Based on recent presentation to airbus

Making the business case

Questions you need to ask?

Platform

Application - product

What else does it need?

The Triple Chasm Model – where do you think your idea

sits?

Idea generation

& Filtering

Building the

Beachhead,

prototype

Proof of concept,

Demonstrator &

Business Planning

Reaching

mass markets

Target Market

Typical Business

Stage

Start-ups

Est. Businesses

Corporate Ventures

Idea Development Business Value

Likely Business

Objective

Early Adopters Fast Followers Mainstream

Classical “Moore” chasm 3Chasm 1 Chasm 2

What do you think you need to prove at

each stage?

Markets

Risks

Team

Funding

Product performance

Value Chain Analysis and Innovation

Porter (1985)

Understanding your position in the value chain

Transactions, user experience,

management

Content

creators

and

developers

Content

packagers

and

publishers

Meta-

content

creators,

developers

and

packagers

Ad

networks

Distribution

servers/

pumps

Distribution

networks eg

ISPs, Mobile

Operators

Delivery

devicesEnd usersAdvertisers

Content creation, packaging

and publishing

Advertising

Media

planners

and buyers

User

management

tools

Operating

System s/w

Content distribution and

access provision

Airtime,

Bandwidth,

Purchase

credits

TransactionsApplication

s/w

Devices, software and

applications

Example: Value Chain for Mobile Services

•Commission

creation of rich

media content

• Localisation of

international

content

• Packaging content

for 3G mobile

• Advertising deals

for revenue

generation

through portal

• Participation in Ad

networks,

interfaces

• Affiliate

relationships with

owners of mobile

assets

• Licensing of

technology for

building server

infrastructure

• Relationships with

suppliers for

infrastructure

related services

• Develop/acquire

billing engines for

tracking, analytics

• Developer

relationships with

O/S vendors

• Agreements with

manufacturers for

pre-loading 3G

VAS apps

• Partnerships/ co-

promotion deals

with application

S/W vendors

• Integration deals

with payment

gateways, app

exchanges

• Affiliate deals to

generate traffic

and promotions

• End user

management,

service

customisation

Example – Semiconductor industry value chain

Example – Pharma industry value chain

NewTechnology

Sales,Manufacturing& Supply

Lead Identification& Optimisation

Drug Development

TargetIdentification

Scale up &Launch

Pharmaceuticals

Technology-focused Biotech

Product-focused Biotech

Marketing & Distribution

Defining your Go-to-Market Strategy

Customer Targeting

• Segmentation

• Volumes

Direct vs In-direct Models

• Speed, scale & control trade-offs

• Channel Complexity

• Channel Costs and impact on Margins

Market segmentation of customers

Customers

Consumer

Corporate

Knowledge

Workers

Brand

‘focus’

Increasing

‘footprint’

Narrower

‘audiences’

(size, geography,

demographics)Increasing

customer focus

Business Consumer

Go-to-Market Models

Direct

• Costs

• Timescales

Indirect

• Agents

• Distributors

• Franchisees

Commercial Models

Types of Revenue Models

• Components

• Products

• Services

• ‘Lifetime’ Revenues

Cost & Margin Implications

• Time to Profit

• Funding Requirements

Sensitivity Analysis

• Key Variables

• Assessment of Risk

Typical Business Models

• Buy and sell

• Make and sell

• Design – outsource – manufacture and sell

• Licence:

• the IP to industry

• Components

• Core technology and provide Know-how and

• consulting services

• Create and sell products

• Create and sell products and provide additional consulting and know-how

• Razor and blade

• Apple model

• Low cost airlines

Defining the Business ModelDefining the Business Model

Osterwalder, A. and Pugneur, Y. (2010) Business Model Generation, John Wiley & Sons.

Key partners

Who are your key

partners – consider

strategic alliances, co-

opetitors, joint ventures

and key suppliers.

Key processes

What are your key

processes – consider

product development,

revenue generation,

order fulfillment and

after-sales support.

Key resources

What are your key

resources – consider

physical, financial,

intellectual, human and

information based

resources.

Value

proposition

What is your value

proposition? Why will

customers buy from

you?

Customer

relationships

What relationships are

you building with your

customers – acquisition,

retention and cross-

selling or upselling?

Customer

segments

Which customer

segments are you going

to deal with – mass

market, niche market,

segmented?

Channels

What are your channels

to market? Direct or

indirect – stores and

offices or web based?

Cost structure

What are the major drivers for your cost structure? What scope for

economies of scope and scale? Can fixed costs be converted to

variable?

Revenue streams

What are the revenue streams – sale of assets, usage fees,

subscription fees, leasing or rental fees, licensing, brokerage,

advertising?