Quick Intro about importance of Business Models and Business Model Innovation and then deeper into Business Model Canvas, Presented at sup46.se for 130 www.sses.se students in Stockholm
1. Serdar Temiz
temiz@kth.se
Business Model Innovation, 7.5 credits - 2015
Serdar Temiz & Terrence Brown
2015
2015-11-10
Business Models
Business Model Canvas
Terrence Brown
terrence@kth.se
2. Serdar Temiz
Social
Entrepreneur
Serdar Temiz & Terrence Brown
2015
Terrence Brown
terrence@kth.se2015-11-10
PhD Candidate
Lecturer Entrepreneurship, Technology Entrepreneuship
Open and User Innovation,
NGO
Previous life:
IT support,Telecom software Engineer, .NET, Java
developer, Project Manager, Business Developer
B.S, M.Sc, MBA & MA,
www.sciencebacker.com
www.okfn.se /
www.okfn.org
3. A business Model is..
The business model is a strategic plan
to be implemented through
organizational structures, processes,
and systems in order to need customer
needs. (one of many definitions)
Serdar Temiz & Terrence Brown
2015
2015-11-10
4. ... can be, even more important than tech
innovation!
Serdar Temiz & Terrence Brown
2015
2015-11-10
RIGHT BUSINESS MODEL
5. Finding and executing the right business
model can be the only/ main reason of the
success
Serdar Temiz & Terrence Brown
2015
2015-11-10
BUSINESS MODEL INNOVATION
11. How Business Models Emerge (1 of 3)
– The value chain is the string of activities that moves a
product from the raw material stage, through
manufacturing and distribution, and ultimately to the
end user.
Primary activities are directly concerned with the
creation or delivery of a product or service.
Support activities help to improve the effectiveness
or efficiency of primary activities
Raw Material
Value Chain
Primary &
Secondary
Activities +
Margin
Product /
Service
Serdar Temiz & Terrence Brown
2015
2015-11-10
12. The Value Chain (again)
"Competitive Advantage: Creating and Sustaining superior Performance" (1985).
Serdar Temiz & Terrence Brown
2015
2015-11-10
How Business Models Emerge (2 of 3)
13. The Value Chain (continued)
Entrepreneurs look at the value chain of a product
or a service to pinpoint where the value chain can
be made more effective or to spot where additional
“value” can be added.
Serdar Temiz & Terrence Brown
2015
2015-11-10
How Business Models Emerge (3 of 3)
19. Mark Johnson
The Four-Box Business Model
Serdar Temiz & Terrence Brown
2015
2015-11-10
Customer value
proposition
Key
resources
Key
Process
Profit
formula
20. • A Value Proposition is an overall view of a company's bundle of
products and services that are of value to the customer.
• Customer Segments: segment(s) of customers a company wants
to offer value to.
• A Channel is a means of getting in touch with the customer.
• The Relationship describes the kind of link a company
establishes between itself and the customer.
• The Key Activities describes the arrangement of activities and
resources that are necessary to create value for the customer.
Key Key Resources that can be deployed by the firm to create
value including those that form the basis for a competitive
advantage
• Key Partnership is cooperative agreement between two or more
companies in order to create value for the customer
• The Cost Structure is the representation in money of all the
means employed in the business model.
• The Revenue Streams describes the way a company makes
money through a variety of revenue flows.
2015-11-10
Serdar Temiz & Terrence Brown
2015
21. Serdar Temiz & Terrence Brown
2015
By Alexander Osterwalder & Yves Pigneur
2015-11-10
23. 1. Customer Segments
2. Value proposition
3. Channels
4. Customer Relationships
5. Revenue Streams
6. Key Resource
7. Key Activities
8. Key Partnerships
9. Cost Structure
Serdar Temiz & Terrence Brown
2015
2015-11-10
The 9 Building Blocs of Business Model Canvas
24. • For whom are we creating value?
• Who are our most important customers?
• Customer Segments
– Mass Market
– Niche market
– Segmented - related customer segments: frequent
flier program, bank customers with big assets
– Diversified: Unrelated customer segments: Amazon
– Multi sided: free newspaper-readers and advertisers
Serdar Temiz & Terrence Brown
2015
2015-11-10
1. Customer Segment
25. • Why?
• Who is your customer?
Grave, School, hospital, apotek, free newspaper
• Can everyone be your customer?
• "people who want to buy a flat,"
• "anyone needs job"
• “Everyone who goes to university”
Serdar Temiz & Terrence Brown
2015
2015-11-10
Find a Customer - I
26. Serdar Temiz & Terrence Brown
2015
2015-11-10
• Find a customer for solving a pain
• Use the Customer Profile
• Describe who is making purchasing decision?
IT ? Operations Group? Management?
• Make sure they are happy
• Market is important but
-do not only think market
• Billion dollar market does not start in few minutes
Find a Customer - II
27. IDENTIFIABLE – what distinguishes them?
MEASURABLE – how many belong to your
target segment?
REACHABLE – how to reach, communicate
with each segment
WILLING – do they want it?
ABLE – they want but can they afford it?
Serdar Temiz & Terrence Brown
2015
2015-11-10
Q’s for Customer
28. • Population size
• Population character
• Disposable income levels
• Educational background
• Primary languages
• Infrastructure
• Regulations
• Political affiliation
• And so on…
Serdar Temiz & Terrence Brown
2015
2015-11-10
Q’s for Customer – Macro Level
29. • Customer is important but you can not give all they
want
• Learn to stay No,
• Learn to focus
• Learn to ”change and adopt”
• They may not know what they want: buying process
is mysterious
Serdar Temiz & Terrence Brown
2015
2015-11-10
Keep in Mind Paradox
30. • A bundle that meets that meets a customer's needs or solve
his/her problem.
• Benefits can be tangible and intangible
• Reason why customers pick one business or another.
• Can be
– innovative, new disruptive offer.
– similar to existing offers but just added feature or
attribute in some sort of way.
Serdar Temiz & Terrence Brown
2015
2015-11-10
2. Value Proposition
31. Some Elements that may add to value:
• Newness
• Customization
• Getting job done
• Support
• Price
• Design
• Status/ Brand
• Accessibility
• Risk deduction
• Usability
Serdar Temiz & Terrence Brown
2015
2015-11-10
32. • What pain do we solve for customer?
• What do we deliver for customer?
• What value do we develop for customer
• Which need of customer do we satisfy?
Serdar Temiz & Terrence Brown
2015
2015-11-10
2. Value Proposition – Q’s to Answer
33. •Awareness of products
and services, Evaluation
of value proposition,
Purchase, Delivery,
After sales
•Direct: Brick and mortal
stores, websales, sales
force
•Indirect: wholesales
partner stores,
Value
Proposition
Customer
Segment
Serdar Temiz & Terrence Brown
2015
2015-11-10
3. Channels-I
34. • 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 are most cost-efficient?
Serdar Temiz & Terrence Brown
2015
2015-11-10
3. Channels – Q’s
35. Serdar Temiz & Terrence Brown
2015
2015-11-10
4. Customer Relations
• Customer
acquisition
• Customer
retention
• Boosting sales
(upselling)
Value
Proposition
Customer
Segment
36. Example Customer Services
Can you give some example companies?
• (Dedicated)Personal assistance
• Self Service
• Community
• Co-creation
• Automated
Serdar Temiz & Terrence Brown
2015
2015-11-10
37. • What type of relationship does each of our
Customer Segments expect us to establish
and maintain with them?
• Which ones have we established?
• How costly are they?
• How are they integrated with the rest of our
business model?
Serdar Temiz & Terrence Brown
2015
2015-11-10
4. Customer Relationships
38. • For what value are our customers really willing
to pay?
• One time/ recurring?
• For what do they currently pay?
• How are they currently paying?
• How would they prefer to pay?
• How much does each Revenue Stream
contribute to overall revenues?
Serdar Temiz & Terrence Brown
2015
2015-11-10
5. Revenue Streams
39. Value
Proposition
Customer
Segment
• Asset sale
• Usage fee: use more, pay more
• Subscription: monthly, yearly
• Leasing/Lending/Renting
• Licensing: patents, license fee
• Brokerage fees
• Advertising
Fixed
pricing
Dynamic
pricing
Serdar Temiz & Terrence Brown
2015
2015-11-10
Channels
5. Revenue Streams
40. Fixed
pricing
Dynamic
pricing
• List price
• Product feature
dependent
• Customer segment
dependent
• Volume dependent
• Yield management : hotels,
airlines
• Real-time-market :supply
and demand
• Auctions Price
• Negotiation
Serdar Temiz & Terrence Brown
2015
2015-11-10
42. • What Key Resources do our Value
Propositions require?
• Our Distribution Channels?
• Customer Relationships?
• Revenue Streams?
• What physical resources, intellectual,
human, financial resources do we have?
Serdar Temiz & Terrence Brown
2015
2015-11-10
6. Key Resources
43. • What Key Activities do our Value Propositions
require?
• Our Distribution Channels?
• Customer Relationships?
• Revenue streams?
• Production- Microsoft
• Network/Platform: Facebook, ebay, Visa
Serdar Temiz & Terrence Brown
2015
2015-11-10
7. Key Activities
44. Why Partnership?
– reduce cost,
– Reduction of risk and uncertainty: Web standards
– Acquisition of particular resources and activities: Nokia Windows,
HTC phones
• Strategic alliances between non-competitors
• Coopetition: strategic partnerships between competitors
• Joint ventures to develop new businesses
• Buyer-supplier relationships to assure reliable supplies
Serdar Temiz & Terrence Brown
2015
2015-11-10
8. Key Partnerships
45. • Who are our Key Partners?
• Who are our Key suppliers?
• Which Key Resources are we acquiring from
partners?
• Which Key Activities do partners perform?
Serdar Temiz & Terrence Brown
2015
2015-11-10
8. Key Partnerships - II
46. Business model Cost Structures:
cost-driven
Minimizing
costs
wherever
possible
value-driven
Premium
Value
Propositions
and a high
degree of
personalized
service
Serdar Temiz & Terrence Brown
2015
2015-11-10
9. Cost Structure - I
47. Cost Structure Characteristics:
• Minimizing costs wherever possibleFixed costs
• Premium Value Propositions and a high
degree of personalized service
Variable costs
• Average cost per unit to fall as output
risesThe same Distribution
Economies of scale
• Channels for different products and
servicesmay support multiple products.
Economy of Scope
Serdar Temiz & Terrence Brown
2015
2015-11-10
9. Cost Structure - II
48. • What are the most important costs inherent
in our business model?
• Which Key Resources are most expensive?
• Which Key Activities are most expensive?
Serdar Temiz & Terrence Brown
2015
2015-11-10
9. Cost Structure
49. Serdar Temiz & Terrence Brown
20152015-11-10
By Alexander Osterwalder & Yves Pigneur
51. • Strategic Mission?
• Customer Segments are Hypotesis for startups?
• Fits to New and Existing Business but does it work
in Start ups?
• Metrics?
• Competition? Organisational Structure?
• Unfair Advantage over competitors?
Serdar Temiz & Terrence Brown
2015
2015-11-10
52. Serdar Temiz & Terrence Brown
20152015-11-10
By Alexander Osterwalder & Yves Pigneur
Colors are
important!
!!!
54. Thank you!
Slide will be on slideshare
Serdar Temiz
@serdar_temiz
www.serdartemiz.com
temiz@kth.se
hi@serdartemiz.com
Terrence Brown
@terrence_brown
terrencebrown.net
Serdar Temiz & Terrence Brown
2015
2015-11-10
The Model 914 used the relatively new electrophotography process, which is a dry process that avoids the use of wet chemicals. In seeking potential marketing partners, Haloid repeatedly was turned down by the likes of Kodak, GE, and IBM, who had concluded that there was no future in the technology as seen through the lens of the then-prevalent business model. While the technology was superior to earlier copy methods, the cost of the machine was six to seven times more expensive than alternative technologies. The model of selling the equipment below cost and making up the difference by large margins in the sale of supplies was not viable because the cost of the supplies was about the same as that of the alternatives, so there was little room to maneuver.
Xerox then decided to market the new product itself and developed a new business model to do so. The new model leased the equipment to the customer at a relatively low cost and then charged a per copy fee for copies in excess of 2000 copies per month. At that time, the average business copier produced an average of only 15-20 copies per day. For this model to be profitable to Xerox, the use of copies would have to increase substantially.
Fortunately for Xerox, the quality and convenience of the new copy technology proved itself and companies began to make thousands of copies per day. As a result, Xerox sustained a compound annual growth rate of 41% over a 12 year period. Without this business model, Xerox might not have been successful in commercializing the innovation.
This type of analysis may focus on (1) a single primary activity of the value chain (such as marketing and sales), (2) the interface between one stage of the value chain and another (such as the interface between operations and outgoing logistics), or (3) one of the support activities (such as human resource management).
Why Swedish start ups are global?
Number of Old people increasing..
Which language do you provide service,
Customer support language
No infrastructure for banking, telecom,