1. An introduction into Business Models
and the BMG Canvas
Erwin Fielt
2010,
2010 October
See also the blog Fieltnotes at http://fieltnotes.blogspot.com/

2. Business models?
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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3. What about?
• Razor and blade (Gillette)
• Direct sales and build to order (Dell)
( )
• Power-by-the-hour (Rolls Roys)
• From product to service company (IBM)
• Music experience (Apple’s iPod and iTunes)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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4. Business & Model
Business Model
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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5. Business & Model
"the activity of "a simplified
providing goods and description and
services involving representation of a
financial, commercial complex entity or
and industrial aspects" process"
Source: Osterwalder, Pigneur & Tucci (2005)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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6. Addressing basic fundamental questions
basic,
• A good business model answers Peter Drucker’s age old
Drucker s age-old
questions:
– Who is t e custo e
o s the customer?
– And what does the customer value?
• It also answers the fundamental questions every
manager must ask:
– How do we make money in this business?
– What is the underlying economic logic that explains how we can
de e a ue customers an appropriate cost?’
deliver value to custo e s at a app op ate cost
Source: Magretta (2002, HBR)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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7. Business model essentials
• It is about creating and capturing value
– Use value and exchange value
• It captures business logic/rationale
– Narrative or conceptual model
• It relates to an organizational entity
– Si l organisation or network of organisations
Single i ti t k f i ti
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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8. Business logic
• Proposition oriented
– Customer/value/offering
• Organization oriented • Integration oriented
g
– Role/activity/architecture – Holistic/balance/
• Fi
Finance oriented
i t d synergy
– Revenue model
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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9. Business models and innovation
• Innovations need • Business models can
business models be innovated
– Turning ideas into (business model
marketable products innovation)
and processes
d – New for the
– Mediates between organization, the
new technology and market/industry and/or
k t/i d t d/
economic value totally new
– Often driven by or
enabled by IT
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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10. Business & Model
Referring to the Emphasizing
way a company the model
does business aspect
Stories, Formal models,
sketches business modelling
Source: Osterwalder, Pigneur & Tucci (2005)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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11. Business Model Canvas
Infrastructure Offering Customer
Finance
Source: Osterwalder (2004) ; Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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12. Business Model Canvas
Customer
Customer
Key activities
relationships
Value
Value Customer
Key partners
propositions Segments
Key
Key
Channels
resources
Cost structure
Cost structure Revenue streams
Revenue streams
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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13. Customer
• An organization serves one or several
Customer Segments.
– Customer groups represent separate segments if:
• Their needs require and justify a distinct offer
• They are reached through different Distribution Channels
• They require different types of relationships
• They have substantially different profitabilities
• They are willing to pay for different aspects of the offer
– Examples: Mass markets, niche markets, segmented,
diversified, multi-sided
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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14. Offering
• It seeks to solve customer problems and satisfy
customer needs with Value Propositions.
– Each Value Proposition consists of a selected bundle
of products and/or services that caters to the
requirements of a specific Customer S
i t f ifi C t Segment. t
– Examples: Newness, performance, customization,
“getting the job done ” design brand/status price
getting done, design, brand/status, price,
cost reduction, risk reduction, accessibility,
convenience/usability
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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15. Customer
• Customer Relationships are established and
maintained with each Customer Segment.
– E
Examples: A l
l Arm-length or affiliated? P
th ffili t d? Personal or mediated?
l di t d?
Communities? Co-creation?
• Value Propositions are delivered to customers through
communication, distribution, and sales Channels.
– Examples: Own or partner channels? Direct or indirect
channels? Full service or self-service?
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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16. Infrastructure
• Key resources are the assets required to offer
and deliver the previously described elements…
• …by performing a number of Key Activities.
yp g y
• Some activities are outsourced and some
resources are acquired outside the enterprise
via Key Partnerships
Partnerships.
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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17. Finance
• Revenue Streams result from Value
Propositions successfully offered to Customer
Segments.
– Examples: Asset sale, Usage fees, Subscription fees,
Lending/renting/leasing, Licensing, Brokerage fees,
Advertising
• The business model elements result in the Cost
Structure.
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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18. Apple s
Apple’s iPod and iTunes
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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19. Apple iPod/iTunes
Customer
Customer
Key activities
relationships
Value
Value
Seamless Target
Target
Key partners music
propositions
experience customers
Key
Key Customer
Customer
resources channels
Cost structure
Cost structure Revenue streams
Revenue streams
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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20. Apple iPod/iTunes
Customer
Customer
Key activities
relationships
Value
Value
Seamless Target
Target
Mass
Key partners music market
propositions
experience customers
Key
Key Customer
Customer
resources channels
Cost structure
Cost structure Revenue streams
Revenue streams
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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21. Apple iPod/iTunes
Customer
Customer
Key activities
relationships
Value
Value
Seamless Target
Target
Mass
Key partners music market
propositions
experience customers
Retail stores
Key
Key Customer
Customer
resources channels
Apple stores Apple.com
iTunes store
Cost structure
Cost structure Revenue streams
Revenue streams
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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22. Apple iPod/iTunes
Customer
Customer
Key activities
relationships
Value
Value
Seamless Target
Target
Mass
Key partners music market
propositions
experience customers
Retail stores
Key
Key Customer
Customer
resources channels
Apple stores Apple.com
iTunes store
Cost structure
Cost structure Revenue streams
Revenue streams
Large
Some music
hardware
revenues
revenues
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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23. Apple iPod/iTunes
Customer
Customer
Record Key activities
companies relationships
OEMs
O Value
Value
Seamless Target
Target
Mass
Key partners music market
propositions
experience customers
Retail stores
Key
Key Customer
Customer
resources channels
Apple stores Apple.com
iTunes store
Cost structure
Cost structure Revenue streams
Revenue streams
Large
Some music
hardware
revenues
revenues
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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24. Apple iPod/iTunes
Hardware
design Love mark
Customer
Customer
Record Key activities
companies Marketing relationships
Switching
costs
OEMs
O Value
Value
Seamless Target
Target
Mass
Key partners music market
Apple brand propositions
experience customers
Retail stores
People
Key
Key iPod Customer
Customer
hardware
resources
Content &
channels
Apple stores Apple.com
agreements iTunes
software
iTunes store
Marketing &
People Cost structure
Cost structure
Manufacturing
sales Revenue streams
Revenue streams
Large
Some music
hardware
revenues
revenues
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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25. Business Model Canvas
Customer
Customer
Key activities
relationships
Value
Value Value creates
Customer
Key partners
propositions revenue Segments
Key
Key
Channels
resources
Cost structure
Cost structure Revenue streams
Revenue streams
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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26. Business Model Canvas
Customer
Customer
Key activities
relationships
C eat g a ue
Creating value Value
Value Customer
Key partners
requires propositions Segments
infrastructure
Key
Key
Channels
resources
Cost structure
Cost structure Revenue streams
Revenue streams
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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27. Business Model Canvas
Customer
Customer
Key activities
relationships
Infrastructure Value
Value Customer
Key partners
generates propositions Segments
costsey
K
Key
Channels
resources
Cost structure
Cost structure Revenue streams
Revenue streams
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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28. Business Model Canvas
Customer
Customer
Key activities
relationships
Value
Value Customer
Key partners
propositions Segments
Key
Key
Channels
resources
Cost structure
Cost structure The sweet spot Revenue streams
Revenue streams
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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29. More information on the Canvas
www.businessmodelgeneration.com
Source: Osterwalder & Pigneur (2009)
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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30. Business model patterns
• Long-tail (
L t il (vs. Bl kb t )
Blockbuster)
• Free/freemium
• Bottom of the Pyramid
B tt f th P id
• Bundling/Unbundling
• Servitization
• Total Solution
• Intermediation
• Platform
• Open (source/innovation)
• ...
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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31. Free
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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32. The Long Tail
Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/]
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