Tarek Fahim
Business Model Design
Certainty comes from the courage to follow uncertain paths
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Breaking the ICE
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Iqbal Quadir Had a DreamReference: Business Models Beyond Profit - Social Entrepreneurship Lecture
Alexander Osterwalder
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Achieving the DreamReference: Business Models Beyond Profit - Social Entrepreneurship Lecture
Alexander Osterwalder
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How do you provide connectivity to villagers when they are too poor to buy a phone ?
Customers managemen
t
Reference: Business Models Beyond Profit - Social Entrepreneurship Lecture
Alexander Osterwalder
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By providing an intermediary a loan to buy a phone and resell call services
Customers managemen
t
Reference: Business Models Beyond Profit - Social Entrepreneurship Lecture
Alexander Osterwalder
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What about Network Management & Customers ?
Customers managemen
t
Reference: Business Models Beyond Profit - Social Entrepreneurship Lecture
Alexander Osterwalder
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Show Me the Money
Customers managemen
t
Reference: Business Models Beyond Profit - Social Entrepreneurship Lecture
Alexander Osterwalder
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Achieving the DreamReference: Business Models Beyond Profit - Social Entrepreneurship Lecture
Alexander Osterwalder
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Rashmi, 24 Bangladeshi village phone lady2-3 $ daily income
• There are about 250ʼ000 women retailing telephone services in 60ʼ000 villages giving access to about 100 million people
• The 250ʼ000 telephones are producing revenues at an annual rate of well over $100 million for GrameenPhone
• Each entrepreneur makes about $2 in profits per day or about $700 per year
• $50 million net profit for GrameenPhone
Reference: Business Models Beyond Profit - Social Entrepreneurship Lecture
Alexander Osterwalder
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Business Model Ingredients
Return Structure
Profit Formula
Human Capital Orientation –
Role of the Crowds
Growth Model
Financing Options
Value Proposition (VP)
Change Philosophy
Key Resources & Platforms
Key Processes
Reference: Business Models Beyond Profit - Social Entrepreneurship Lecture
Alexander Osterwalder
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GrameenPhone Business Model
For Profit Organization
with core social impact
ingredient
Enabling mobile connection to rural people who normally
cannot afford to own a telephone, provides a good
income-earning opportunity to Village Phone operators living
in rural areas
Customers managemen
t
Reference: Business Models Beyond Profit - Social Entrepreneurship Lecture
Alexander Osterwalder
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Change Philosophy
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Return Structure
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• Trying to balance the generation of both social/environmental and economic returns
• To remain effective and sustainable at the same time
• The balance between economic and social/environmental return are choices base (No best practice or correct answer)
Social and/or Environmental Return
Purely philanthropic enterprises
Purely commercial enterprises
Economic Return
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Value Proposition (VP)
The way to create value for customers—that is, a way to help customers get an important
job done
By “job” we mean a fundamental problem in a given situation that needs a solution
Once we understand the job and all its dimensions, including the
full process for how to get it done, we can design the offering
Target Customer
Job to be Done
Offering
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Profit Formula
The blueprint that defines how the company creates
value for itself while providing value to the
customer
Revenue Model:
price x volume
Cost
Structure
Margin
Model
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Quick-Wins
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Human Capital Orientation – Role of the Crowds5
Collaborative Production
Fully Partially None
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Key Resources & Platforms
The key resources are assets such as technology, products,
facilities, equipment, and channels required to deliver the value proposition to the targeted customer. The focus here is on the key elements that create
value for the customer and the company, and the way those
elements interact
Every company also has generic resources that do not create competitive differentiation
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Key Processes
Operational and managerial processes that allow them to deliver value in a way they can successfully repeat and increase in scale. These
may include such recurrent tasks as training, development, manufacturing, budgeting, planning, sales, and service.
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Processes & NormsRules &
Metrics
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Financing Options8
Equity Financing
Debt Financing
Angel Investment
Donations & Grants
3 Fs InvestmentFamily / Friends / Fools
Self Financing
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Growth Model
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Franchise
By Concept One Self
Different Perspective
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OK. Where do I start ?
Return Structure
Profit Formula
Human Capital Orientation –
Role of the Crowds
Growth Model
Financing Options
Value Proposition (VP)
Change Philosophy
Key Resources & Platforms
Key Processes
Founder’s Oriented Choices
Customer’s Oriented Choices
Reality Bites
Entrepreneurship Mindset
Design Thinking & Innovation
Business As Usual
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Going Forward…What to do ?
Return Structure
Profit Formula
Human Capital Orientation –
Role of the Crowds
Growth Model
Financing Options
Value Proposition (VP)
Change Philosophy
Key Resources & Platforms
Key Processes
Less Frequently Changing More Frequently Changing
Cu
sto
mer
sC
om
pet
itio
nM
on
ey
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Constrained Innovation !!
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Case In Point : Tata Motors Nano Car
Providing a safer alternative for scooter families.
The cheapest car available in India cost five times what a scooter did
and that many of these
families could not afford one.
“Offering an affordable, safer, all-weather alternative for scooter
families, one with the potential to reach tens of millions of people who were not yet part of the car-buying
market”
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Case In Point : Tata Motors Nano Car
Envisioning a price point of around US$2,500, less than half the price of the cheapest car available.
This, of course, had dramatic ramifications for the profit formula:
• Significant drop in gross margins.
• Radical reduction in many elements
of the cost structureHowever, he could still make money if he could
increase sales volume dramatically, and he knew that his target base of consumers was
potentially huge
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Case In Point : Tata Motors Nano Car
For Tata Motors to fulfill the requirements of its customer value proposition and profit formula for the Nano, it had to reconceived how a
car is designed, manufactured, and distributed
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Case In Point : Tata Motors Nano Car
Built a small team of fairly young engineers who would not
- like the company’s more-experienced designers -
be influenced and constrained in their
thinking by the automaker’s existing profit formulas.
This team dramatically minimized the number of parts in the vehicle, resulting in a
significant cost saving
Choose to outsource a remarkable 85% of the Nano’s
components and use nearly 60% fewer vendors than normal to reduce transaction costs and achieve better economies of
scale
Envisioned an entirely new way of assembling and distributing its cars. The ultimate plan is to ship the modular components of the vehicles to a combined network of company-owned and independent entrepreneur-owned assembly
plants, which will build them to order.
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29 FS
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Other Constrained Innovations !!!!
$30 cataract surgeryAravind Eye hospital
$0.01 cell phone minuteBharti Airtel $0.01 shampoo
Hindustan Unilever
$25 micro loansKIVA Organization
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Constrained Innovation !!
Return Structure
Profit Formula
Human Capital Orientation –
Role of the Crowds
Growth Model
Financing Options
Value Proposition (VP)
Change Philosophy
Key Resources & Platforms
Key Processes
Values
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Putting It All Together
Customers’ Base
Values
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Any Questions ?
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Looking Forward to Seeing You There.
Quick-Wins
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