Business model canvas 2013

Serdar Temiz [email protected] 2013

Business Models

Serdar Temiz, [email protected]

ME2603 Entrepreneurship 6.0 credits


About me• Master in ICT Entrepreneurship • SSES Alumni• Previously Software Developer/ Project

Manager• PhD Candidate at Indek KTH• Business/ Project developer/adviser for

private companies• www.Opensweden.net


In reallity...

• Life long learner and a do-er


This presentation

• Not about a specific business idea• About business processes• About business model innovation

• It is pretty long

• Feel free to fall asleep, interrupt or leave

• I hope you know all this already.

• If not, I really think it can give you a lot


Why should I listen to you?• Do not listen me!

IT IS YOUR RESPONSIBILITY TO QUESTION ALL ASSUMPTIONS. MINE, YOURS, EXPERTS.


Recap: What is Entepreneurship?

The process of coordinating resources to exploit or take advantage of opportunities that exists in the market or are created by innovation in an attempt to create value. (Brown, 1994)


Where Entepreneur Jumps in?

product /

service

need/ expectation


Some Questions

• Who is your customer?• What is Innovation• Why it matters


Invention vs InnovationBusiness Plan vs Business Model


There are many inventions, but far fewerinnovations.An invention is a novel ideaInnovation is the commercialization of thatnovel idea


FORTUNE 500

• “Two thirds of the original 1955 list was gone within three decades” William Shanklin*

• The rate at which large American companies left the Fortune 500 increased four times between 1970 and 1990 a change of almost 50% from the 1999 Fortune 500 to the 2009 Fortune 500

John Micklethwait & Adrian* Wooldridge,

• *(cited in Dane Stangler and Sam Arbesman WHAT DOES FORTUNE 500 TURNOVER MEAN

)


Turnover Rate in Fortuna 500

• Dane Stangler and Sam Arbesman WHAT DOES FORTUNE 500 TURNOVER MEAN


Types of Innovation

1. Technology innovation2. Process innovation3. Product & service innovation4. Business Model innovation


Process innovation

• Implementation of a new or significantly improved production or delivery method

• Ford Car Production• Dell Computers


Technology innovation

• 3D printing• Touch screen• You name it.


Product & service innovation

• Customer Support & Communication via FB– airbaltic

• Facebook itself


Business Model Innovation

• Why is it important?


Why business models matter?Joan Magretta

• Who is the customer and what does the customer value?

• How do we make money from the business?• How can we deliver value to the customer at an

appropriate cost?• Writing a new story• A better way than existing alternatives• Making the number add up• Tweaking on the fly based on feedback


Business Model WarfareLangdon Morris

• Business mortality is high• Technology innovation by itself has rarely

been sufficient to ensure the future.• Similar products and services• Advantages resulting from a successful

business models are fleeting. Models need to be continuously reviewed and updated when necessary


Operating Margin Growth in Excess of Competitive Peers

[Source: IBM, CEOs are expanding the innovation horizon: important implications for CIOs]

Compound annual growth rate over five years


Benefits Cited by Business Model Innovators% of responders

Source: IBM, Global CEDO Study 2006


How Business Models Emerge (1 of 3)

– The value chain is the string of activities that moves a product from the raw material stage, through manufacturing and distribution, and ultimately to the end user.

• Primary activities are directly concerned with the creation or delivery of a product or service.

• Support activities help to improve the effectiveness or efficiency of primary activities

Raw Material

Value ChainPrimary & Secondary Activities +

Margin

Product / Service



The Value Chain (again)

"Competitive Advan tage: Creating andSustaining superior Performance" (1985).



• The Value Chain (continued)– Entrepreneurs look at the value chain of a product or a

service to pinpoint where the value chain can be made more effective or to spot where additional “value” can be added.• This type of analysis may focus on (1) a single primary activity of

the value chain (such as marketing and sales), (2) the interface between one stage of the value chain and another (such as the interface between operations and outgoing logistics), or (3) one of the support activities (such as human resource management).


Business Models GenerationAlexander Osterwalder

• “A business model describes the rationale of how anorganization creates, delivers,and captures value.”


A business Model is..

• The business model is a strategic plan to be implemented through organizational structures, processes, and systems in order to need customer needs.


Simple Business Model

Value Proposition

Revenue Model

Production Model

Delivery Model


Simple Business ModelVa

lue

Prop

ositi

on

10Re

venu

e M

odel

10

Prod

uctio

n M

odel

10

Del

iver

y M

odel

10

HOW MANY OPTIONS DO WE HAVE?


Forces affecting the business model• Customer needs• Competition• Technological change• Social change• Legal environment


Pivoting

• Changing important part of business model• - can be simple: chancing pricing• -can be complex: target customer, user needs

change, feature set changes, new distribution channel


Basic Business Model Map

Product/Service Ecosytem

Customer EcoSystem

Finance

Value


• Who is customer• How do you reach customer• What is your value proposition /USP• How to you communicate customer• What are your resources• What is your enviromental costs/benefits• What are your key activities• What are your key partners• How do you make money?


There are different type of Business Model Maps


• Henry Chesbrough & Richard Rosenbloom


intacam's Business Model MapperTM

Serdar Temiz [email protected] 2013Mark Johnson


Business Model Canvas


The 9 building blocks for Business Model Canvas

1. Customer Segments2. Value proposition3. Channels4. Customer Relationships5. Revenue Streams6. Key Resource7. Key Activities8. Key Partnerships9. Cost Structure


1. Customer Segment

• For whom are we creating value? • Who are our most important customers?• Customer Segments– Mass Market– Niche market– Segmented - related customer segments: frequent

flier program, bank customers with big assets– Diversified: Unrelated customer segments: Amazon– Multi sided: free newspaper-readers and advertisers


Find a Customer-I

• Why?• Who is your customer? Grave, School, hospital, apotek, free newspaper• Can everyone be your customer?• "people who want to buy a flat," • "anyone needs job" • “Everyone who goes to university”


Find a Customer-II

• Find a customer for solving a pain• Use the Customer Profile• Describe who is making purchasing decision? IT ? Operations Group? Management?• Make sure they are happy• Market is important but -do not only think market• Billion dollar market does not start in few minutes


Q’s for Customer

IDENTIFIABLE – what distinguishes them?MEASURABLE – how many belong to your target segment?REACHABLE – how to reach, communicate with each segmentWILLING– do they want it?ABLE– they want but can they afford it?


Q’s for Customer - Macro Level

• Population size• Population character• Disposable income levels• Educational background• Primary languages• Infrastructure• Regulations• Political affiliation• And so on…


Keep In Mind -Paradox

• Customer is important but you can not give all they want

• Learn to stay No,• Learn to focus• Learn to ”change and adopt”• They may not know what they want: buying

process is mysterious


2.Value Proposition

• a bundle that meets that meets a customer's needs or solve his/her problem.

• benefits can be tangible and intangible• Reason why customers pick one business or

another.• can be – innovative, new disruptive offer– similar to existing offers but just added feature or

attribute in some sort of way


Q’s to answer – Value Proposition

• What pain do we solve for customer?• What do we deliver for customer?• What value do we develop for customer• Which need of customer do we satisfy?


Some Elements that may add to value

• newness• customization• getting job done• support• price

• design• status/ brand• Accessibility• risk deduction• usability


2. Value Proposition - Q’s to answer –

• What pain do we solve for customer?• What do we deliver for customer?• What value do we develop for customer• Which need of customer do we satisfy?


3. Channels

• Awareness of products and services, Evaluation of value proposition, Purchase, Delivery, After sales

• Direct: Brick and mortal stores, websales, sales force

• Indirect: wholesales partner stores,

Value Proposition

Customer Segment


3. Channels- Qs

• Through which Channels do our Customer Segments want to be reached?

• How are we reaching them now? • How are our Channels integrated? • Which ones work best? • Which ones are most cost-efficient?


4. Customer Relations

• Customer acquisition

• Customer retention

• Boosting sales (upselling)

Value Proposition

Customer Segment


Example Customer Services

Can you give some example companies?• (Dedicated)Personal assistance• Self Service• Community• Co-creation• Automated


4. Customer Relationships

• What type of relationship does each of our Customer Segments expect us to establish and maintain with them?

• Which ones have we established? • How costly are they? • How are they integrated with the rest of

our business model?


5. Revenue Streams

• For what value are our customers really willing to pay?

• One time/ recurring?• 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?


5.Revenue Streams

•ChannelsValue Proposition

Customer Segment

• Asset sale• Usage fee: use more, pay more• Subscription: monthly, yearly• Leasing/Lending/Renting• Licensing: patents, license fee• Brokerage fees• Advertising

Fixed pricing

Dynamic pricing


5.Revenue Streams

Fixed pricingDynamic

pricing

• List price • Product feature

dependent• Customer segment

dependent• Volume dependent

• Yield management : hotels, airlines

• Real-time-market :supply and demand

• Auctions Price • Negotiation


6. Key Resources

Value Proposit

ion

physical financial

intellectual human

Key resources can be owned or leased by the company or acquired from key partners.


6. Key Resources

• What Key Resources do our Value Propositions require?

• Our Distribution Channels? • Customer Relationships? • Revenue Streams?• What physical resources, intellectual,

human, financial resources do we have?


7. Key Activities

• What Key Activities do our Value Propositions require?

• Our Distribution Channels? • Customer Relationships? • Revenue streams?• Production- Microsoft• Problem Solving: Mc Kinsey• Network/Platform: Facebook, ebay, Visa


8. Key Partnerships

Why Partnership?– reduce cost, – Reduction of risk and uncertainty: Blu Ray Tech.– Acquisition of particular resources and activities: Nokia

Windows, HTC phones• Strategic alliances between non-competitors• Coopetition: strategic partnerships between

competitors• Joint ventures to develop new businesses• Buyer-supplier relationships to assure reliable supplies


8. Key Partnerships -II

• Who are our Key Partners? • Who are our Key suppliers? • Which Key Resources are we acquiring from

partners? • Which Key Activities do partners perform?


9. Cost Structure-I

• Business model Cost Structures:

cost

-driv

en minimizing costs wherever possible

valu

e-dr

iven Premium

Value Propositions and a high degree of personalized service


9. Cost Structure-II• Cost Structure Characteristics:

• minimizing costs wherever possibleFixed costs

• Premium Value Propositions and a high degree of personalized serviceVariable costs

• average cost per unit to fall as output risesThe same Distribution

Economies of scale

• Channels for different products and servicesmay support multiple products.

Economy of Scope


9. Cost Structure

• What are the most important costs inherent in our business model?

• Which Key Resources are most expensive?• Which Key Activities are most expensive?


In Total


Problems with this canvas?


Spotify Business Model


Business Model Canvas – Spotify- September 2013

Key Partners Key Activities Value Propositions

• .

Customer Relationships

Customer Segments

Key Resources Channels

Cost Structure Revenue Streams

Serdar Temiz Stockholm-Sweden

Listeners• Legal music for free or minimum payment

• Be social when you listen• Music based on mood

• Automated service• self service (FAQ)• Community forum• Customer Service

• Awareness at social media • Mobile application• Desktop application• Spotify.com

Advertisers

• self service : on learning how ads are located in the spotify etc.

• personal assistance: to put ad, advertisers should get in touch directly

• Targeted advertisement-• commercials between

songs: make listeners sure to listen

• Awareness with social media partners (fb, msn)

• Customer center representative

• Keep technology up and running

• Adding more music, label, artists to Spotify offering

• Launching Spotify in different countries

• Music,• Server,• Brand• Employees

• Labels, • aggregators (e.g merlin

network )• Facebook

• License fee• Salaries• Technology cost

• Subscription of unlimited and premium customers,• Advertisement revenue


• Are we done?



Key Partners Key Activities Value Propositions

• .


Customer Segments

Key Resources Channels

Cost Structure Revenue Streams

Serdar Temiz Stockholm-Sweden

Listeners• Legal music for free or minimum payment


• Automated service• self service (FAQ)• Community forum• Customer Service

• Awareness at social media • Mobile application• Desktop application• Spotify.com

Advertisers



• Targeted advertisement-• commercials between

songs: make listeners sure to listen

• Awareness with social media partners (fb, msn)

• Customer center representative



• Launching Spotify in different countries


• Labels, • aggregators (e.g merlin

network )• Facebook

• License fee• Salaries• Technology cost

• Subscription of unlimited and premium customers,• Advertisement revenue

Developers

• developer.spotify.com/• physical meetups

Can add music to their code

????



Key Partners

• Labels, • aggregators (e.g

merlin network )• Facebook

Key Activities



• Launching Spotify in different countries (currently only in Sweden, Norway, Finland, the UK, France, Spain, the Netherlands and the US )

Value Propositions

• Legal music for free or minimum payment


• Targeted advertisement-

• commercials between songs: make listeners sure to listen

• Can add music to their code.


• Automated service

• self service (FAQ)• Community forum• Customer Service



Customer Segments

Listeners

Advertisers

Developers

Key Resources


Channels• Awareness at social media • Mobile application• Desktop application• Spotify.com• Awareness with social

media partners (fb, msn)• Customer center

representative• developer.spotify.com/• physical meetups

Cost Structure• License fee• Salaries• Technology cost

Revenue Streams• Subscription of unlimited and premium customers,• Advertisement revenue

StartupAcademy.se Stockholm-Sweden


Facebook’s Canvas?


iTune’s Canvas


Twitter’s Canvass


Thank youSerdar [email protected]

Business model canvas 2013

Business

Transcript of Business model canvas 2013