Business Model Generation

Part1: Building Blocks

I Got an Awesome Idea

Reality

Business Model

The corner of success and failure

“A business model describes the rationale of how

an organization creates, delivers and captures

value.”

The 9 Building blocks

I- Customer segments:

- Customer groups represent separate segments if (

they are interested by different offers, they are

willing to pay for different aspect of the offer, they

are reached thru different distribution channels,

they need different types of relationships, they

have substantial differences in profitability)

- Types: mass market, niche market, segmented

(credit lines...), diversified (amazon), multi-sided

markets.

II- Value proposition

- What value do we deliver to the customer?

- Which customer problem are we helping to solve?

- Which customer needs are we satisfying?

- Which bundles, products for each customer

segment?

- It can be qualitative or quantitative.

- Values Types: Newness, performance,

customization, getting the job done, design, brand

status, price, cost reduction, risk reduction,

accessibility, convenience-usability

III- Channels

- 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 is most cost –efficient?

- How are we integrating them with customer

routines?

Channel phases: awareness, evaluation, purchase,

delivery and after sales.

IV- Customer relationship

- What type of relationship does each of our

customer segments expects us to establish?

- Which ones have we established?

- How costly are they?

- How are they integrated with the rest of our

business model

Types: personal assistance, dedicated personal

assistance, self-service, automated services,

communities and co-creation

V- Revenue stream

- For what value are our customers really willing to

pay?

- For what do they actually pay?

- How are they currently paying?

- How much does each revenue stream contribute to

overall revenues?

- Ways to generate revenue streams: asset sale,

usage fee, subscription fees, lending-renting-

leasing, licensing, brokerage fees, advertising.

Price mechanism: fixed, dynamic.

VI- Key resources

- What key resources do our value propositions

require? Our distribution channels? Customer

relationships? Revenue streams?

Categories: physical/intellectual/human/ financial.

VII- Key activities

- What key activities do our value propositions

require? Our distribution channels? Customer

relationships? Revenue streams?

Production, problem solving platform network

VIII- Key partnerships

Who are our key partners? Who are our key

suppliers, key resources we acquiring, which key

activities does our partners perform.

Motivations: optimization and economy of scale.

Reduction of risk and uncertainty, acquisition of

particular resources and activities.

IX- 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?

Types: Cost driven, value driven

Characteristics: fixed costs, variable costs, economies

of scale, economies of scope.