Published on March 10, 2014
2 Business model: How a company creates value for itself while delivering products or services for customers. Steve Blank
3 • In basic usage provides a good checklist of important things • Can be used as a very advanced tool by any kind of company to model and iterate new innovative business models very fast • Orinally created by Alex Osterwalder & Yves Pigneur
4 •Validate the assumptions you make •Make several iterations as your learn more about the assumptions you make •If needed, writing a traditional business plan is straightforward based on BMC
5 INDUSTRY FORCES KEY TRENDS MARKET FORCES MACRO- ECONOMIC FORCES technology society & culture regulation socioeconomic Segments Needs & demands Switching costs Market issues Stakeholders Competitors Value chain actors Substitutes Capital markets Global markets Other resources Infrastructure
6 Questions Examples What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? Newness Performance Customization “Getting the Job Done” Design Brand/Status Price Cost Reduction Risk Reduction Accessibility Convenience/ Usability
7 Short version
8 Longer versions • What do we provide, what are the benefits, how it’s delivered and how it’s different • Increase your website sales and conversions. No coding or HTML knowledge required” (Visual Website Optimizer). No differentiation, though. • World’s #1 Project Management App (Basecamp) • End result customer wants + specific period of time + address the objections (Dane Maxwell) • Hot fresh pizza delivered to your door in 30 minutes or it’s free (Domino’s) • Start accepting credit cards today. No additional fees and next day deposits. (Square) • “We help X do Y doing Z” (Steve Blank) • We help non-technical marketers discover return on investment in social media by turning engagement metrics into revenue metrics.
9 Questions Examples For whom are we creating value? Who are our most important customers? Mass Market Niche Market Segmented Diversified Multi-sided Platform
10 WHY? Pains Gains Jobs You observe in customers WHAT? Product Gain creators Pain relievers You design for customers Product/Market -fit
11 Questions Examples 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? How are we integrating them with customer routines? How do we raise awareness? How do we help customers evaluate our Value Proposition? How do we allow customers to purchase products and services? How do we deliver a Value Proposition to customers? How do we provide post-purchase customer support?
12 Questions Examples What type of relationship does each of our Customer? Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? Personal assistance Dedicated Personal Assistance Self-Service Automated Services Communities Co-creation
13 Questions Examples For what value are our customers really willing to pay? 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? Types Asset sale Usage fee Subscription Fees Lending/ Renting/ Leasing Licensing Brokerage fees Advertising Fixed pricing List Price Feature dependent Segment dependent Volume dependent Dynamic pricing Negotiation Yield Management Real-time-Market
14 Questions Examples What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? Types of resources Physical Intellectual (brand patents, copyrights, data) Human Financial
15 Questions Examples Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? motivations for partnerships Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities
16 Questions Examples What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? Production Problem Solving Platform/Network
17 Questions Examples What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? Cost Driven leanest cost structure, low price value proposition, automation, outsourcing Value Driven focused on value creation, premium value proposition sample characteristics Fixed Costs (salaries, rents, utilities) Variable costs Economies of scale and scope
18 1. How much do switching costs prevent your customers from churning? • iPod with “1000 songs in your pocket” 2. How scalable is your business model? • Facebook 3. Does your business model produce recurring revenues? • Redhat, SaaS 4. Do you earn before you spend? • Dell, just-in-time manufacturing 5. How much do you get others to do the work? • Ikea, Facebook 6. Does your business model provide built-in protection from competition? • Apple Ecosystem 7. Is your business model based on a game changing cost structure? • Skype vs. Telcos
20 10. Don't know how you'll measure success (Key metrics are missing) 9. Marketing to everyone 8. Ending up on local maximum 7. Problems are not specific enough 6. No unfair disadvantage story 5. A weak unique value proposition 4. Not enough runway 3. No significant path to customers 2. No monetizable pain 1. Falling in love with the solution
21 You cannot business-model your way out of a shitty product Tim O’Neil
Topi Järvinen firstname.lastname@example.org twitter.com/topij www.nestholma.com/ twitter.com/nestholma www.facebook.com/Nestholma www.nestholma.com
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