Business modeling master class 29 may 2013 rozen

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  • 1. Master Class:Business ModelingProf.Alon RozenENPC MBA Paris29 May 2013
  • 2. Prof.Alon Rozen © 2013Biz model:the Heart of Any Business
  • 3. Prof.Alon Rozen © 2013Business modelingRepresenting how a companyorchestrates diverse activities to:(1) deliver value(2) to customers(3) in a sustainable manner.
  • 4. Prof.Alon Rozen © 2013Business model vs Strategy There is a general confusion between thenotions of business models and strategy.Business Model• Focus = value“orchestration”Strategy• Focus = outdocompetitors
  • 5. Prof.Alon Rozen © 2013Business Modeling (made simple)1/ Create a model 2/ Test it 3/ ReviseNarrative Test• Does the storymake sense?Numbers Test• Does the storymake cents?
  • 6. Prof.Alon Rozen © 2013Why is the biz model so important? If done right Creates a virtuous cycle that is difficult to copy Generates super-profits and a competitive moat Ex.Apr 23:“Apple sees profits fall for first time in adecade but cash pile rises to $145bn” If done wrong: It doesn’t make sense,cents or profits… It is not sustainable… Ex: May 9:“Sony makes 1st net profit in 5 years”
  • 7. Prof.Alon Rozen © 2013ž
  • 8. Prof.Alon Rozen © 2013Business Model - examples Subscriptions (gym, magazine, public transport,cinema) Razor & blades (razors,printers,cell phones) Bricks & Clicks (retail + online) (Gap,FNAC,Apple) Loyalty (frequent flyer miles) Industrialization of services (restaurant tickets, vouchers) Low-cost (EasyJet, LIDL,IKEA) Crowdsourcing - (mymajorcompany, Kickstarter) Freemium (free+paid services) (online newspapers)
  • 9. Prof.Alon Rozen © 2013Modern business model = Freemium Freemium = free + premium End-user is given a free“hook”and then sold(“upsold”) to paid extras (e.g.apps) The Global Guru (financial newsletter) Free newsletter (200,000 subscribers) Paid newsletter $100/year (15,000) Premium newsletter $1000/year (1,000)
  • 10. Prof.Alon Rozen © 2013One term,many approachesGeoffrey Moore• Volume- or complexity-based modelsAlexander Osterwalder• Business model canvasAsh Maurya• Lean business model canvasAlon Rozen• Business model worksheet
  • 11. Prof.Alon Rozen © 2013Meta Business Model Worksheet (A.Rozen)
  • 12. Business Model Volume-based  Complexity-based  MixedGeneral description of the businessmodel including the 6 W’s (what,who, where, how, when, and why© Alon Rozen 2012Customer modelWho are thecustomers? Who arethe end-users? Earlyadopters?Cost modelWhat are themain costs? Arecosts mostlyvariable orfixed? How dothey scale?Margin modelA high margin orlow marginbusiness bynature? Marginstructure?Operating modelWhat type ofoperations? Logistics?Outsourcing? HR?Working K modelCash positivebusiness? Cash flowissues (CAPEX, OPEX? CCC)?Sales & MarketingmodelApproach tosales andmarketing? Salesmodel?Distribution?Marketingmodel?Growth modelHow will thebusiness grow?Speed?Scalability?Organic growth orM&A? Self-financed or newinvestmentneeded?Revenue modelHow is revenuegenerated – whopays what, when?Business Modeling: your turn! Cacau Show
  • 13. Prof.Alon Rozen © 2013Business modeling:old and newDeconstruct anexisting businessModel a businessfrom scratch:start-ups
  • 14. Prof.Alon Rozen © 2013Biz model description:Cacau ShowCacau Show operates a volume-based business model by whichit sells branded chocolate to its franchisees,to department storesand,recently,to supermarkets (what)indirectly to mass-market“class C”and even“B”consumers (who),using in-store direct sales via franchises (captive market) andintermediated distribution via supermarkets and departmentstores (how & where).This allows Cacau Show to optimize inventory (a base ofguaranteed sales) all year long and maximize sales during peakseasons (Easter) (when),thus allowing Cacau Show to practice low margins whilemaintaining healthy cash flow,strengthening the brand,attracting new franchises (+franchise management fees) andeasily fund future growth (why).
  • 15. Biz model:a truly key success factor! Biz model optimization is a KSF! Two types of successful biz model: Simple and efficient Innovative The true heart of any business A weak heart means a weak business Even if it looks healthy! But – no magic business models They have to evolve over time!
  • 16. Thank you!