Fourth and final lecture to students in Business Informatics dep-artment at Higher School of Economics, Moscow

1. Higher School of Economics , Moscow 2011 www.hse.ru Ian Miles Research Laboratory for the Economics of Innovation, HSE (and Manchester Institute of Innovation Research) June 2011 e - Business and e - Business Models – Part 4 [ « Business and business models in the Internet »]

3. Inspired by Liting Liang 2011 (DPhil thesis) , studying low-cost airlines as innovative business models. But the emergence of the Web (and web2.0) and new media platforms means new approaches possible in all the hexagons. “ Building blocks” need to be aligned, though tension can be creative Higher School of Economics, June 2011 Value Proposition Economic Formula Organisational Vision Position in Value Network Target Market Value Chain Structure Resources and Capabilities Elements of a Business Model

4. Economic Formula Definition : revenue model and cost structure: how firm incurs expenses and how it gains income. Example : consumer pays for media content, firm produces or buys it. Innovation : consumer contributes media content, service paid for by advertisers. Changed cost structure, new sources of revenue. Higher School of Economics, June 2011 Value Proposition Economic Formula Organisational Vision Position in Value Network Target Market Value Chain Structure Resources and Capabilities 4 – Economic Formula Value Chain Structure Position in Value Network

10. Geeting regular income: remember Rappa’s list of e-Business Models

11. http://digitalenterprise.org/models/models.html More detail on e-Business Model types from Rappa

15. What service offering? How far the website marketing some service you want to sell How far the website offers useful content or service of value to users Related services Premium services Vanity projects A shop “Free” services Paid-for content Advertising

17. Selling an e-book Do you sell it yourself directly, or through a merchant? Do you use PayPal (etc.)?

20. Sponsors Content that they have an interest in promoting: may also sponsor services

25. Freemium http://www.surveymonkey.com/ Increasing number of questions, responses, templates, sophistication of structure… Allegedly the most common model, with a conversion rate of a few per cent

26. Simple Purchase http://haveamint.com

28. Pay-per-view: live event http://us.blizzard.com/blizzcon/en/event-info/virtual-ticket

29. Subscription

30. Subscription– not just for content

35. Value Chain Structure Definition : the organisation of the units that add value to various steps in production and delivery Example : traditional organisation of media content industries, from (in-house) creators through packagers to distributors. Innovation : disintermediation; outsourcing or offshoring key professional services to other business partners. Redesign of value production and/or delivery activities. Higher School of Economics, June 2011 Value Proposition Economic Formula Organisational Vision Position in Value Network Target Market Value Chain Structure Resources and Capabilities 5 - Value Chain Structure Position in Value Network

40. Fulfilment Services

41. Position in Value Network Definition : how the firm interacts with stakeholders and locates itself in the system of production. Example : firm chooses how far to specialise in one or other location in value network. Innovation : customer roles changed, e.g. feedback sought, viral marketing, new CRM systems. Changed relationships with suppliers, competitors, customers; work with new stakeholders. Higher School of Economics, June 2011 Value Proposition Economic Formula Organisational Vision Target Market Value Chain Structure Resources and Capabilities Position in Value Network 6 - Position in Value Network Value Chain Structure

43. Analysis of your Business Model What are you selling? To whom? Using what resources in what activities? Spending what, and being paid what? Who are your key partners? What are your key relationships, how are they organised? Higher School of Economics, June 2011 Value Proposition Economic Formula Organisational Vision Position in Value Network Target Market Value Chain Structure Resources and Capabilities

45. Osterwalder’s template Infrastructure: 1 Key Activities needed to execute the BM. 2 Key Resources needed to create value for the customer. 3 Partner Network needed for alliances to perform business. Offering: 4 Value Proposition: what services represent value for specific customer segments, and differentiates your USP from competitors. Customers: 5 Customer Segments: the target market for your services. 6 Channels: how products and services are delivered to customers; marketing and distribution methods. 7 Customer Relationship: links with various customer segments. Finances: 8 Cost Structure: expenses are incurred in undertaking activities. 9 Revenue Streams: what income is generated, and how captured.

53. Business Model Questions (Teece) Figure 3 in D. Teece, “ Business Models, Business Strategy and Innovation”, Long Range Planning , 2010 Illustration downloaded from a great presentation at: http://businessinnovation.berkeley.edu/teece/Business_Models_Business_Strategy_and_Innovation.pptx

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