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Entrepreneruship for success: Business Model Innovation Prof.Valentina Ndou 24° -30° March, 2016
Entrepreneruship for success: Business Model Innovation
Prof.Valentina Ndou
24° -30° March, 2016
'Entrepreneurship education is about learners developing the skills
and mind-set to be able to turn creative ideas into
entrepreneurial action. This is a key competence for all
learners, supporting personal development, active citizenship,
social inclusion and employability.
1- Development of entrepreneurial attitudes, skills and
knowledge should enable the individual to turn ideas into
action.
2- Entrepreneurship is not only related to economic activities
and business creation, but more widely to all areas of life
and society.
Innovative and creative action can be taken within a new
venture, or within existing organizations, i.e. as 'intrapreneurial
activity'.
Entrepreneurship as a key competence:
Entrepreneurship key competence:
Promotion of entrepreneurship as a key competence is critical
to the development of the entrepreneurial mind-set and
behaviour, resulting not only in increasing numbers of small
businesses but also greater creativity and productivity of the
workforce in genera.
Developing and promoting entrepreneurship education
has been one of the key policy objectives for the EU and
Member States for many years.
There is a growing awareness of the potential of young
people to launch and develop their own commercial
or social ventures thereby becoming innovators in the
areas in which they live and work.
Entrepreneurship education is essential not only to shape
the mind-sets of young people but also to provide the skills,
knowledge and attitudes that are central to developing an
entrepreneurial culture.
Entrepreneurship Education
Lifelong entrepreneurial learning:
Entrepreneurship promotion should begin in early
education and be sequenced through subsequent levels.
In this way, the entrepreneurial spirit and skills in society
as a whole would be strengthened.
Ing. Gianluca ELIA, University of Salento - Course of "Technology Entrepreneurship" - a.a. 2014-2015
31 years
27 years 22 years
20 years
29 years
19 years
Where Opportunities stand?
OPPORTUNITY IDENTIFICATION
GLOBAL TRENDS
Aging society
Lifelong education
Food and population
Regulation
TECHNOLOGY TRENDS
•Innovation
•Disruptive technologies
•New knowledge
EMERGING MARKETS
•Efficiency
•Longer product lifecycle
•New needs and markets
MARKET TRENDS
•Deregulation
•Supply chain disruption
•Globalization
Opportunity identification
Every Problem is an Opportunity (vinod Khosla)
"A wise man will make more opportunities than he finds."
Francois Bacon
"In the middle of difficulty lies opportunity." Albert Einstein
"Opportunities? They are all around us? There is power lying latent everywhere waiting for the observant eye to discover
it." Orison Swett Marden
"Even when opportunity knocks, a man still has to get up off his
seat and open the door."
An opportunity is a favorable juncture of circumstances with a good chance for success or progress. It is the job of the entrepreneur to locate new ideas and to put them into action.
Entrepreneurs are people who identify and pursue • solutions among problems, • possibilities among needs, • Opportunities among
challenges.
Thus, entrepreneurship may be described as the identification and exploitation of previously unexploited opportunities.
Necessity is the mother of invention -- and startups
The elements that feed Enterprenuership: The Sweet Spot
MARKET OPPORTUNITY
Timely
Solvable
Important
Profitable
Favorable Context
CAPABILITIES & SKILLS
Skilled at the needed tasks
PERSONAL TALENT
Interests
Passions Commitment
Creativity
Sweet Spot
ETABLE
5 Rules for Success
Idea
Team
Business Model
Prototype
Communication
From Opportunity to Business idea Who has a problem to solve?
(potential customers) What’s the utility they need?
(function of use)
What technological system could be used for resolving it? (technology, managerial approach, knowledge)
From idea to enterprise
How are ventures actually formed and what is the role of the
business plan?
Entrepreneurs respond to attractive opportunities by forming new ventures
that :
One particularly important step is the development of a business plan.
CREATE DELIVER CAPTURE
VALUE
Xerox- the innovation strategy of photocopying industry
Google – Innovation in earning mechanisms How to make money from free content?
Xerox 914 model could make 100,000 copies per month (one copy every 26.4 seconds, or ~136 copies/hour). Costly- nobody will buy it How to get money from this technology????
1958 – Chester Carlson
1997- Larry Page & Sergey Brin
Xerox- the innovation strategy of photocopying industry
How to get money from this technology???? Different way of selling the product - lease the machine for 95$/ month - Offer 2000 copies for free - Charge for every other copy – 4 cents/copy Results: Thousands of copies per day 41% revenue growth
The technology alone doesn’t pay back
Innovation in earning mechanisms
How to make money from free content?
Different way of pricing the product Different customer segments Innovative pricing mechanisms -sell contextualized advertising - sell search terms and auctioning
The Product innovation alone doesn’t pay back
Lessons Learnt
What is a Business model???? Your definition
Brainstorm
What is a Business model????
Business Model needs to be simple, relevant and intuitively
understandable, while not oversimplifying the complexities of the enterprise functions.
A Business Model should be something that everybody can easily understand, no matter who they are: a partner, an employee, a vendor,
or an investor. A Business Model should also be easy to apply to your organization, to
your competitors and other enterprises.
The way you use to create, diffuse and capture value
THE BUSINESS MODEL CANVAS
A STRATEGIC MANAGEMENT AND ENTREPRENEURIAL TOOL.
IT ALLOWS YOU TO DESCRIBE, DESIGN, CHALLENGE, INVENT, AND PIVOT YOUR BUSINESS MODEL.
• Your business
in one page
• Simple
visualization
• Empower
visual
thinking
• Simple
change
process
• Networking
• Guidance for
business plan
development
• Innovative
capacity
• Start –up
• Innovation
The business model Canvas
• Your business
in one page
• Simple
visualization
• Empower
visual
thinking
• Simple
change
process
• Networking
• Guidance for
business plan
development
• Innovative
capacity
• Start –up
• Innovation
Segmen Segmen
Segmen
Segmen
Segmen
Segmen
Segmen
Segmen
Segmen
Segmen
Segmen Segmen
Elements for developing the entrepreneurial idea
1 2
3
4
5
6
7
8
9
Value proposition design
Customer Segment
MARKET SEGMENTATION:
Demographics
Psychographics
Geographic
Behavioral
Customer Job
Pains
Gains
Products and services
Pain relievers Gain creators
Top Down Approach Bottom – up Approach
Gains
Pains
Customer Job
Products and
Services
Pain Relievers
Gain Creators
Defining the Value proposition
The Value Proposition defines the company to the customer.
The Value Propositions describes the bundle of products and services that create value for a specific Customer segment
The Value Proposition is the reason why customers turn to one company over another. It solves a customer problem or satisfies a
customer need. Each Value Proposition consists of a selected bundle of products and/or services that caters to the requirements of a specific
Customer Segment. In this sense, the Value Proposition is an aggregation, or bundle, of benefits that a company offers customers.
Vision and the Business Model
What value do we deliver to our customers? Newness
Performance
Customization
Getting the job done
Design
Brand/
Sstatus
Price
Cost reduction
Risk reduction
Convenience/usab
ility
What value do we deliver to our customers? Some Value Propositions satisfy an entirely new set of needs that customers previously didn’t perceive because there was no similar offering. This is often, but not always, technology related.
Newness
Improving product or service performance has traditionally been a common way to create value. The PC sector has traditionally relied on this factor by bringing more powerful machines to market. But improved performance has its limits. In recent years, for example, faster PCs, more disk storage space, and better graphics have failed to produce corresponding growth in customer demand.
Performance
• Tailoring products and services to the specific needs of individual customers or Customer Segments creates value. In recent years, the concepts of mass customization and customer co-creation have gained importance.
Customization
“Getting the job done” Value can be created simply by helping a customer get certain jobs done. Rolls-Royce understands this very well: its airline customers rely entirely on Rolls- Royce to manufacture and service their jet engines
Design Design is an important but difficult element to measure. A product may stand out because of superior design. In the fashion and consumer electronics industries, design can be a particularly important part of the Value Proposition
Brand/status Customers may find value in the simple act of using and displaying a specifi c brand. Wearing a Rolex watch signifies wealth.
Price Offering similar value at a lower price is a common way to satisfy the needs of price-sensitive Customer Segments. But low-price Value Propositions have important implications for the rest of a business model. No frills airlines, such as Southwest, easyJet, and Ryanair have designed entire business models specifically to enable low cost air travel.
What value do we deliver to our customers?
Cost reduction Helping customers reduce costs is an important way to create value. Salesforce.com, for example, sells a hosted Customer Relationship management (CRM) application. This relieves buyers from the expense and trouble of having to buy, install, and manage CRM software themselves.
Risk reduction Customers value reducing the risks they incur when purchasing products or services. For a used car buyer, a one-year service guarantee reduces the risk of post-purchase breakdowns and repairs. A service-level guarantee partially reduces the risk undertaken by a purchaser of outsourced IT services.
Accessibility Making products and services available to customers who previously lacked access to them is another way to create value. This can result from business model innovation, new echnologies, or a combination of both. NetJets, for instance, popularized the concept of fractional private jet ownership. Using an innovative business model, NetJets offers individuals and corporations access to private jets, a service previously unaffordable to most customers.
Convenience/usability Making things more convenient or easier to use can create substantial value. With iPod and iTunes, Apple offered customers unprecedented convenience searching, buying, downloading, and listening to digital music. It now dominates the market.
What value do we deliver to our customers?
Value Innovation Value innovation focusing on beating the competition, you focus on making the competition
irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space. Innovative firms do not use the competititon as their benchmark
Value innovation places Equal emphasis on Value and innovation
Value innovation is created in the region where a company’s actions favorably affect both its cost structure and its value proposition to buyers.
COST SAVINGS are made by ELIMINATING and REDUCING the factors an industry competes on.
BUYER VALUE is lifted by RAISING and CREATING elements the industry has never offered.
Over time, costs are reduced further as scale economies kick in due to the high sales volumes that superior
value generates.
What value do we deliver to our customers?
The UNIQUE SELLING PROPOSITION consist both in a diagnostic and an action framework for building a compelling Blue Ocean Strategy. It serves two purposes. 1. It captures the current state of play in the known market space 2. It captures the offering level that buyers receive across all these key competing factors.
Analytical tool for constructing an innovative value preposition
An INNOVATIVE, UNIQUE VALUE PREPOSITION comes from reorienting your strategic focus from COMPETITORS to ALTERNATIVES, and from CUSTOMERS to NONCUSTOMERS of the industry.
There’s a better way to do it. Find it!
Thomas Edison
There are four key questions to challenge an industry’s strategic logic and business model: • Which of the factors that the industry takes for granted should be eliminated? • Which factors should be reduced well below the industry’s standard? • Which factors should be raised well above the industry’s standard? • Which factors should be created that the industry has never offered?
b
c
a
d
e
5. Bargaining power of complementors 6. Bargaining Power
of suppliers
2. Threat of entry by new competitors
3. Threat of Substitute Products
4. Bargaining Power of complementers
1. Firm Rivalry
Looks across alternative industries
Looks across strategic groups within
its industry
Redefines the buyer group of the
industry
Looks across to complementary
product and service offerings that go
beyond the bounds of its industry
Rethinks the functional-emotional
orientation of its industry
Participation in shaping external trends
over time
COMPETITIVE ANALYSIS NEW VALUE PREPOSITON
Constructing an innovative value preposition Blue ocean’s strategy frameworks
Blue Ocean’s strategy - BOS
BOS Tools and
Frameworks
The Strategy Canvas
Four Actions Framework
6 Pathways Framework
4 Steps of Visualising strategy
Blue Ocean’s Strategy
Blue oean’s straetegy
6 Pathways Framework
Definition of Unique selling preposition
How to define our customer segments?
Mass market
(consumer electronics)
Niche market
(supplier-buyer relationship)
Segmented
(banks)
Diversified
(web-companies)
Multisided markets
(credit card holders and
merchants/facebook)
Customer Selection
The Business Model Canvas
Through which channels we reach our customers?
Sales force
Web sales
Own stores
Partner stores
Wholesalers
Awareness
How do we raise awareness about our company’s products and services?
Evaluation
•How do we help customers evaluate our organizations’s value preposition?
Purchase
•How do we allow customers to purchase specific products and services?
Delivery
How do we deliver a value poposition to customers?
After Sales
•How do we provide post-purchase customer support?
CHANNEL TYPES
CHANNEL PHASES
The Business Model Canvas
How to relate with our customers?
What key resources do our value preposition require? Our distribution channel? Customer relationship? Revenue streams? Which are the core competencies required? Resources:
• Physical (includes physical assets such as manufacturing facilities, buildings, vehicles, machines, systems, point-of-sales systems, and distribution networks)
• Intellectual (Intellectual resources such as brands, proprietary knowledge, patents and copyrights, partnerships, and customer databases are increasingly important components of a strong business model)
• Human (Novartis, for example, relies heavily on human resources: Its business model is predicated on an army of experienced scientists and a large and skilled sales force).
• Financial (cash, lines of credit, or a stock option)
Chapter 3 Technology Ventures: From Idea to Enterprise
Resources
• What Key Activities do our Value Propositions require? • Our Distribution Channels? • Customer Relationships?
– Production - designing, making, and delivering a product in substantial quantities and/or of superior quality.
– Problem solving - Key Activities of this type relate to coming up with • new solutions to individual customer problems. The operations of consultancies,
hospitals, and other service organizations are typically dominated by problem solving activities.
• Platform/network - Networks, matchmaking platforms, software, and even brands can function as a platform. eBay’s business model requires that the company continually develop and maintain its platform: the Web site at eBay.com.
Activities
• Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform?
• It can be useful to distinguish between three motivations for creating partnerships: – Optimization and economy of scale - The most basic form of partnership or buyer-supplier relationship is
designed to optimize the allocation of resources and activities. It is illogical for a company to own all resources or perform every activity by itself.
– Reduction of risk and uncertainty- Partnerships can help reduce risk in a competitive environment characterized by uncertainty. It is not unusual for competitors to form a strategic alliance in one area while competing in another.
– Acquisition of particular resources and activities - Few companies own all the resources or perform all the activities described by their business models. Rather, they extend their own capabilities by relying on other firms to furnish particular resources or perform certain activities. Such partnerships can be motivated by needs to acquire knowledge, licenses, or access to customers
Partners
Indirect Content Sales
After-Sales Service
Product Financing
Collect-Early, Pay-Late
Royalties on Intellectual Property
Revenue Sources
Direct Product Sales
Customers pay for the value that they perceive in the product or service
Customers can pay for the service that they actually use or pay a flat fee that entitles them to some amount of service
Advertisers pay for most of the content in exchange for the right to have their ads shown to the TV or newspaper audience
The revenues are the interest charges and other fees collected by the company that offers financing to customers to buy a product
A firm can collect payments from its customers before it has to pay its suppliers, so it can invest the money collected
A firm can decide to license other firms to use the knowledge embodied in the patent or copyright
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?
Fee-for-Service
Subscription
Mark-up
Commission
Advertising
Production
Advertisers pay for most of the content in exchange for the right to have their ads shown to the TV or newspaper audience (yahoo.com)
A firm charges a fee for a transaction that it mediates between two parties (e.g. eBay)
Customers pay only for the service that they use (e.g. data exchanged on ADSL)
A firm buys a product or service, marks up its price, and resells it to customers (e.g. wholesalers and retailers)
A firm that creates the product or service sells it to customers who values it and pays for it
A customers pays a flat fee for the right to use a product for a period of time (e.g. flat ADSL)
COMBINATIONS
Revenue Model
What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? Cost-driven - Cost-driven business models focus on minimizing costs wherever possible. Value-driven - Some companies are less concerned with the cost implications of a particular business model design, and instead focus on value creation.
Fixed costs - Costs that remain the same despite the volume of goods or services produced. Examples include salaries, rents, and physical manufacturing facilities. Variable costs - Costs that vary proportionally with the volume of goods or services produced. Some businesses, such as music festivals, are characterized by a high proportion of variable costs. Economies of scale - Cost advantages that a business enjoys as its output expands. Larger companies, for instance, benefit from lower bulk purchase rates. Economies of scope - Cost advantages that a business enjoys due to a larger scope of operations. In a large enterprise, for example, the same marketing activities or Distribution Channels may support multiple products.
Cost structure
Crowdfunding
Equity based
Reward based
All or Nothing
Take it All
Social lending
Donation based
CROWDFUNDING
Is it possible to make innovation in a traditional sector
like Coffeee?????
Answer: YES
Swiss customers pay coffee
600-800 hundred more than
the traditional price
NESPRESSO Business model
Selling machines Coffee capsules
Business model canvas
Source: Osterwalder, Pigneur, 2011
Inditex Business model
This Business Model: offer the customer the clothes she wants, when she wants them. Inditex the best in the world. Speed is the number one priority above and beyond even production costs. Lean approach to production - offer clothes the customer wants, when she wants them. Continuous improvement, small production batches, and pull logic. Ship and deliver in 24 hours from the order in Europe and in 48 hours in the rest of the world. On average, a shop receives new goods and new clothing models twice a week. The most important consequences are that customers are tempted to visit the shops more often because there are always new collections and garments. The customers visit the shops more often, from 4 to 5 times more often than competitor's average, and they buy more under the pressure of scarcity. At the end of 2013 Inditex owned 6,340 shops, that in general are located in the center of big cities, and 832 shops in franchise . The shops are the main sensor of customers taste and trends. doesn't advertise. No billboards, no adv in the magazines, no tv spots. It's a cost brought down to zero.
25 Questions to Build a Design-Driven Startup
1. Value Offerings: What is the value proposition? 2. Target Customers: Who are the users and paying customers? 3. Synthesis: What problems are you solving? 4. Envisioning: What is your vision of the future? 5. Trends: What industry trends will impact your business? 6. Scenario Planning: What are the possible usage scenarios of the idea? 7. Creation: How does your idea work? 8. Evaluation: What features need to be prioritized? 9. Customer Insights: What questions need to be asked to identify insights? 10. Prototyping: What experiments can be conducted to validate assumptions and hypothesis of your idea? 11. Business Activities: What are the key activities to create, deliver, and maintain value? 12. Partners: Who should you forge partnerships with to co-create values? 13. Resources: What are the required resources to implement idea into operations? 14. Cost Structure: What are the costs incurred to implement idea into operations? 15. Revenue Model: How is revenue generated from the idea? 16. Pricing Strategy: What is the pricing structure of the idea based on the revenue model? 17. Financial Plan: How much funds are required to develop your idea and scale the business? 18. Marketing Plan: How will you reach out to target customers? 19. Sales Plan: What is our sales process to close leads? 20. Brand Strategy: How are you building relationships with customers? 21. Product/Service Strategy: What new products and services need to be launched in the future? 22. Growth Strategy: What must be true about our strategy for it to be a good choice? 23. Metrics: What metrics are used to measure progress? 24. Operations Plan: What actions need to be taken immediately? 25. Milestones: What milestones need to be achieved within the roadmap?
Jeffrey Tjendra
Creator & Design Executive Officer at Business Innovation by Design
Thank you for your kind attention!
