East African Business Summit - business model session

Slide 1: competitive advantage through BUSINESS innovation MODEL Dr. Alexander Osterwalder, July ‘08 East African Business Summit

Slide 3: William Focus: stay ahead of CEO competition Regional Retail Bank WAIT

Slide 4: Eddie Focus: reach global Entrepreneur markets and strive Music & Film Industry WAIT

Slide 5: Charlene Focus: find institutions Senior Investment Specialist that stand out Africa Advisor to Pension Funds WAIT

Slide 6: they’re all looking for …

Slide 7: the most competitive BUSINESS MODEL

Slide 10: global CEO survey

Slide 11: “ In the operations area, much of the innovation and cost savings that could be achieved has already been achieved. Our greatest focus is on business model innovation, which is where the greatest benefits lie. ” IBM Global CEO Study 2006

Slide 13: “Nearly all CEOs are adapting their business models — two-thirds are implementing extensive innovations. More than 40 percent are changing their enterprise models to be more collaborative. ” IBM Global CEO Study 2008

Slide 14: is business model innovation on your agenda?

Slide 15: CONCLUSION focusing on business model innovation pays off 1

Slide 18: iPod + iTunes

Slide 19: CONCLUSION business model innovation leverages product innovation 2

Slide 22: low cost short haul high-speed trains fractional jet ownership low cost long haul business class only

Slide 23: CONCLUSION multiple business models compete in one industry - which one’ s right for you? 3

Slide 24: ♯1 focusing on business model innovation pays off ♯2 business model innovation leverages product innovation ♯3 multiple business models compete in one industry

Slide 25: how can we get a grasp of business models? ?

Slide 26: so how do YOU describe a business model?

Slide 27: “ A business model is nothing else than a representation of how an organization makes (or intends to make) money ”

Slide 28: yet, that is not enough to work with…

Slide 29: 90’000 views 11’500+ downloads http://business-model-design.blogspot.com

Slide 30: CLIENT CUSTOMER CLIENT KEY ACTIVITIES CLIENT CLIENT SEGMENTS RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS PARTNER CLIENT CLIENT CUSTOMER CLIENT CLIENT OFFER CUSTOMER HOW? NETWORK SEGMENTS SEGMENTS WHAT? CLIENT SEGMENTS SEGMENTS WHO? CLIENT SEGMENTS SEGMENTS SEGMENTS DISTRIBUTION CLIENT CLIENT KEY RESOURCES CLIENT CLIENT CHANNELS SEGMENTS SEGMENTS SEGMENTS SEGMENTS COST REVENUE $? CLIENT CLIENT STRUCTURE SEGMENTS €? CLIENT CLIENT FLOWS SEGMENTS SEGMENTS SEGMENTS

Slide 31: Apple’s iPod & iTunes activities relationship hard- & software lifestyle brand design offer brand CLIENT CLIENT CLIENT clients partners KEY ACTIVITIES lasting ;-) management SEGMENTS RELATIONSHIPS SEGMENTS hardware IT platform suppliers management stylish MP3 player PARTNER “high-end” CLIENT CLIENT content producers OFFER CLIENT NETWORK Offer multi-media consumer SEGMENTS SEGMENTS SEGMENTS content Apple stores & Brand & People dealer networks CLIENT DISTRIBUTION CLIENT KEY RESOURCES iTunes software mac.com SEGMENTS CHANNELS SEGMENTS multi-media rights iTunes resources channels hard- & software hardware development revenues CLIENT COST STRUCTURE REVENUE multi-media CLIENT marketing SEGMENTS revenues FLOWS SEGMENTS costs revenues digital rights costs

Slide 32: how do you work with the business model CANVAS

Slide 33: what is your business model? PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS what type of what are the key relationships do you who are your most activities and key build with your important strategic processes in your what do you offer your customers? customers in terms of who are your partners? business model? products and services? do you have a customer customers? who assists you with relationship management strategy? can you describe the strategic resources and what do your customers pay different types of activities? for? customers you are KEY DISTRIBUTION targeting? which internal activities why do customers come to could you externalize at RESOURCES your company? CHANNELS how is each of your higher quality and lower customer segments costs? what are the most how does your offer differ different? from that of other service how do you reach crucial and costly providers? resources in your customers and acquire business model? them? (people, networks, locations, through which channels do skills, …) you interact with customers? COST STRUCTURE REVENUE STREAMS / PRICING how does your cost structure look like? what is your revenue structure? what are the most important costs of running your how do you earn money? business model? what type of revenues do you earn? (transaction fees, subscriptions, service fees, …) http://business-model-design.blogspot.com

Slide 35: what’s so POWERFUL about this?

Slide 36: it is visual

Slide 37: visual blueprint

Slide 38: it is holistic

Slide 39: strategic fit

Slide 40: it fosters co-creation

Slide 41: participation

Slide 42: it allows prototyping

Slide 43: creativity

Slide 44: what about the PROCESS ?

Slide 45: The 5 steps of business model design & innovation 1 VISUALIZE 2 ASSESS 3 INNOVATE 4 PLAN 5 IMPLEMENT → describe existing → assess → brainstorm on → turn new model → communicate business model strengths and improvements & into a project & implement weaknesses opportunities roadmap

Slide 46: example of an innovative BUSINESS MODEL

Slide 49: PARTNER CLIENT mobile phone CLIENT rural Telenor OFFER Offer CLIENT NETWORK SEGMENTS connectivity SEGMENTS villagers SEGMENTS KEY Network CLIENT RESOURCES SEGMENTS ? DISTRIBUTION CLIENT CHANNELS SEGMENTS

Slide 50: Grameen Bank (microfinance) • 1138 branches • 12’801 employees • 2.3 million borrowers • 39’172 villages covered • $33 million lent monthly • 94% of borrowers female

Slide 51: $ $ $

Slide 52: $ $ $

Slide 53: loansKEY & billing CLIENT CLIENT CLIENT ACTIVITIES SEGMENTS RELATIONSHIP SEGMENTS Grameen Bank PARTNER CLIENT mobile phone CLIENT phone rural Telenor OFFER Offer CLIENT NETWORK SEGMENTS connectivity SEGMENTS villagers ladies SEGMENTS Telenor KEY Network CLIENT RESOURCES SEGMENTS ? DISTRIBUTION Grameen CLIENT Bank CHANNELS SEGMENTS COST CLIENT REVENUE call CLIENT STRUCTURE SEGMENTS revenues FLOWS SEGMENTS

Slide 54: RESULTS

Slide 55: there are about 250’000 women retailing telephone services in 60’000 villages giving access to about 100 million people

Slide 56: the 250’000 telephones are producing revenues at an annual rate of well over $100 million for GrameenPhone

Slide 57: each entrepreneur makes about $2 in profits per day or about $700 per year

Slide 58: power loansKEY & billing CLIENT CLIENT CLIENT ACTIVITIES SEGMENTS RELATIONSHIP SEGMENTS Grameen Bank PARTNER CLIENT mobile phone CLIENT phone rural electricity Telenor OFFER electricity Offer CLIENT NETWORK SEGMENTS connectivity SEGMENTS villagers ladies SEGMENTS Telenor KEY power Network CLIENT generator RESOURCES SEGMENTS ? DISTRIBUTION Grameen CLIENT Bank CHANNELS SEGMENTS COST CLIENT REVENUE call CLIENT utility fees STRUCTURE SEGMENTS revenues FLOWS SEGMENTS

Slide 59: ♯1 business models are a priority of many business people today ♯2 we need a common language to describe & manage business models ♯3 new powerful business models are possible to create

Slide 60: thank you!

Slide 61: Business Model Innovation Book business-model-design.blogspot.com