Business Model Design SP640

Business Model Design

Dr Tendayi Viki

Follow Me: @tendayiviki

Business Model DesignDocumenting Your Plan A

Ash Maurya (2012)Running Lean

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Customer Segment This block defines the different groups of

people or organizations that a company aims to reach and serve.

• Mass Market

• Niche Market

• Segmented Market

• Diversified Market

• Multisided Market

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Value Propositions The value propositions block describes the

product/service; and how it creates value for your customer segments.

Performance

Price

Design

Brand/Status

Convenience/Usability

Risk Reduction

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Channels The channels block describes how a company

reaches its target segments to deliver the value proposition.

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Customer Relationships The customer relationships block describes

the types of relationships a company establishes with their customers.• Personal Assistance

• Dedicated Personal Assistance

• Self Service

• Automated Service

• Communities

• Co-creation

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Revenue Streams The revenue streams block describes how

the company generates revenues from its customer segments.

• Asset Sale

• Usage Fee

• Subscription Fees

• Lending/Renting/Leasing

• Licensing

• Brokerage Fees

• AdvertisingOsterwalder & Pigneur (2010)

http://www.businessmodelgeneration.com/

Key Resources The key resources block describes the most

important assets required to make your business model work.• Physical

• Intellectual

• Human

• Financial

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Key Activities The key activities block describes the most

important things a company must do to make its business model work.• Production

• Problem Solving

• Platform/Network

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Key Partnerships The key partnerships block describes the

network of suppliers and partners that make your business model work.

• Optimization and economies of scale

• Reduction of risk and uncertainty

• Acquisition of resources and activities

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Cost Structure The cost structure describes all the costs

incurred to operate a business model.

• Cost Driven

• Value Driven

• Fixed and Variable Costs

• Economies of Scale and Scope

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Osterwalder & Pigneur (2010)http://www.businessmodelgeneration.com/

Your Product is NOT the Product It is important to realise that a product or service idea is not

sufficient for success. You could have a good idea, but if you do not have a good

business model to support it, then your business will fail. It is not enough to just have a good product, it must be delivered to

customers in a manner that is sustainably profitable.

A lot entrepreneurs focus too much on just the product. But the same amount of effort needs to be put into developing

the business model. Indeed, business model innovation by itself can be game changing.

The canvas can be used as a prototyping tool.

http://www.businessmodelgeneration.com/Alexander Osterwalder

Canvas Rules You don’t write on the canvas (use post-its). Everyone writes (no team boss). One idea per post-it note (no lists!). Be concise and think in the present. Quantity over quality (no self-censoring). For double sided market use different colour post-its.

Rob Fitzpatrick and Salim Virani (2012)http://www.foundercentric.com/

You Have A Business Idea

Discuss as a group and put one business model on the canvas.

Your business model as you currently see it.

Time: 20 Minutes

Rob Fitzpatrick and Salim Virani (2012)http://www.foundercentric.com/

Who else could use your product?

Come up with every type of person you can imagine benefitting from your product or service.

Time: 15 Minutes

Rob Fitzpatrick and Salim Virani (2012)http://www.foundercentric.com/

How will they hear about it?

Come up with as many channels as you can, that you will use to publicise and distribute the product or service to your customers.

Time: 10 Minutes

Rob Fitzpatrick and Salim Virani (2012)http://www.foundercentric.com/

Marketing vs. Sales?

You are either a marketing or sales driven company?

Low Margin, High Volume (Consumer) High Margin, Low Volume (B2B)

Which do you think you are?

Now build a model to do the opposite!

Time: 15 Minutes

Rob Fitzpatrick and Salim Virani (2012)http://www.foundercentric.com/

How can you make your customers pay 10 times more?

Come up with a way you could charge more for your product/service.

How will this affect the rest of the business model?

Time: 10 Minutes

Rob Fitzpatrick and Salim Virani (2012)http://www.foundercentric.com/

Give the product away?

Come up with a way you could give the core value of your product away for free to your end users.

How would you make money?

How does this change the rest of the model

Time: 10 Minutes

Rob Fitzpatrick and Salim Virani (2012)http://www.foundercentric.com/

Now that you have thought of various possibilities, discuss as a group a final business model that you will test during this course and put that on the canvas.

Your business model as you currently see it.

Time: 15 Minutes

Rob Fitzpatrick and Salim Virani (2012)http://www.foundercentric.com/

Now What?

In the past, you would now be encouraged to turn your business models,

into business plans.

But this course, is different.

Alexander Osterwalder (2012)http://www.businessmodelgeneration.com

All these hypotheses have to be tested and validated with customers.

Thank You&

See You Next Week