Describe and Improve your Business Model

How to Describe and Improve your Business Model Openinnovation, Dublin, 24 Oct 2007 © Arvetica, September 2007

photos are from flickr under a « creative commons » license - authors are referenced in the comment section

IBM Global CEO Survey “ Business model innovation matters” and it is a top priority of CEOs

How Do We Describe Business Models Today?

Going to War without a Map… Karl von Clausewitz (~1800)

Insufficiently Well Here CEOs 10° Managers 60° Here Staff 360° Ok

The Result

Could it Be Different?

It Exists in Business Process Modeling

A Management Toolbox for Business Model Design and Innovation

A Template to Describe Business Models 42’941 downloads

Describe a Business Model: 9 Building Blocks CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE

Example: Bizner Bank CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS entrepreneurs automatized relationship BizBallance (integrated banking and accounting) monthly fee Reeleezee IT infra mgmt account mgmt, transactions, etc. IT infrastructure, marketing, partnership costs DISTRIBUTION CHANNELS Web KEY ISSUES TO SOLVE IT, accounting, banking

Xerox 914 Business Model CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE large companies transactional sales team 1 time sales fee photocopiers R&D manufacturing regular large companies lease high-end photocopiers sales teams lease & 4ct per copy (2k+) financing & billing

Multis Example REVENUES COSTS KEY ISSUES TO SOLVE ACTIVITIES PARTNERS RELATIONS OFFER CLIENTS CHANNELS total remanufacturing solutions of high end IT platforms manufacturing long term deep integration brand manufacturers customers base manufacturing IT brand manufacturers sales commission re-marketing inventory management systems knowledge manage secondary supply chain reverse logistics manufacturing inventory « sales » team brand manufacturers of high end IT platforms flat fee

The Process

find a way to play poker to unlock these models Prof Henry Chesbrough, Berkeley “ ”

5 Steps to Business Model Design & Renewal
describe existing business model
assess strengths and weaknesses
brainstorm on improvements & opportunities
turn new model into a project roadmap
1 2 4 3 VISUALIZE ASSESS RENEW PLAN 5 IMPLEMENT
implement project roadmap

Visualize

Visualizing

Visualizing Amazon.com

REVENUES COSTS KEY ISSUES TO SOLVE ACTIVITIES PARTNERS RELATIONS OFFER CLIENTS CHANNELS selling stuff on the Web IT infra automatized relationships mass customer data services Amazon.com data grid partners selling stuff Amazon.com warehousing & distribution distribution content management product selection product search marketing affiliates

Assess, Design & Renew

good ideas are widely distributed, nobody has a monopoly on innovation Prof Henry Chesbrough, Berkeley “ ”

Assessing Amazon.com
where are some of Amazon.com‘s highest costs located?
what are some of Amazon.com‘s core competencies ?
how could they leverage these competencies ?
how could they leverage investments ?

REVENUES COSTS KEY ISSUES TO SOLVE ACTIVITIES PARTNERS RELATIONS OFFER CLIENTS CHANNELS selling stuff on the Web IT infra automatized relationships mass customer data services Amazon.com data grid partners selling stuff Amazon.com warehousing & distribution distribution content management product selection product search marketing affiliates

Leveraging IT at Amazon.com

REVENUES COSTS KEY ISSUES TO SOLVE ACTIVITIES PARTNERS RELATIONS OFFER CLIENTS CHANNELS selling stuff on the Web IT infra automatized relationships mass customer data services Amazon.com data grid partners selling stuff Amazon S3 Amazon.com Internet API Web2.0 companies warehousing & distribution distribution content management product selection A9 product search data storage fees product search search engine revenues e-commerce sites Internet marketing affiliates

Changing the Business Model: Examples

Building on Existing Customer Relationships: Walmart Clinics CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE shoppers frequent relationship Walmart Clinics health services medical knowledge and staff

Changing the Game: Cirque de Soleil CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE theater & opera visiitors artistic circus without lions stage & manage spectacle & logistics create art & atmosphere higher ticket prices

Demand-Creating Alliances: Intel Processor Platform CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE end users speedy processors partners with ever “heavier” applications

Planning & Implemention

Introducing a Family Office Service through a Partnership CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE affluent clients (100k-1+mio) tight personal relationships branches & bankers local private banking mainly product revenues ultra high net worth individuals family office services revenue sharing agreement local branch of family office tight relationships with UHNWI PARTNER NETWORK PARTNER NETWORK independent multi-family office

Project Roadmap OFFER CLIENT RELATIONSHIPS CLIENT SEGMENT ACTIVITIES PARTNER REVNUE STREAMS ACQUISITION CHANNELS family office services UHNWI relationships UHNWI client trust, internal cooperation mutli-family office partner revenue sharing relationship managers & new office design collaboration process training program develop marketing material internal concept presentation generate prioritized prospect list work out client presentation establish acquisition learning process relationship manager collaboration process team set-up client reception area profit center set-up set-up CRM tool

the only thing that’s not designed is nature Dave Kelly, IDEO “ ”

business people don’t just need to understand designers better; they need to become designers Roger Martin, Dean Rotman School “ ”

Thank You

www.arvetica.com business-model-design.blogspot.com

Alexander Osterwalder
Before joining Arvetica Alex founded Business Model Design, a consulting boutique specialized in business model innovation. Besides consulting the private sector he was also involved in building up a globally active NGO based in Thailand in the field of knowledge management, HIV/AIDS and malaria. Prior to consulting, Alex worked at the University of Lausanne, as an entrepreneur in the banking sector and as an online journalist for the major Swiss business magazine BILANZ. He holds a PhD and Masters degree of the HEC Business School of the University of Lausanne, Switzerland. Alex is an active member of the IMD based Open World Initiative (OWI).

Waster Water Treatment Example

offer customer segment revenue stream distribution channel waste water treatment system Canadian mining sites one time sales fee sales force

sell waste water treatment system Canadian mining sites one time sales fee sales force total waste water treatment management Canadian mining sites recurring service fee sales force

sell waste water treatment system Canadian mining sites one time sales fee sales force core activities core capabilities costs partner network client relationship build treatment systems water treatment knowledge production costs suppliers follow-up

build treatment systems water treatment knowledge production costs suppliers follow-up total waste water treatment management Canadian mining sites recurring service fee sales force dispatch repair teams error free systems development call center variable costs of repair services

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Describe and Improve your Business Model

by Alexander Osterwalder on Oct 22, 2007

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