« Business Model - brunowatt.files.wordpress.com€¦ · « Business Model » M1 ‘14 – C III Date 22nd Sept + … 23/09/14# M1#2014#’#Strategy#’#Pr#Bruno#M.WATTENBERGH’#©#

« Business Model »

M1 ‘14 – C III Date 22nd Sept + …

M1 2014 -‐ Strategy -‐ Pr Bruno M.WATTENBERGH -‐ © 23/09/14 1


Give me some takeaway from the previous course ! Come on ! Dare … J

Structure of the Course today •  Searching for the definition of BM

•  Understanding how to use the BMC

•  Discover some examples

•  Talk about the HBR article of Clayton Christensen

•  Next Course :

–  A great video how to use the BMC

–  Zara – Inditex Case + Guest of the day à next course ?



Business Models … Why is this notion important for you ?

23/09/14 M1 2014 -‐ Strategy -‐ Pr Bruno M.WATTENBERGH -‐ © 5

What’s A “Company” ?


What’s A Company?

A business organization which sells a product or service (solution ?) in exchange for revenue and profit


How Are Companies Organized?

Companies are organized around Business Models



Yes but what About My Technology?



What About My Technology? The technology is one of the many critical pieces necessary

to build a company. It can be part of the “Value Proposition” (offer)

or It can be part of the Value Chain (production)

or It can be part of the Customer relation (value delivery)


What About My Technology? Customers don’t care about your technology

They are trying to solve a problem Entrepreneurs are solving problems … J


How Are Companies Organized?

Companies are organized around Business Models


What’s a Business Model?


What’s a Business Model?

A business model describes the complex mechanic & all the parts of the company

necessary to make money (or create value for non-profit organizations)


•  Def … “Business Model”

– A business model describes the

rationale of how an organization

creates, delivers and captures value.


Delivery of the value created ?

Capture of the value created & delivered

Value CreaXon ? Value

proposiXon ?

The basis of the BM is the creaXon of potenXal r e v enue , o r mo re concretely the « Value CreaXon » à concept of “Value ProposiXon”

Less evident à many innovaXon in the channels to deliver the value : Internet, partenerships, …

Economic model à how you capture the value created and delivere … many innovaXons : Google, Ebay, Skype, Facebook, …

Plenty of opportuni.es of choice, pa4ern, … So,many different combina.ons & op.ons !

M1 2014 -‐ Strategy -‐ Pr Bruno M.WATTENBERGH -‐ ©

Partnerships ?

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Basic historic Business Model … ?


Basic historic Business Model … ? Easy to understand … Easy to copy … Fit with the market demand …


InnovaXve Business Model … ?

Gutenberg looking for applicaXon for his new technology … ?

?


InnovaXve Business Model … ? 1950 … DC introduce locally a new culture of payment …



Question ? 2 minutes exercise … •  Explain - briefly – to your neighbor the

business model of the company you have chosen ?



A tower to heaven … ?

“God went down and confounded their speech, so that they could not understand each other, and scattered them over the face of the earth, and they stopped building the city. Thus the city was called Babel.”

Different languages à impossible to build the tower àSame problem with business !

Let’s use a common culture / language


Blah, blah, blah, blah … How do business people traditionally discuss business models à Blah, blah, blah Smart people around the table à we should, … but no shared language Blah, … because a mix of strategy, resources, implementation, marketing, sales, … When words don’t work, you should try something else … Business Design Summit M1 2014 -‐ Strategy -‐ Pr Bruno M.WATTENBERGH -‐ © 23/09/14 27


Dan Roam author

Any problem can be made cleared with a picture … Clarity à better conversation à better solutions



All businesses are organized around what is called a "Business Model"

All business models include three large dynamics allowing a large number of combinations

Models become more complicated, it is not easy to describe a business ... It is easier to describe a

company explaining its Business Model Design tools can facilitate the understanding of a

business model Technology is a means to create, deliver and

capture value, it is not a purpose M1 2014 -‐ Strategy -‐ Pr Bruno M.WATTENBERGH -‐ ©

Take Away

23/09/14 31

Business Model Canevas of Dr Osterwalder

•  Phd à 2001 •  Management book of the decade ? •  Websites & Blogs •  Revolution à Mind mapping of the Business Model

Processing •  Propose a common culture and tools to innovate

through the BM •  Useful to understand the existing BM and to challenge

them •  Useful to explore new patterns and configurations •  Adapted to the changing environment !


•  Alex Osterwalder : –  A business model can be described as :

•  an abstract conceptual model that represents the business and money earning logic of a company.

•  a business layer (acting as a sort of glue) between business strategy and processes.

–  But the Business Model … : •  It is not a guarantee for success as it has to be implemented

and managed. •  It is something else than the company's business process

model


A business model is a conceptual tool that contains a set of elements and their rela4onships and allows expressing a company's logic of earning money.

It is a descrip4on of the value a company offers to one or several segments of customers and the architecture of

the firm and its network of partners for crea4ng, marke4ng and delivering this value and rela4onship

capital, in order to generate profitable and sustainable revenue streams.




“You can’t write about business model innova4on … without an innova4ve business

model”

23/09/14 36



?"A business model describes all the parts of the company necessary to make money"


?"what are those parts? what parts is a business model composed of?"


Business Model Canvas"


To describe, challenge, design, and invent business models more systematically"



WHAT?

The bundle of products & services that create value


WHAT? WHO?

The different groups of people or organizaXons an enterprise aims to reach and serve, + the tacXc to reach them & to develop

relaXonships with them


WHAT? WHO? HOW ?

The configuraXon of resources, competences, acXviXes and

partnerships to create & deliver the value


WHAT? WHO? HOW ?

-‐ €? + €?

The cash a company generates from each Customer Segment

All costs incurred to operate a business model


building blocks "9"


Ground rules using BMC - 1

Don’t write on the Canvas: By using Stattys / Post-its to describe your business model you will be able to move things around, onto as well as off the Canvas. This way ideas stay mobile and you keep things flexible.


Ground rules using BMC - 2

One idea per Statty / Post-it : Don’t make bullet points on Stattys. For instance, use two Stattys to describe two different channels, like your sales force and

your company’s website. This will allow you to play around with the elements of your business model.


Instructions to use BMC - 1

Getting started: Start sketching out your business model by creating Stattys for each one of the nine building blocks. Some people prefer to begin with listing their customer segments or value propositions. Others prefer starting with their key resources or key activities. It doesn’t matter. Just do it.



Add all elements relevant to your model: Ask yourself what all the elements are that your business model requires to create, deliver, and capture value. Create a Statty for every single element

that is important. M1 2014 -‐ Strategy -‐ Pr Bruno M.WATTENBERGH -‐ © 23/09/14 52


Check completeness and coherence : Make sure you don’t create “orphan” elements in your business model. For example, for each customer segment and their jobs-to-be- done you should have a corresponding value proposition. Or, for instance, for each value proposition you should list the key resources and activities that are required to create it.



Tell a story: When finished sketching out your business model try telling the story of your model one Statty at a time. Take all the Stattys down and explain your business model by putting up one Statty after the other on a blank Canvas. This will force you to tell a coherent story element after element.


The 9 blocks ?


CUSTOMER SEGMENTS"

images by JAM"M1 2014 -‐ Strategy -‐ Pr Bruno M.WATTENBERGH -‐ © 23/09/14 56

CUSTOMER SEGMENTS"

images by JAM"M1 2014 -‐ Strategy -‐ Pr Bruno M.WATTENBERGH -‐ ©

For whom have we have chosen to create value? Who is the typical customer? What for? Define one or more segments or individual exhibiting behaviors / needs / problems individuals we choose to solve 23/09/14 57

CUSTOMER SEGMENTS"


Customer or User ?

For whom have we have chosen to create value? Who is the typical customer? What for? Define one or more segments or individual exhibiting behaviors / needs / problems individuals we choose to solve 23/09/14 58

CUSTOMER SEGMENTS"


Customer & User ?

For whom have we have chosen to create value ? Who is the typical customer ? What for ? Define one or more segments or individual exhibiting behaviors / needs / problems individuals we choose to solve

23/09/14 59

VALUE PROPOSITIONS"


What values do we bring to the customer selected ? What needs / desires we chose to respond ? What problem do we help resolve? Words of the customer! Issue of setting combinations of values for each matched segment. 23/09/14 60

VALUE PROPOSITIONS"


The words of the customer / user Not "dry product" product increased

Solu4on rather than product quan4fica4on

Adapted to the "problem customer"


VALUE PROPOSITIONS"


The words of the customer / user Not "dry product" product increased

Solu4on rather than product quan4fica4on

Adapted to the "problem customer"


VALUE PROPOSITIONS"


Magic Duo ? 23/09/14 63

VALUE PROPOSITIONS"


Magic Duo ?

ItéraXons

23/09/14 64

CHANNELS"


CHANNELS"


Which channels our customers prefer ? Which are the most effective and efficient ? How do we integrate the habits of customers ? → Define how the company communicates and engages with its customers.

23/09/14 66

CHANNELS"



B2C ? B2B ?

B2B2C ?

23/09/14 67

CHANNELS"



B2C or B2B or B2B2C ?

How does the customer know that your offer is, how can it evaluate / test it, how can he go to the act of purchasing,

how it comes, how he receives the service sales ?

23/09/14 68

CHANNELS"


Magic Trio ? 23/09/14 69

CUSTOMER RELATIONSHIPS"


What kind of relationship each of our segments want ? What is their costs ? How articulates those relations with other blocks of the model ? → Set the type of relationship with the customers segments. 23/09/14 70

CUSTOMER RELATIONSHIPS"


What kind of relationship each of our segments want ? What is their costs ? How articulates those relations with other blocks of the model ? → Set the type of relationship with the customers segments.

Purely transac4onal ? Sale "dry"?

Customer knowledge ? Maintenance of customer

rela4ons ? Privacy ? Trust ?

Sense of belonging ?

23/09/14 71

REVENUE STREAMS"


What do they currently pay for what kind of offers and how ? What is the from each source of income relative to total income ? → Assess the cash the company generates from each segment. 23/09/14 72

KEY RESOURCES"


What key resources are needed to achieve the value proposition ? What channels, customer relationship, revenue streams ? → Define the most important assets required to make the model work.

Resource? Competence? Assesment?

23/09/14 73

KEY ACTIVITIES"


What key activities are necessary for the realization of the value proposition ? What channels, customer relationship, revenue streams ? → Describe the most important for the model to work actions.

Value Chains

23/09/14 74

KEY PARTNERS"


Who are our key partners and suppliers? What resources and activities are supported or created by them? → Describe its network of partners and suppliers to ensure that the model works.

23/09/14 75

COST STRUCTURE"


Quels sont les coûts les plus importants ? Ceux liés aux activités et aux ressources clés ? → Décrire tous les coûts inhérents au modèle.

23/09/14 76


Best Practices using BMC - 1

Color coding: Use different color Stattys to highlight certain aspects of your business model. For example, use different color Stattys if you have two very different customer segments in your business model with very different jobs-to-be done (e.g. advertisers and users). Then continue to use the same colors for the corresponding value propositions, channels, etc.



Visuals & words: Combining images and words to describe business model building blocks is more powerful than just using words. Our brain processes images quicker than words. Hence, images will allow viewers of your Canvas to more rapidly grasp the big picture of your model.



Granularity: Don’t add too many Stattys when you are sketching out the strategic overview of a business model. Too many details hide the big picture. On the other hand, adding detail is appropriate when you work on the refinement of your business model, in order to test it and consider customer development.


Frequent Mistakes BMC - 1 Orphan Elements:

Make sure you don’t create “orphan” elements in your business model. For example, everyStatty in the revenue streams box needs a corresponding Statty in the customer segment and value proposition box that highlights who is willing to pay for what. You should not, for instance, have “advertising” as a revenue stream, without having an “advertiser” who is willing to pay for “an audience”.


Frequent Mistakes BMC - 2 Mixing present and future:

Make sure you clearly distinguish between presently existing business models and future ideas. Mixing them can be confusing. You can easily distinguish between the two by using color coding or by using separate Canvases.


Frequent Mistakes BMC - 3

Too many ideas in one Canvas: Describing too many different ideas in the same Business Model Canvas can lead to confusion. Try using separate Canvases to sketch out individual ideas. If necessary you can always bring them together in the same Canvas later on.


images by JAM"

customer segments"

key partners"

cost structure"

revenue streams"

channels"

customer relationships"

key activities"

key resources"

value proposition"


images by JAM"

customer segments"

key partners"

cost structure"

revenue streams"

channels"

customer relationships"

key activities"

key resources"

value proposition"



CANVAS OVERLAY"

images by JAM"

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMER SEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY ACTIVITIES

KEY PARTNERS

KEY RESOURCES


images by JAM"

CANVAS OVERLAY"

OFFER (Value Proposition)

(Distribution) CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMER SEGMENTS

REVENUE STREAMS

COST STRUCTURE

KEY

ACTIVITIES

KEY PARTNERS

KEY

RESOURCES


In 9 blocks you can briefly describe the key elements of the model of any human activity ... even yours (Business

Model You)! You also have a mental schema to quickly understand the

dynamics of such activities ... If you work in a group you can quickly create a language /

common culture à common reference Like any methodology there are things to do and not to do

à practice, practice ... In group if possible! The BMC provides a creative tool to seek in team for a business model … or to compare two or more business

models … or to let evolve its actual business model


Take Away

23/09/14 89

Front Stage & Back Stage ?



Efficiency Fit with the model chosen

Value crea4on + Focus Choices à trade off’s have been

made

23/09/14 91


î Costs ì Value

23/09/14 92


Proof of Concept ? Proof of Business ?

23/09/14 93

How we use the BMC in the course ? Value Chain theory (Michael Porter)

Blue Ocean Strategy (Chan & Mauborgne)

Strategic and markeXng

segmentaXon

Resources-‐based view

Strategic Alliances Co-‐creaXon


DistribuXon strategy

Financial Plan

23/09/14 94


Where does your venture starts from ?

23/09/14 95

Where to start from ? 1.  From the Value Proposition

as it is the core of the value created in the company !


2.  No ! From the Market Segment as it is necessary to understand the market to seize the opportuniXes and threats !

3.  No ! From the Resources & Competences as they are telling us what

23/09/14 96

How is your BM ?


« Sources of the new venture ? »"Specific resources, some specific competences,

a license (IP), a specific know-‐how, …

A specific Value ProposiXon … a well-‐defined offer : you have a soluXon looking for a problem to solve, or a customer to saXsfy.

A well-‐defined segment of customer having a problem you intend to saXsfy

A low-‐cost model where more customer can access a product or a service



InnovaXon by the resources :

partnership & infrastructures

23/09/14 99


Offer : New value proposiXon with impact and relaXonships with

the other bloks

23/09/14 100


Customer : based on the real unsaXsfied needs of consumer (not or

not fully saXsfied)

23/09/14 101


Finances : Low cost, dynamic pricing, innovaXve cost structure, yield

management, …

23/09/14 102


You can have 3 origins of the company and these three origins involve a very

different dynamic ... You must identify this origin because it will

determine the strategy of the company and limit the possible models ...

Each induced origins and potential risks ... A fourth configuration is the low-cost one.


Take Away

23/09/14 104

« Business Model - brunowatt.files.wordpress.com€¦ · « Business Model » M1 ‘14 – C III Date 22nd Sept + … 23/09/14# M1#2014#’#Strategy#’#Pr#Bruno#M.WATTENBERGH’#©#

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