Talk with Steve Blank at true ventures

DESIGNING &TESTINGBUSINESS MODELSAlexOsterwalder.com SteveBlank.com@business_design @sgblank

? where do I comefrom, what do I do?

)-:my workplace

)-:my current MVP

BusinessModelGeneration.com/toolbox iPad stencil, actual scale, template by hortis, le studio. Feb. 2010. http://hortis.lestudio.chdate: project: screen:author:

this workshop day combines two global bestsellers +BusinessModelGeneration.com SteveBlank.com/books.html

Swiss Time Machine

[sources: Henry Chesbrough, photo: life.com]

revenue growth of 41%compounded for the next 20 years [sources: Henry Chesbrough, photo: xerox.com]

Swiss Time Machine

BusinessModelGeneration.com

1,000,000 new book titles were published in the U.S. in ʼ10

11,000 new business books appear every year

12% decline of sales in majorbookstore chains (ʻ07-ʼ09)

?so what did we do?

we changed the product...

? would a big publishinghouse have taken us on with this book?

we changed the business model...

“ you canʼt write about business model innovation without an innovative business model ”

$250.-

Results

# in the top 10 of softcover business books in the US

# 170ʼ000+ English #bmgen copies in print (June 2011)

# 18 #bmgen translations upcoming in 2011

more importantly...

business modelsenable (new) products and technologies and help solve (entirely new) customer problems

the 100Million dollar question

how do you search for the right business model?

1 understanding business models2 prototyping alternatives of “what could be”3 evaluating your business model design4 testing business models with customer development

but hey,1 what is a business model anyways?

?whatʼs abusiness model?

BusinessModel Canvas

to describe, challenge,design, and inventbusiness models moresystematically

9 building blocks

CUSTOMER SEGMENTS images by JAM

VALUE PROPOSITIONS images by JAM

CHANNELS images by JAM

CUSTOMER RELATIONSHIPS 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 customerpartners segments cost revenuestructure key streams resources channels images by JAM

The Business Model Canvas key activities value proposition customer relationships KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS building building key block block customerpartners segments building building building block building block block block KEY CHANNELS RESOURCES building block building block building block cost COST STRUCTURE REVENUE STREAMS revenue buildistructure building key ng building streams block resources block channelsck blo images by JAM

BusinessModelGeneration.com/canvas

illustration

how much less or more do the Swiss pay per gram of coffee consumed at homecompared to a decade ago?

600% to800%more

Nespresso changed thebusiness model for espresso

RESULTS

own recyclingcontainers

one of the fastest-growing businesses in the Nestlé group

average growth of30% p.a. since 2000

global sales of3.8+ billion USD

Nespresso’s business Model KEY KEY Value CUSTOMER CUSTOMER PARTNERS ACTIVITIES Proposition RELATIONSHIPS SEGMENTS B2C marketing tion distribu Nespre sso households Club (espresso fans) *** Nespresso ine pod productioncoffee mach machines rs manufacture businesses KEY etail CHANNELS **** r RESOURCES Nespresso ts coffee outle mail pods growers distribu order tion e coffe channel s m Nespresso.co pod produ call ts paten ctio n center Nespresso facilities stores COST STRUCTURE REVENUE STREAMS B2C distrib sales of Nespress resso o production ution sales of Nesp marketing machines pods

but Nespresso almost failed in1987 due to a nonperforming business model

Nespresso’s 1987 Model KEY KEY Value CUSTOMER CUSTOMER PARTNERS ACTIVITIES Proposition RELATIONSHIPS SEGMENTS machine offices Nespressomanufacturer KEY system CHANNELS RESOURCES joint venture with machine manufacturer COST STRUCTURE REVENUE STREAMS

now Nestlé is building aportfolio of business models in their coffee business

prototype2 alternatives and ask yourself what could be

? letʼs take some time towork on a really, really big issue in the world?

access to propersanitation

2.6 billionpeople lack access

4 out of 10 people in the world lackeven the most simple latrine to perform their needs

* single-use toilet bag* self-sanitizing* biodegradable* turns into fertilizer* (mainly) targeted at poor people* low production cost* people already pay for sanitation

The Business Model Canvas KEY KEY OFFER CUSTOMER CUSTOMERPARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS KEY CHANNELS RESOURCES COST STRUCTURE REVENUE STREAMS

minibrainstormingsession

come up with as many businessmodel ideas as possible for thePeepoo bag (not full Canvases)

* single-use toilet bag* self-sanitizing* biodegradable* turns into fertilizer* (mainly) targeted at poor people* low production cost* people already pay for sanitation

make rough prototypes of thedifferent alternativesto analyze, evaluate and compare them

F rankGe hry [source: Sony Pictures]

[source: Sony Pictures]

[source: Wikimedia Commons]

?what does that have to dowith business models and my organization?

no architect wouldbuild something that resembles his ﬁrst sketch

?what does thatmean for us?

BusinessModelGeneration.com

business model prototypingnapkin sketch Canvas business case ﬁeld test

“ prototyping is the conversation you have with your ideas ” Tom Wujec

evaluate3 your business model design

building block building buildin block g blo ckbuilding block building block build ing block building building block block build ing block building buil di block blo ng ck buildin g block

SWITCHING COSTSHow easy or diﬃcult is it for customers to switch to another company?

with this amazing device you can have thousand songs in a pocket

...and you’r screwing us because it has just become more diﬃcult to switch devices

RECURRING REVENUESIs every sales a new eﬀort or will it result in follow-‐up revenues and purchases? How evenly distributed are your revenues through the year?

EARN BEFORE YOU PAYAre you earning money before you are spending it?

GAME CHANGING COST STRUCTUREIs your cost structure substanSally diﬀerent and beTer than those of compeStors?

phone calls will be totally free in the future

GETTING OTHERS TO DO THE WORKHow much does your business model get customers or third parSes to create value for you?

go ahead and share on your facebook page...

...that will make my plaWorm more valuable...

...and raise my plaWorm’s value(aSon)...

SCALABILITYHow rapidly and how easily can you grow your business model without hi[ng roadblocks (e.g. infrastructure, customer support, etc.)?

VIRALITY/NETWORK EFFECTHow viral is your business model? How substanSal are the beneﬁts to share with others?

PROTECTION FROM COMPETITIONHow much is your business model protecSng you from compeSSon?

a product/technology focus is just not enough anymore

break-outsession

The Business Model Canvas KEY KEY OFFER CUSTOMER CUSTOMERPARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS KEY CHANNELS RESOURCES COST STRUCTURE REVENUE STREAMS

testing4 business models with customer development

a business model might lookgreat on paper... building block building buildin block g blo ck building block building block build ing block building building block block build block ing .. but after all it is only a... building buil di block blo ng ck buildin g block

... a set of hypotheses guess guess guess guess guessguess guess guess guess guess g uess guess

StevenBlank.com/books.html

THANK YOU! BusinessModelGeneration.com AlexOsterwalder.com / @business_design BusinessModelAlchemist.com

BusinessModelGeneration.com/toolbox iPad stencil, actual scale, template by hortis, le studio. Feb. 2010. http://hortis.lestudio.chdate: project: screen:author:

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Talk with Steve Blank at true ventures

by Alexander Osterwalder

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