businesses – Infrastructure Businesses
• Examples: Private Banking Industry and Mobile Telecom Industry
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Un-Bundling Business Model Example: The Mobile Teleco
• What they did in: – Telecos have outsourced operation and maintenance to equipment
manufacturers. – Teleco can sharpen its focus on branding and segmenting
customers and services. – Telecos work with multiple third-parties that assure a constant
supply of new technologies, services, and media content such as mapping, games, video, and music
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• Traditionally Mobile telecommunication competed on network quality.
• They realize that their key asset is no longer the network—it is their brand and their Customer Relationships.
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The Long Tail
• Long tail business models are about selling less of more.
• They focus on offering a large number of niche products, each of which sells relatively infrequently.
• Examples: Youtube, Facebook and Lulu.com
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The Long Tail Example: Books Publishing Industry
• Old Model: – The traditional book publishing model is built
on a process of selection whereby publishers screen many authors and select those that seem most likely to achieve minimum sales targets.
• New Model: – Lulu.com’s business model is based on
helping niche and amateur authors bring their work to market.
– It eliminates traditional entry barriers by providing authors the tools to craft, print, and distribute their work through an online marketplace.
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Multi-sided Platforms
• Multi-sided platforms bring together two or more distinct but interdependent groups of customers.
• The platform creates value by facilitating interactions between the different groups.
• Examples: Visa, Google and eBay
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Multi-sided Platforms Example: Google's Business Model
• The heart of Google’s business model is its Value Proposition of providing extremely targeted text advertising globally over the web.
• The model only works, though, if many people use Google’s search engine.
• The more people Google reaches, the more ads it can display and the greater the value created for advertisers.
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FREE as a Business Model
• In the free business model at least one substantial Customer Segment is able to continuously benefit from a free-of-charge offer.
• Non-paying customers are financed by another part of the business model or by another Customer Segment.
• Examples: Flickr, Youtube, Skype and Google
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FREE as a Business Model Example: Newspapers Publishing Model
• One industry crumbling under the impact of FREE is newspaper publishing.
• Traditionally, newspapers and magazines relied on revenues from three sources: newsstand sales, subscription fees, and advertising.
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BUSINESS MODEL DESIGN The techniques and tools from the world of design that can help you design better and more innovative business models.
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Business Model Design
Customer Insights
Ideation
Visual Thinking
Prototyping
Storytelling
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1. Customer Insights
• Good business model design views the business model through customers‘ eyes, an approach that can lead to the discovery of completely new opportunities.
• Successful innovation requires a deep understanding of customers, including environment, daily routines, concerns, and aspirations.
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2. Ideation
• What’s needed is a creative process for generating a large number of business model ideas and successfully isolating the best ones. This process is called ideation.
• We can distinguish four epicenters of business model innovation: – Resource-driven
– Offer-driven
– Customer-driven
– Finance-driven
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3. Visual Thinking
• By visual thinking we mean using visual tools such as pictures, sketches and diagrams to construct and discuss meaning.
• Business models are complex concepts, it is difficult to truly understand a model without sketching it out.
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4. Prototyping
• Prototyping is a powerful tool for developing new, innovative business models. It makes abstract concepts tangible and facilitates the exploration of new ideas.
• Prototyping comes from the design and engineering disciplines, where it is widely used for product design, architecture, and interaction design.
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5. Storytelling
• Storytelling will help you effectively communicate what it is all about. Good stories engage listeners, so the story is the ideal tool to prepare for an in-depth discussion of a business model and its underlying logic.
• Why Storytelling?
– Introducing the New
– Pitching to investors
– Engaging Employees
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BUSINESS MODEL DESIGN PROCESS The concepts and tools to simplify the task of setting up and executing a business model design initiative.
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Business Model Design Process
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Mobilize
Understand
Design
Implement
Manage
1. Mobilize
• Prepare for a successful business model design project
• Mobilizing Activities:
– Frame project objectives
– Test preliminary business ideas
– Plan
– Assemble team
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2. Understand
• Research and analyze elements needed for the business model design effort
• Understanding Activities: – Scan environment
– Study potential customers
– Interview experts
– Research what has already been tried (e.g. examples of failures and their causes)
– Collect ideas and opinions
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3. Design
• Generate and test viable business model options, and select the best
• Design Activities:
– Brainstorm
– Prototype
– Test
– Select
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4. Implement
• Implement the business model prototype in the field
• Implementing Activities:
– Communicate & Involve
– Execute
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5. Manage
• Adapt and modify the business model in response to market reaction
• Managing Activities: – Scan the environment
– Continuously assess your business model
– Rethink your business model
– Align business models throughout the enterprise
– Manage synergies or conflicts between models
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ANY QUESTIONS? Thanks for your time.
Alaa Moustafa Business Development Manager, eSpace facebook.com/alaa.moustafa Twitter.com/alaamoustafa
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