Business Models Beyond Profit - Social Entrepreneurship Lecture

how to systematically build! BUSINESS MODELS BEYOND PROFIT Alex Osterwalder, PhD! www.businessmodelgeneration.com Twitter: business_design

this was a three hour lecture given at Jacobs University, Bremen, in the context of impACT3 - a pan-European student competition for social entrepreneurship www.act-for-impact.net sponsored by

the world used to be divided into …

giving…

…and taking

“ Iʼve found that investors typically have two pockets, one for donations and one for ” maximizing proﬁts Matt Scott, co-founder COSMOS Ignite

social impact − + potential old school not-for-proﬁt

proﬁt potential + social impact − + potential old school not-for-proﬁt −

proﬁt potential + old school corporation social impact − + potential old school not-for-proﬁt −

proﬁt potential + old school corporation x social impact − + potential old school not-for-proﬁt −

“ Business must be for proﬁt but proﬁt must also be for purpose ” Mads Kjaer co-founder MYC4

proﬁt potential + new school of old school conscientious corporations entrepreneurs social impact − + potential old school not- for-proﬁts −

interesting?

interesting? YES?

we need new tools to come-up with business models beyond proﬁt

my mission today is to help you…

… systematically look at business models

… and learn how to develop business models

what do business models have to do with social & environmental impact?

it’s key if you want to come up with innovative ways to “do good” AND “do well”

outline

outline approach

outline approach patterns

outline approach patterns attitude

outline approach patterns attitude process

A approach

does…

… have a business model?

buzz  group 

discuss with your neighbor what a business model is and write down your deﬁnition

which elements did you mention when you deﬁned a business model? ?

“ there is a lack of deﬁnition ”

“ few companies understand their existing business model well enough ”

so we came up with a way to master business models through…

the BUSINESS MODEL CANVAS

Def_Business Model a business model describes the rationale of how an organization creates, delivers, and captures value

9 BUILDING BLOCKS

the 9 building blocks of a business model images by JAM

CUSTOMER SEGMENTS images by JAM

VALUE PROPOSITIONS images by JAM

CHANNELS images by JAM

CUSTOMER RELATIONSHIOPS images by JAM

REVENUE STREAMS images by JAM

KEY RESOURCES images by JAM

KEY ACTIVITIES images by JAM

KEY PARTNERS images by JAM

COST STRUCTURE images by JAM

key value customer activities proposition relationships key customer partners segments cost revenue structure key distribution streams resources channels images by JAM

images by JAM

OVERLAY PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS KEY DISTRIBUTION RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS images by JAM

THE BUSINESS MODEL CANVAS PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS KEY DISTRIBUTION RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS

THE BUSINESS MODEL CANVAS PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS building block! building building building block! block! block! building block! KEY DISTRIBUTION RESOURCES CHANNELS building block! building block! building block! COST STRUCTURE REVENUE STREAMS building building building block! block! block!

example 

ʻs business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS KEY DISTRIBUTION RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS

ʻs business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS wealthy lend to poor westerners! ! entrepreneurs KEY DISTRIBUTION RESOURCES CHANNELS Kiva.org! COST STRUCTURE REVENUE STREAMS

ʻs business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS wealthy lend to poor westerners! ! entrepreneurs KEY DISTRIBUTION RESOURCES CHANNELS Kiva.org! loans! poor local entrepreneu rs! microfinance institutions! COST STRUCTURE REVENUE STREAMS

ʻs business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS wealthy lend to poor westerners! ! entrepreneurs KEY DISTRIBUTION RESOURCES CHANNELS Kiva.org! loans! poor local entrepreneu rs! microfinance institutions! COST STRUCTURE REVENUE STREAMS optional donations on top of loan!

ʻs business model PARTNER KEY OFFER CUSTOMER CUSTOMER ACTIVITIESeningMF NETWORK sc re s! RELATIONSHIPS SEGMENTS risk insti tution management! wealthy managing lend to poor westerners! ! platform! entrepreneurs KEY DISTRIBUTION RESOURCES CHANNELS Kiva.org! loans! Kiva.org poor local entrepreneu Platform ! rs! microfinance institutions! COST STRUCTURE REVENUE STREAMS optional donations on top of loan!

ʻs business model PARTNER KEY OFFER CUSTOMER CUSTOMER ACTIVITIESeningMF NETWORK sc re s! RELATIONSHIPS SEGMENTS risk insti tution management! wealthy managing lend to poor westerners! ! platform! entrepreneurs Paypal! KEY DISTRIBUTION RESOURCES CHANNELS Kiva.org! loans! local Kiva.org poor microfinance local entrepreneu Platform ! rs! institutions! microfinance institutions! COST STRUCTURE REVENUE STREAMS optional donations on top of loan!

ʻs business model PARTNER KEY OFFER CUSTOMER CUSTOMER ACTIVITIESening MF NETWORK re sc s! RELATIONSHIPS SEGMENTS risk insti tution management! wealthy managing lend to poor westerners! ! platform! entrepreneurs Paypal! KEY DISTRIBUTION RESOURCES CHANNELS Kiva.org! loans! local Kiva.org poor microfinance local entrepreneu Platform ! rs! institutions! microfinance institutions! COST STRUCTURE REVENUE STREAMS platf optional risk orm screening! donations on ! management! top of loan!

the Canvas is a handy tool

break‐out  session 

map out the renowned business model of…

a rough sketch of Grameen Bank…

ʻs business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS personal! KEY micro-loans! DISTRIBUTION RESOURCES CHANNELS poor entrepreneurs! branches! COST STRUCTURE REVENUE STREAMS

ʻs business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS personal! KEY micro-loans! DISTRIBUTION RESOURCES CHANNELS poor entrepreneurs! branches! COST STRUCTURE REVENUE STREAMS interest rates!

ʻs business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS risk management! lending & personal! collecting payments! KEY micro-loans! DISTRIBUTION government! RESOURCES CHANNELS poor entrepreneurs! branches! brand/ trust! branches! capital! COST STRUCTURE REVENUE STREAMS interest rates!

ʻs business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS risk management! lending & personal! collecting payments! KEY micro-loans! DISTRIBUTION government! RESOURCES CHANNELS poor entrepreneurs! branches! brand/ trust! branches! capital! COST STRUCTURE REVENUE STREAMS capital interest costs! rates! people!

B patterns

“ pattern in architecture is the idea of capturing architectural design ideas as archetypical ” and reusable descriptions Christopher Alexandert, Architect

buzz  group 

how does a donor- funded business model look like? ?

3rd party-funded business models PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS proposal proposal! writing! donor! KEY DISTRIBUTION RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS donations!

3rd party-funded business models PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS proposal proposal! writing! donor! KEY DISTRIBUTION RESOURCES CHANNELS reputation! mission! recipient! COST STRUCTURE REVENUE STREAMS donations!

3rd party-funded business models PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS to ency tend s on focu oney m do nor ( e)! proposal c writing! proposal! sour donor! KEY DISTRIBUTION RESOURCES CHANNELS t no direc ” ck reputation! edba iary! “$fe nefic e mission! fr om b recipient! COST STRUCTURE REVENUE STREAMS donations!

“ The dependence of nonproﬁts on begging – oops, I mean fundraising – limits the sectorʼs self-respect, independence, ” vision, and impact Michael Shuman, author of “Going Local”

example 

Iqbal Quadir dream had a

customer-funded business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS mobile connectivity! KEY DISTRIBUTION RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS

customer-funded business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS network mobile management! connectivity! KEY DISTRIBUTION RESOURCES CHANNELS Telenor! license! network! COST STRUCTURE REVENUE STREAMS network management!

customer-funded business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS network mobile management! connectivity! KEY DISTRIBUTION villagers! RESOURCES CHANNELS vide Telenor! license! how do you pro to c onnectivity n they network! vill agers whe y COST STRUCTURE poor to bu are too REVENUE STREAMS a phone?! network management!

customer-funded business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS n by providing a loan inte rmediary a e and to b uy a phon network s! mobile c all service Grameen management! connectivity! resell Bank! KEY DISTRIBUTION villagers! RESOURCES CHANNELS phone ladies! Telenor! license! network! COST STRUCTURE REVENUE STREAMS network management!

customer-funded business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS network mobile Grameen management! connectivity! Bank! KEY DISTRIBUTION villagers! RESOURCES CHANNELS phone income ladies! opportunity! Telenor! license! phone ladies! network! Grameen branches! COST STRUCTURE REVENUE STREAMS network management!

customer-funded business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS network mobile Grameen management! connectivity! Bank! KEY DISTRIBUTION villagers! RESOURCES CHANNELS phone income ladies! opportunity! Telenor! license! phone ladies! network! Grameen branches! COST STRUCTURE REVENUE STREAMS communication network revenues! management!

RESULTS

Rashmi, 24 Bangladeshi village phone lady 2-3 $ 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

design from the customer perspective PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS KEY DISTRIBUTION RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS

blended value / triple bottom line social and environmental cost

blended value / triple bottom line social and environmental cost social and environmental beneﬁt

C attitude

“ If you freeze to an idea too quickly, you fall in love with it. If you reﬁne it too quickly, you become attached to it and it becomes very hard to keep exploring, to keep looking for better. ” Jim Glymph, Gehry Partners

business model prototyping napkin sketch

business model prototyping napkin sketch Canvas

business model prototyping napkin sketch Canvas business case

business model prototyping napkin sketch Canvas business case ﬁeld test

key is: ﬁnding the appropriate business model

so you need to generate options ﬁrst!

buzz  group 

a silly exercise

the silly cow exercise!

Muuuuhhhh

sketch out 3 business models..

…in which I, the cow, play the main act!

letʼs look at some examples…

cows-for-advertising

rent-a-cow-for-the-weekend

got it?

you got 2 minutes!

you got 2 minutes! GO!

example 

D process

ﬁve phases of business model design mobilize set the stage

ﬁve phases of business model design mobilize understand set the stage immersion

ﬁve phases of business model design mobilize understand design set the stage immersion inquiry

ﬁve phases of business model design mobilize understand design implement set the stage immersion inquiry execution

ﬁve phases of business model design mobilize understand design implement manage set the stage immersion inquiry execution evolution

financial spreadsheets environment analysis implementation roadmap SWOT and uncertainty analysis 141

www.businessmodelgeneration.com

THANK YOU!! www.businessmodelgeneration.com www.alexosterwalder.com (upcoming) www.businessmodelalchemist.com (upcoming new blog) Twitter: business_design

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Business Models Beyond Profit - Social Entrepreneurship Lecture

by Alexander Osterwalder on Aug 25, 2009

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