Describe and Improve your Business Model

Slide 1: How to Describe and Improve your Business Model Openinnovation, Dublin, 24 Oct 2007 © Arvetica, September 2007 © Arvetica Page 1

Slide 2: photos are from flickr under a « creative commons » license - authors are referenced in the comment section © Arvetica Page 2

Slide 3: IBM Global CEO Survey “Business model innovation matters” and it is a top priority of CEOs © Arvetica Page 3

Slide 4: How Do We Describe Business Models Today? © Arvetica Page 4

Slide 5: Going to War without a Map… Karl von Clausewitz (~1800) © Arvetica Page 5

Slide 6: Insufficiently Well Ok Here Here CEOs 10° Managers 60° Staff 360° © Arvetica Page 6

Slide 7: The Result © Arvetica Page 7

Slide 8: Could it Be Different? © Arvetica Page 8

Slide 9: It Exists in Business Process Modeling © Arvetica Page 9

Slide 10: A Management Toolbox for Business Model Design and Innovation © Arvetica Page 10

Slide 11: A Template to Describe Business Models 42’941 downloads © Arvetica Page 11

Slide 12: Describe a Business Model: 9 Building Blocks PARTNER CLIENT CLIENT CLIENT CLIENT CLIENT NETWORK RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS SEGMENTS CLIENT KEY ISSUES TO CLIENT CLIENT CLIENT OFFER CLIENTS CLIENT CLIENT CLIENT SEGMENTS SOLVE SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS COMPETENCIES, DISTRIBUTION CLIENT CLIENT CLIENT ACTIVITIES, CLIENT CHANNELS SEGMENTS SEGMENTS SEGMENTS RESOURCES SEGMENTS COST REVENUE CLIENT CLIENT CLIENT CLIENT STRUCTURE FLOWS SEGMENTS SEGMENTS SEGMENTS SEGMENTS © Arvetica Page 12

Slide 13: Example: Bizner Bank PARTNER automatized CLIENT CLIENT CLIENT Reeleezee CLIENT CLIENT NETWORK RELATIONSHIPS relationship SEGMENTS SEGMENTS SEGMENTS SEGMENTS BizBallance KEYaccounting, IT, ISSUES TO CLIENT CLIENT CLIENT CLIENT (integrated banking OFFER entrepreneurs CLIENTS CLIENT CLIENT CLIENT banking SEGMENTS SOLVE SEGMENTS SEGMENTS SEGMENTS andSEGMENTS accounting) SEGMENTS SEGMENTS COMPETENCIES, IT infra mgmt DISTRIBUTION CLIENT Web CLIENT CLIENT ACTIVITIES, account mgmt, CLIENT CHANNELS SEGMENTS SEGMENTS SEGMENTS RESOURCES transactions, etc. SEGMENTS IT infrastructure, COST REVENUE CLIENT CLIENT marketing, monthly fee CLIENT CLIENT STRUCTURE FLOWS SEGMENTS SEGMENTS partnership costs SEGMENTS SEGMENTS © Arvetica Page 13

Slide 14: Xerox 914 Business Model PARTNER CLIENT CLIENT transactional CLIENT regular CLIENT CLIENT NETWORK RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS SEGMENTS financing & leaseCLIENT high-end large R&D CLIENT KEY ISSUES TO photocopiers CLIENT CLIENT OFFER CLIENTS CLIENT CLIENT CLIENT SEGMENTS SOLVE billing photocopiers companies manufacturing SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS COMPETENCIES, DISTRIBUTION CLIENT sales teams sales team CLIENT CLIENT ACTIVITIES, CLIENT CHANNELS SEGMENTS SEGMENTS SEGMENTS RESOURCES SEGMENTS leaseCLIENT per time 4ct & sales 1 REVENUE COST CLIENT CLIENT CLIENT copy (2k+) STRUCTURE FLOWS fee SEGMENTS SEGMENTS SEGMENTS SEGMENTS © Arvetica Page 14

Slide 15: Multis Example long term IT brand PARTNERS RELATIONS deep manufacturers integration manage reverse secondary brand logistics supply chain re-marketing manufacturers total customers base remanufacturing KEY ISSUES systems ACTIVITIES OFFER CHANNELS CLIENTS manufacturing solutions of high knowledge brand TO SOLVE end IT platforms « sales » manufacturers team of high end IT inventory manufacturing platforms management sales manufacturing commission COSTS REVENUES inventory flat fee © Arvetica Page 15

Slide 16: The Process © Arvetica Page 16

Slide 17: “ find a way to play poker to unlock these models ” Prof Henry Chesbrough, Berkeley © Arvetica Page 17

Slide 18: 5 Steps to Business Model Design & Renewal 1 2 3 4 5 IMPLEMENT VISUALIZE ASSESS RENEW PLAN → brainstorm on → turn new model → implement → describe → assess project existing strengths and improvements into a project roadmap business model weaknesses & opportunities roadmap © Arvetica Page 18

Slide 19: Visualize © Arvetica Page 19

Slide 20: © Arvetica Page 20

Slide 21: Visualizing © Arvetica Page 21

Slide 22: Visualizing Amazon.com © Arvetica Page 22

Slide 23: automatized PARTNERS RELATIONS partners relationships product Amazon.com selection content selling stuff mass management on the Web customer distribution affiliates KEY ISSUES warehousing ACTIVITIES OFFER CHANNELS CLIENTS TO SOLVE & distribution product search data services Amazon.com data grid selling stuff IT infra COSTS REVENUES marketing © Arvetica Page 23

Slide 24: Assess, Design & Renew © Arvetica Page 24

Slide 25: “ good ideas are widely distributed, nobody has a monopoly on innovation ” Prof Henry Chesbrough, Berkeley © Arvetica Page 25

Slide 26: 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? © Arvetica Page 26

Slide 27: automatized PARTNERS RELATIONS partners relationships product Amazon.com selection content selling stuff mass management on the Web customer distribution affiliates KEY ISSUES warehousing ACTIVITIES OFFER CHANNELS CLIENTS TO SOLVE & distribution product search data services Amazon.com data grid selling stuff IT infra COSTS REVENUES marketing © Arvetica Page 27

Slide 28: Leveraging IT at Amazon.com © Arvetica Page 28

Slide 29: automatized PARTNERS RELATIONS partners relationships product Amazon.com selection content selling stuff mass management on the Web customer distribution affiliates KEY ISSUES Web2.0 warehousing ACTIVITIES OFFER CHANNELS CLIENTS Amazon S3 TO SOLVE companies & distribution product Internet API search A9 product e-commerce data services search sites Amazon.com Internet data grid selling stuff IT infra data storage COSTS REVENUES fees marketing search engine revenues © Arvetica Page 29

Slide 30: Changing the Business Model: Examples © Arvetica Page 30

Slide 31: Building on Existing Customer Relationships: Walmart Clinics frequent PARTNER CLIENT CLIENT CLIENT CLIENT CLIENT relationship NETWORK RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS SEGMENTS CLIENT Walmart KEY ISSUES TO medical knowledge CLIENT CLIENT CLIENT OFFER shoppers CLIENTS CLIENT CLIENT CLIENT SEGMENTS Clinics SOLVE and staff SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS COMPETENCIES, DISTRIBUTION CLIENT CLIENT CLIENT ACTIVITIES, health services CLIENT CHANNELS SEGMENTS SEGMENTS SEGMENTS RESOURCES SEGMENTS COST REVENUE CLIENT CLIENT CLIENT CLIENT STRUCTURE FLOWS SEGMENTS SEGMENTS SEGMENTS SEGMENTS © Arvetica Page 31

Slide 32: Changing the Game: Cirque de Soleil PARTNER CLIENT CLIENT CLIENT CLIENT CLIENT NETWORK RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS SEGMENTS theater & opera KEY ISSUES & create art TO artistic circus CLIENT CLIENT CLIENT CLIENT OFFER CLIENTS CLIENT CLIENT CLIENT visiitors atmosphere SEGMENTS SOLVE without lions SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS stage & manage COMPETENCIES, DISTRIBUTION CLIENT CLIENT CLIENT spectacle & ACTIVITIES, CLIENT CHANNELS SEGMENTS SEGMENTS SEGMENTS RESOURCES logistics SEGMENTS higher ticket COST REVENUE CLIENT CLIENT CLIENT CLIENT STRUCTURE FLOWS prices SEGMENTS SEGMENTS SEGMENTS SEGMENTS © Arvetica Page 32

Slide 33: Demand-Creating Alliances: Intel Processor Platform partners with PARTNER CLIENT CLIENT everCLIENT “heavier” CLIENT CLIENT NETWORK RELATIONSHIPS SEGMENTS SEGMENTS applications SEGMENTS SEGMENTS speedy CLIENT KEY ISSUES TO end users CLIENT CLIENT CLIENT OFFER CLIENTS CLIENT CLIENT CLIENT SEGMENTS SOLVE processors SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS COMPETENCIES, DISTRIBUTION CLIENT CLIENT CLIENT ACTIVITIES, CLIENT CHANNELS SEGMENTS SEGMENTS SEGMENTS RESOURCES SEGMENTS COST REVENUE CLIENT CLIENT CLIENT CLIENT STRUCTURE FLOWS SEGMENTS SEGMENTS SEGMENTS SEGMENTS © Arvetica Page 33

Slide 34: Planning & Implemention © Arvetica Page 34

Slide 35: Introducing a Family Office Service through a Partnership tight relationships tightCLIENT personal independent CLIENT PARTNER CLIENT CLIENT withCLIENT UHNWI RELATIONSHIPS relationships multi-family office NETWORK SEGMENTS SEGMENTS SEGMENTS SEGMENTS ultra high net family office affluent clients local private CLIENT KEY ISSUES TO CLIENT CLIENT CLIENT OFFER CLIENTS CLIENT CLIENT CLIENT worth individuals services (100k-1+mio) SEGMENTS SOLVE banking SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS SEGMENTS localCLIENT&of branch COMPETENCIES, branches DISTRIBUTION CLIENT CLIENT ACTIVITIES, family office CLIENT CHANNELS bankers SEGMENTS SEGMENTS SEGMENTS RESOURCES SEGMENTS revenueproduct mainly sharing COST REVENUE CLIENT CLIENT CLIENT CLIENT agreement STRUCTURE FLOWS revenues SEGMENTS SEGMENTS SEGMENTS SEGMENTS © Arvetica Page 35

Slide 36: Project Roadmap CLIENT UHNWI SEGMENT family office work out client OFFER services presentation CLIENT UHNWI set-up CRM tool RELATIONSHIPS relationships relationship ACQUISITION generate prioritized relationship manager managers & new client reception area CHANNELS prospect list collaboration process office establish acquisition develop marketing training program learning process material client trust, internal internal concept ACTIVITIES team set-up cooperation presentation mutli-family office design collaboration PARTNER partner process REVNUE revenue sharing profit center set-up STREAMS © Arvetica Page 36

Slide 37: “ the only thing that’s not ” designed is nature Dave Kelly, IDEO © Arvetica Page 37

Slide 38: “ business people don’t just need to understand designers better; they need to become ” designers Roger Martin, Dean Rotman School © Arvetica Page 38

Slide 39: Thank You © Arvetica Page 39

Slide 40: www.arvetica.com business-model-design.blogspot.com © Arvetica Page 40

Slide 41: 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). © Arvetica Page 41

Slide 42: Waster Water Treatment Example © Arvetica Page 42

Slide 43: waste water Canadian sales force treatment offer distribution channel customer segment mining sites system one time revenue stream sales fee © Arvetica Page 43

Slide 44: total waste water sell waste water Canadian sales force treatment treatment system mining sites management recurring one time servicefee sales fee © Arvetica Page 44

Slide 45: client partner network suppliers follow-up relationship water treatment build treatment sell waste water Canadian core capabilities core activities sales force knowledge systems treatment system mining sites one time sales production costs costs fee © Arvetica Page 45

Slide 46: suppliers follow-up call center water build total waste water error free Canadian dispatch treatment treatment treatment sales force systems mining sites repair teams knowledge systems management development variable costs production recurring of repair costs service fee services © Arvetica Page 46