Tools for business model generator

1. Tools for Business Model
Generator
Prepared by Hani Tarabichi
From Business Model Generator
Book

2. The Spirit!!!
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Create Value
Build New Business
Improve and transforms organizations
Innovative way of thinking
Visionary – Game changer
Challenge driven

4. What is a Business Model
• A business model describes the rationale of how
an organization creates, delivers, and captures
value
• Business concept must be simple, relevant, and
understandable
• A business model is built on 9 blocks covering 4
areas:
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Customer
Offers
Infrastructure
Financial viability

5. 9 blocks of business model
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Customer Segment CS
Value Proposition VP
Channels CH
Customer Relationships CR
Revenue Streams RS
Key Resources KR
Key Activities KA
Key Partnership KP
Cost Structure C$

6. Customer Segment CS
• Defines the different groups of people that
company aims to reach and serve
• Without profitable customers NO company
can survive
• Distinct segment = Common needs = Common
behavior = Better service
• The question is WHICH segment to serve and
which to ignore???

7. Customer Segment CS
• Customer groups represents different
segments IF:
– Their needs require and justify distinctive offers
– They are reached through different channels
– They require different kind of relationships
– They have substantially different profitability
– They are willing to pay for different aspects of the
offer

8. Customer Segment CS
• Types of segments:
– Mass Market: FMCG, B2C
– Niche Market: B2B, specific requirements
– Segmented Market: By size or industry
– Diversified Market: Diversified customer business
model
– Multi-Sided Platform: Credit cards companies

9. Value Proposition VP
• Bundle of products and services that create
value to specific segment
• VP is the reason why customers choose one
company over another
• VP solves customer problems and satisfies his
needs
• Some VP might be innovative while others
may be similar to other offers

10. Value Proposition VP
• What value do we deliver to our customers?
• Which one of our customer’s problems are we
solving?
• Which customer needs are we satisfying?
• What bundle of products/services are we offering
to each customer segment?
• VP are quantitative: Price, speed..
• VP are qualitative: Design, customer experience

11. Value Proposition VP
• Examples of VP:
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Newness
Performance
Customization
Getting the job done
Design
Brand status
Price
Cost reduction
Risk reduction
Accessibility
Convenience/ Usability

12. Channels CH
• How to communicate with and reach
customer segments to deliver value
proposition
• Deals with any sales touch point:
– Communication
– Distribution
– Sales channels

13. Channels CH
• Channels help in:
– Raising awareness
– Helping customers evaluate Value Proposition
– Allows customers to purchase
– Delivers value proposition to customers
– Provide post-purchase customer support

14. Channels CH
• Channels help in:
– Raising awareness
– Helping customers evaluate Value Proposition
– Allows customers to purchase
– Delivers value proposition to customers
– Provide post-purchase customer support

15. Channels CH
• Through which channels do our customer
segments want to be reached?
• How are we reaching them now?
• How are our channels integrated?
• Which one works best?
• Which channel is most cost effective?

16. Channels CH
• Channels options:
– Direct .vs. Indirect
– Owned .vs. Partner
• Which channel mix??
OWN
Direct
Sales
Force
Partner
Indirect
Web Site
Own
store
Own store
Partner
store
Wholesaler

17. Customer relationships CR
• Type of relationships a company establishes
with specific customer segment
• Drivers for customer relationships:
– Customer acquisitions
– Customer retention
– Boosting sales/ up-selling

18. Customer relationships CR
• What type of relationships does each of our
customer segments expect us to establish?
• How costly is it?
• How customer relationships integrated with
rest of business model?

19. Customer relationships CR
• Categories of customer relationships:
– Personal assistance: Human interaction
– Dedicated personal assistance: Most intimate
– Self service: No direct relationship with customer
– Automated services: Self service + Automated
process
– Communities: involvement on-line
– Co-creation: Reviews, content creation..

20. Revenue Stream RS
• The cash a company generates from each customer
segment
• For which value is each customer segment truly willing
to pay?
• Revenue streams for different segments may have
different pricing mechanism
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Fixed price list
Bargaining
Auction
Market dependant
Volume dependant
Yield dependant on inventory

21. Revenue Stream RS
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For what do customers currently pay?
How are customers currently pay?
How would they prefer to pay?
How much does each customer revenue
stream contribute to overall revenues?

22. Revenue Stream RS
• Ways to generate Revenue Streams:
– Asset Sale: Selling ownership rights of products
– Usage fees: phone services, hotels
– Subscription fees: Access to service, annual fees,
gyms, mobile..
– Lending/renting/leasing: Temporary rights to use
– Licensing: Permission to use protected intellectual
property in exchange for licensing fees
– Brokerage fees: Intermediary services
– Advertising

23. Key Resources KR
• Important assets to make business model
works
• Can be owned or leased

24. Key Resources KR
• What key resources do our value proposition
requires?
• What key resources do our distribution
channels requires?
• What key resources do our customer
relationship requires?
• What key resources do our revenue streams
requires?

25. Key Resources KR
• Key resources categories:
– Physical: Manufacturing facilities, building,
vehicles, machines, systems, POS, Distribution
networks
– Intellectual: Brands, Proprietary knowledge,
patents, copy rights, partnerships, customer data
base
– Human: Human resources
– Financial: Either resources or guarantees

26. Key Activities KA
• Most important things a company must do to
make its business model works
• What key activities do our value proposition
require?
• What key activities do our channels require?
• What key activities do our Customer segment
require?
• What key activities do our revenue streams
require?

27. Key Activities KA
• Production
– Design
– Making
– Delivering
• Problem solving
– New solutions
– Knowledge
– Continuous training
• Platforms / Network

28. Key Partnerships KP
• Network of suppliers and partners that make
business model works
• Partnerships and alliances are made to:
– Optimize business model
– Reduce risk and uncertainty
– Acquire resources

29. Key Partnerships KP
• Types of partnerships:
– Strategic alliance between none competitors
– Coopetition: Strategic partnership between
competitors
– Joint-Venture: Develop new business
– Buyer-supplier relationships to assure reliable
supplies

30. Key Partnerships KP
• Who are our key partners?
• Who are our key suppliers?
• Which key resources are we acquiring from
partners?
• Which key activities do partners perform?

31. Cost Structure C$
• Describes all costs incurred to operate a
business model
• Can be easily calculated after defining
– Key activities
– Key resources
– Key partnerships

32. Cost Structure C$
• What are the most important costs inherent in
our business?
• Which key resource are most expensive?
• Which key activities are most expensive?
• Is our business model Cost Driven .vs. Value
Driven?

33. Cost Structure C$
• Cost driven business model
– Focus on minimizing cost
– Use low price value proposition
– Maximum automation
– Extensive outsourcing
• Value driven business model
– Focus on value creation
– Premium value proposition
– High degree of personalized services

34. Cost Structure C$
• Cost structures can have the following
characteristics:
– Fixed cost: Constant cost despite volume of
production
– Variable cost: Proportional cost with output
volumes
– Economies of scale: Cost advantages as output
expands and average cost per unit drops
– Economies of scope: Cost advantages due to large
scope