Business Modeling Introduction

What is a Business Model ?

Describes how your business makes money

“ ”

How does this help me?

How do we describe a business model?

... no common language

How do we communicate a business model?

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Strategy Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Cras in tortor. Sed posuere erat. Maecenas pulvinar nulla eu magna. Vivamus semper, risus ut egestas pulvinar, lectus ante feugiat quam, sit amet congue odio lacus ac ipsum. Aliquam suscipit, est ut volutpat vulputate, nulla felis pulvinar libero, non ornare libero ipsum tristique tortor. Fusce sed lorem vitae justo feugiat malesuada. Donec aliquet. Vivamus semper eros nec diam. Vivamus sem arcu, imperdiet nec, congue ac, scelerisque vel, nulla. Donec et mauris. Integer a nulla vulputate pede consequat euismod. Praesent molestie urna nec leo. Proin eros. Maecenas ac sem nec dui sodales tempus. Maecenas suscipit egestas velit. Suspendisse vel tortor. Proin imperdiet, sem nec aliquet ultrices, nunc est egestas eros, non hendrerit magna eros eget augue. Maecenas sed leo vitae leo faucibus vulputate. Proin dignissim eros at augue. Nam luctus nulla non nibh. Nam at lorem ac mauris laoreet viverra. In placerat consequat nunc. Donec rhoncus nunc ac urna. Integer vestibulum condimentum orci. Fusce velit turpis, malesuada quis, scelerisque ut, eleifend vitae, ipsum. Vestibulum eu erat. Vestibulum justo nisl, tincidunt et, semper vel, tristique quis, eros. Vestibulum tempus, massa vel consectetuer congue, erat magna consequat purus, a facilisis orci nibh vitae purus. Nam tincidunt venenatis ligula. Nunc orci nulla, ornare quis, lobortis viverra, dapibus at, turpis. Suspendisse sit amet nisl at enim tincidunt blandit. Curabitur augue est, suscipit sed, egestas sit amet, vehicula vitae, tellus. Maecenas nec metus vel nisi interdum pellentesque.

Words

Text

Text Text 18% 300%

12%

1%

... in improper ways

How do we measure the success of a business model?

...well, we don’t

How do we change an existing business model and innovate?

... (re)inventing the wheel

the right equipment!

...obviously a tool is needed...

Business Model Canvas

A common “language”, tool to describe, evaluate and change

business models

The business model describes:

how the business creates value

how the business delivers value

how the business realizes value

Building blocks 9

BUSINESS MODEL "CANVAS:"

CUSTOMER SEGMENTS"

Different groups of people or organizations which we want to reach and serve"

www.businessmodelgeneration.com

Customer Segment"

If they require different:"•  Value proposition"•  Aspects of the offer"•  Channels"•  Relationships"•  Profitability"

…they may represent a separate segment"

VALUE PROPOSITION"

the unique bundle of products and services which has value for the target customer"

www.businessmodelgeneration.com

Attributes of the value proposition ""•  Novelty"•  Performance (tech specs)"•  Customization"•  “Getting the job done”"•  Design"•  Brand/Status"•  Price"•  Cost reduction"•  Risk reduction"•  Accessibility"•  Convenience/usability"

CHANNELS"

how do we communicate with and reach the target customer"

www.businessmodelgeneration.com

Channels are for…""•  Raising awareness"•  Helping customers evaluate your “gift”"•  Allowing customers to purchase your “gift”"•  Delivering the “gift”"•  Providing post-purchase customer support"

Could be:"•  owned Channels"•  partner Channels"

CUSTOMER RELATIONSHIPS"

type of relationships we have to establish with the target customer"

www.businessmodelgeneration.com

Types of relationships""•  Transactional, one-time "•  Long-term, repetitive"•  Individual approach"•  Preferential individual approach"•  Self-service"•  Automated service"•  Building a community"•  Co-creation "•  Switching costs"

REVENUE STREAMS"

feasible revenue streams, through which the business will make money"

www.businessmodelgeneration.com

Types of revenue streams?"

"•  Sale of assets"•  “Pay per view”"•  Subscription "•  Rent/Lease"•  Licensing"•  Commission"

KEY RESOURCES"

The key «assets» the company needs for the business model to work"

www.businessmodelgeneration.com

Types of resources?"

"•  Physical"•  Intellectual property"•  Financial "•  Human resources"

KEY ACTIVITIES"

the key activities the company must perform well for the business model to work"

www.businessmodelgeneration.com

Types of activities"

"•  Production"•  Problem solving"•  Platform/network "

KEY PARTNERS"

network of suppliers and partners, without which the business model wonʼt work"

www.businessmodelgeneration.com

Why should we create partnerships?"

"•  Optimization and savings in scope/range"•  Reduction of the risk"•  Access and acquisition of resources"

COST STRUCTURE"

the essential costs without which the business model wonʼt work"

www.businessmodelgeneration.com

Cost: types, cost structures, attributes"

"•  Cost-driven (structure)"•  Value-driven (structure)"•  Fixed vs. operational cost (type)"•  Economy of scale (attribute)"•  Economy of scope(attribute)"

Target Customers"

Key Partners"

Cost Structure"

Revenue Streams"Channels"

Customer"Relationships"

Key Activities"

Key Resources"

Value Proposition"

www.businessmodelgeneration.com

www.businessmodelgeneration.com

VALUE PROPOSITION

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERS SEGMENTS

REVENUE STREAM COST STRUCTURE

KEY ACTIVITIES KEY PARTNERS

KEY RESOURCES

THE CANVAS"

www.businessmodelgeneration.com

Examples

ПРЕДЛОЖЕНИЕ �

КАНАЛИ�

ВЗАИМО-ОТНОШЕНИЯ�

ТАРГЕТ КЛИЕНТ�

ИЗТОЧНИЦИ НА ПРИХОДИ�РАЗХОДНА СТРУКТУРА�

КЛЮЧОВИ �ДЕЙНОСТИ�

КЛЮЧОВИ ПАРТНЬОРИ�

КЛЮЧОВИ РЕСУРСИ�

Приблизително �същата гласова �услуга �

Глобално покритие без ограничения-та на мрежа �

90% ползват безплатно�10% плащат за услугите �

Разходна структура на �софтуерна компания �

Няма инфра- �структура �

Максимално �аутсорсване�

Разработване �на софтуер�Няма поддръж- �ка на мрежа �

Автоматизира- �но масово �къстъмизиране �

Онлайн, евтино �разпростране- �ние на софтуер�

Young people

with average income�

Communicating

ideas and smart

solutions for the home �

Advertising �Catalog�

Stores �

Simple, practical

design at a reasonable

price�

Compliance�

Suppliers relationships�

The Brand IKEA � The franchise

IKEA �

Store management

system�

Suppliers ��IKEA �

Goods and delivery�

Marketing �

Personnel �Selling goods an

d

ideas for the home�

Easy self-service when

choosing, buying and

assembling �

Storage and logistics�

Store and

infrastructure�

Restaurant �

Supermarket �

ПРЕДЛОЖЕНИЕ

КАНАЛИ

ВЗАИМО-ОТНОШЕНИЯ

ТАРГЕТ КЛИЕНТ

ИЗТОЧНИЦИ НА ПРИХОДИ РАЗХОДНА СТРУКТУРА

КЛЮЧОВИ ДЕЙНОСТИ

КЛЮЧОВИ ПАРТНЬОРИ

КЛЮЧОВИ РЕСУРСИ

Online retail store

Global consumers

market

Sale discounts

Amazon.com affiliated websites

Individual profiles and

recommendations Logistis

Affiliated websites

Marketing Technology

Content Delivery

Software development and support

Software Supply

infrastructure

Internet !users all !

over the globe!

The network (viral) effect!

3rd parties’ !games and apps!

!the FB platform!

facebook.com!

The largest social platform

“share your stories and content with !the others”!

Software development !and maintenance !

Network development !

Brand! IT infra!

Key talented

engineers

Huge DB and users base !

Paypal!!

Zynga !FarmVille !

Personnel !

IT infrastructure!

Revenue sharing !

with app and game developers!

Advertisers !

Game and app!developers!

Adds revenue!

Targeted !users for adds, games

and apps!

Co-creation: Personalized

profiles!

Internet !users all !

over the globe!

The network (viral) effect!

3rd parties’ !games and apps!

!the FB platform!

facebook.com!

The largest social platform

“share your stories and content with !the others”!

Software development !and maintenance !

Network development !

Brand! IT infra!

Key talented

engineers

Huge DB and users base !

Paypal!!

Zynga !FarmVille !

Personnel !

IT infrastructure!

Revenue sharing !

with app and game developers!

Advertisers !

Game and app!developers!

Adds revenue!

Targeted !users for adds, games

and apps!

Co-creation: Personalized

profiles!

One more example: in Bulgaria

•  Using services as individuals– price sensitive •  Attracting sponsors-clients to make the price

acceptable for them •  The individuals are attracted of a particular value •  Sponsors-clients are attracted to a different

value

Students (wanna-preneurs)"Start-upers"

Business model S (segment S)

VALUE PROPOSITION

CHANNELS

CUSTOMERS RELATIONSHIPS

CUSTOMER SEGMENT

REVENUE STREAM COST STRUCTURE

KEY ACTIVITIES KEY PARTNERS

KEY RESOURCES

“Green path” (without sponsors)

Practical and relevant workshops for entrepreneurs, networking

Email and telephone Social media

Social media Direct mailing Presentations and seminars

Students and Start-ups

Workshops Online and offline events

Programs and content Methodology and know-how

Payment (facilitators) Commissions Franchise fees

Participants fees

Cisco Systems Start-UP Foundation AISEC Career centers Local centers of the Cisco Entrepreneur Institute Successful entrepreneurs

Business model based completely on revenue from individuals

VALUE PROPOSITION

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMER SEGMENT

REVENUE STREAM COST STRUCTURE

KEY ACTIVITIES KEY PARTNERS

KEY RESOURCES

“Green path” (with sponsors)

Practical and relevant workshops for entrepreneurs, networking

Media coverage CSR recruitment

Email and telephone Social media

Social media Direct mailing Presentations and seminars Sales contacts and meeting

Students and Start-ups

Medium and large companies

Workshops Online and offline events

Active selling

Programs and content Methodology and know-how

Networking Creating relationships

Payment (facilitators) Commissions Franchise fees Sales fees

Participants fees

Income from sponsorship packages

Cisco Systems Start-UP Foundation AISEC Career centers Local centers of the Cisco Entrepreneur Institute Successful entrepreneurs

Personal relationships

Sales partners mainly from the corporate sector

Business model sponsored by companies and directed completely to individuals

Exercise

Imagine that you become a proud owner of a soccer team…

... describe the business model of your team

describing how a wealth management bank acquires its clients

What value proposition will you offer and to which customer segment?

How do you reach your customers?

How do you build relationships?

How do you make money with this business model?

VALUE PROPOSITION

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMER SEGMENT

REVENUE STREAM COST STRUCTURE

KEY ACTIVITIES KEY PARTNERS

KEY RESOURCS

Business model of your team (example)

Playing spectacular soccer in offence

Website Blog (RSS) VIP events with the team

Stadium and tickets-offices TV channels and cell phones

Fans

Play attractively and win Brand management Video production

Trainers and players Stadium and infrastructure

Team and trainrs Infrastructure and support Marketing Video

Tickets sale

Food and drinks Tickets distribution TV channel Mobile operators Advertising agencies/ media shop Advertisers

TV channels and mobile operators

Advertising

Advertising space and good visibility

Sales people

Personal relationships

Contacts: Svetlan Stanoev sstanoev@thebusinessinstitute.eu Tzvetelina Teneva tzteneva@thebusinessinstitute.eu