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

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

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

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

they’re all looking for …

the most competitive BUSINESS MODEL

global CEO survey

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 “ ”

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 “ ”

is business model innovation on your agenda?

CONCLUSION focusing on business model innovation pays off 1

iPod + iTunes

CONCLUSION business model innovation leverages product innovation 2

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

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

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

how can we get a grasp of business models? ?

so how do YOU describe a business model?

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

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

yet, that is not enough to work with…

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

WHAT? WHO? HOW? $? € ? CUSTOMER 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 CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY RESOURCES KEY ACTIVITIES REVENUE FLOWS DISTRIBUTION CHANNELS PARTNER NETWORK

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

business model CANVAS how do you work with the

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

POWERFUL what’s so about this?

visual it is

visual blueprint

holistic it is

strategic fit

co-creation it fosters

participation

prototyping it allows

creativity

what about the PROCESS ?

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 INNOVATE PLAN 5 IMPLEMENT communicate & implement The 5 steps of business model design & innovation

describe existing business model

assess strengths and weaknesses

brainstorm on improvements & opportunities

turn new model into a project roadmap

communicate & implement

example of an innovative BUSINESS MODEL

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

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

1138 branches

12’801 employees

2.3 million borrowers

39’172 villages covered

$33 million lent monthly

94% of borrowers female

$ $ $

$ $ $

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

RESULTS

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

the 250’000 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

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

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

thank you!

business-model-design.blogspot.com Business Model Innovation Book