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Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas
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Dream Viability Testing: Quickly and Cheaply Test the Viability of Your Dream Business Ideas

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Consider this scenario which is a “Hollywood version” of a business case that I read several years ago in the book, “Discovery-Driven Growth,” by Rita Gunther McGrath and Ian MacMillan. The character, …

Consider this scenario which is a “Hollywood version” of a business case that I read several years ago in the book, “Discovery-Driven Growth,” by Rita Gunther McGrath and Ian MacMillan. The character, Bob, is a figment of my imagination.

Bob, a father of two young girls, was recently made redundant. Bob is desperate to pursue his dream business idea of owning an antique toy store. However, Bob is seeking advice on the best tool for testing the viability of his dream idea. The options at the top of Bob’s mind are as follows:

Option 1: INTUITION ("JUST DO IT")
Based on gut feeling and experience: rent store, buy antique toys, open store to public, and see what happens. Hopefully, monthly revenue from the sale of antique toys will be more than his monthly operating cost.

Option 2: TRADITIONAL BUSINESS PLAN
Spend 8 weeks attending an evening course on writing a (theoretical) business plan for the antique toy store. Thereafter, launch the project and open the antique toy store according to the schedule or “waterfall” of activities in the business plan.

Option 3: BUSINESS MODEL CANVAS/CUSTOMER DEVELOPMENT STACK
First, document the proposal (hypotheses) for the antique toy store using the tool of the Business Model Canvas. Then, according to principles of Steve Blank’s Customer Development methodology, “Get Out Of the Building” and talk to at least 50 prospective customers and other stakeholders. Test and validate/reject hypotheses for each of the 9 building blocks of the Business Model Canvas.

Option 4: LEAN STARTUP METHOD
Start by building a Minimum Viable Product (MVP) for the antique toy store. The objective is to rapidly learn about what works and what does not work regarding outcomes that customers want and can pay for. Rapidly use the iterative loop of “Build-Measure-Learn” to find problem-solution fit as well as product-market fit.

Option 5: DISCOVERY-DRIVEN PLANNING
The first step is to prepare a “Reverse Income Statement (RIS)” to check whether the opportunity or profitability of such an antique toy store is worthwhile. Also, the Reverse Income Statement would reveal “profitability-assumptions and hypotheses” of a business model that should be tested, validated, and/or rejected.

In your opinion, which of the above options would be best for Bob? And why?

My own recommendation is for Bob to use the methodology of Profit Model Analysis and Design (PMAD) for his task of Dream Viability Testing. PMAD is a seamless visual synthesis of the above tools. PMAD consists of three activities as follows:

#1: Visualize the desired profitability of your business model
#2: Design and test your value proposition model
#3: Launch and manage a scalable value creation model

For details of applying PMAD to the above case study, see http://goo.gl/2HAN00

So, once again, which option would be best for Bob in pursuing his dream business idea of owning and running his antique toy store?

Published in: Business, Technology
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  • @RodKing
    Rod, your response in which you stated 'Hopefully, the flexible and modular approach of DVT would eliminate waste and increase the odds of new ideas succeeding in business' is spot on. I hope that this concise presentation attracts the attention it deserves. Having tried your approach I dare say that it is comprehensive and eye-opener.
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  • @hudali15: Ali, Thanks for your comment and insight regarding the spectrum of Dream Viability Testing (DVT): from idea initiation to idea implementation. It's true. In contrast to existing piecemeal approaches, DVT presents a holistic methodology for saving time and money when exploring new ideas and projects in business. Matured disciplines such as Science, Engineering, Architecture, and Design have established procedures and systems for testing nascent and risky ideas: they quickly and inexpensively build and test models while measuring their impacts in experiments. However, in business the status quo is 'Build it and see if customers would come.' This build-it-and-they-would-come approach is extremely wasteful in terms of money and time as well as wrecks the lives of many promising entrepreneurs. Hopefully, the flexible and modular approach of DVT would eliminate waste and increase the odds of new ideas succeeding in business. Using the paradigm of the Delight/Pain ratio, I'd say that the Dream Validation Testing (DVT) approach minimizes pain while maximizing delight especially for the many entrepreneurs and startups that have fascinating new ideas for business growth.
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  • Rod,
    What is truly viable is reading this presentation. It covers the full spectrum from the idea initiation to idea implementation. Visual screening allows for the ease of adding factors, moving factors and rearranging them. I encourage readers to work out an example to realize the benefit of this fully integrated approach.
    Rod, your spring of ideas never dries up.
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  • 1.                 THE  3-­‐ACT  BUSINESS  MODEL  STORYBOARD    A  Visual  Toolkit  for  Quickly  and  Cheaply  Tes8ng  Whether  Your  Business  Idea  is  Viable           Dr.  Rod  King    
  • 2.               The  Core  Job-­‐To-­‐Get-­‐Done  of       A  Business  Startup     Is     To  Efficiently  Discover  and  Launch     A  Scalable  Profit  Model    
  • 3.                 “Profit  is  the  Oxygen  of  a  Business”    
  • 4.                 How  Can  We   Quickly  and  Inexpensively  Test   The  Viability  (Profitability)  of     A  Business  Idea?    
  • 5. Never  Start  a  Project   Using   The  TradiVonal  Business  Plan,     Lean  Startup  Method,     and     Customer  Development  Stack   To  Test   The  Viability  (Profitability)  of   A  Business  Idea  
  • 6. WHAT  DO  THE  FOLLOWING  APPROACHES  HAVE  IN  COMMON:   Tradi'onal  Business  Plan,  Lean  Startup  Method,  and  Customer  Development  Stack?   q  The  approaches  of  the  tradi8onal  business  plan,  Lean  Startup  method,  and  Customer  Development  Stack  are   8me-­‐consuming  and  expensive  for  tes8ng  the  profitability  of  dream  business  ideas   q  “Profit  Model”  is  not  the  unit  of  analysis  or  unit  of  learning  in  the  approaches  of  the  tradi8onal  business  plan,   Lean  Startup  method,  and  Customer  Development  Stack   q  The  approaches  of  the  tradi8onal  business  plan,  Lean  Startup  method,  and  Customer  Development  Stack   ini8ally  ignore  profitability:  they  do  NOT  begin  with  the  end  in  mind,  that  is,  with  profitability  or  analogs/ an8logs  of  a  sustainable  profit  model.  The  approaches  take  a  worm’s  eye  view  of  a  project     q  Each  approach  is  wasteful:  it  spends  a  lot  of  8me/money  in  implicitly  defining  a  profit  model  and  does  not   make  use  of  archetypal  profit  models  as  well  as  proven  profitable  paXerns  for  business  models   q  Rela8vely  lot  of  8me/money  is  spent  to  find  out  what  a  profitable  model  looks  like  when  using  the  tradi8onal   business  plan,  Lean  Startup,  and  Customer  Development  Stack   q  Many  vague,  weak,  or  non-­‐quan8ta8ve  hypotheses  are  generated  when  using  the  tradi8onal  business    plan,   Lean  Startup,  and  Customer  Development  Stack  so  that  hypothesis  tes8ng  is  haphazard   q  The  approaches  do  not  feature  a  Revenue  Lifecycle  Profile  for  a  Product/Service  so  that  it  is  not  clear  when   and  how  the  product/business  intends  to  generate  revenue   q  The  methodologies  of  the  tradi8onal  business  plan,  Lean  Startup,  and  Customer  Development  Stack  are   weakly  integrated  with  the  body  of  knowledge  in  Strategic  Management,  Innova8on,  and  Project   Management.  These  methodologies  cannot  adequately  model  or  explain  factual  business  success  or  failure     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing  
  • 7. Disrup'on  Spot   Luxury  Spot   Strategic   Choice   TradiVonal  Business  Plan         Business  Model  Canvas/ Customer  Development   Stack   q 3-­‐Act  Business  Model   q Discovery-­‐Driven   Growth  (DDG)   Strategic  Management/   Strategic  Plan/   Balanced  Scorecard   Lean  Startup  Method/   Lean  Canvas   OVERVIEW  OF  TOOLS  FOR  DREAM  VIABILITY  TESTING  (DVT)   Trade-­‐off  Map  of  Cost  vs.  Effec'veness     (-­‐):  PAIN:  Time  (Cost;  Risk)   (+):  DELIGHT:   Effec8veness   Key   Profitable  Tool     Unprofitable  Tool     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   Market  Segment  (Job-­‐To-­‐Get-­‐Done/Goal;  Product/Tool):  Test  Viability  of   Business  Idea  (Project/Business  Model)   “Insane”  Happiness  (Value)   Ideal  Final  Result  (IFR)   Infinite  Shared  Happiness   “Invisible  Hand”    
  • 8. The  3-­‐Act  Business  Model  Storyboard     Eliminate  the  Complexity  and  Waste  of     The  Tradi8onal  Business  Plan,  Lean  Startup  Method,  and  Customer  Development  Stack  
  • 9. 3  STEPS  FOR  THE  3-­‐ACT  BUSINESS  MODEL  STORYBOARD   Quick  and  Inexpensive  Heuris'c  for  Pregnant  Idea  Tes'ng  and  Execu'on   q  First,  Visualize  the  Desired  Profitability  of  Your  Business  Model.     q  Then,  Analyze,  Design,  and  Test  Your  Value  ProposiVon  Model.   q  Finally,  Launch  and  Manage  Story  of  a  Scalable  Value  CreaVon  Model.     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing  
  • 10.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   Start  with  the  End   In  Mind  
  • 11. Past  Reality                   Present  Reality                 Future  Reality                     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   WHY  pivot?   3-­‐Act  Business  Model  (3BM)  Plan     Why  Pivot?  
  • 12. Past  Reality                   Present  Reality                 Future  Reality                   3-­‐Act  Business  Model  (3BM)  Plan     4  Pivot  Ques'ons     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   Strategy   Short/Medium/Long-­‐term   WHAT  to  pivot?   TO  WHAT  to  pivot?   WHY  pivot?   HOW  to  pivot?  
  • 13. ENVIRONMENT     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   3-­‐Act  Business  Model   Create  Value   Deliver  Value   Share  (Capture)  Value   Bird’s  Eye  View   CORE  JOBS:   HOW?   WHAT?   WHY?   VALUE   CREATION   MODEL   VALUE   PROPOSITION   MODEL   VALUE  SHARING   (PROFIT)   MODEL   Innovator’s   Perspec8ve   Marketer’s   Perspec8ve   Investor’s   Perspec8ve  
  • 14.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   PROFIT   MODEL   ENVIRONMENT    3-­‐ACT  BUSINESS  MODEL     3-­‐ACT  BUSINESS  MODEL  STORYBOARD    First,  Visualize  the  Desired  Profitability  of  Your  Business  Model   Bird’s  Eye  View  
  • 15.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   PROFIT   MODEL     3-­‐ACT  BUSINESS  MODEL  STORYBOARD    First,  Visualize  the  Desired  Profitability  of  Your  Business  Model   W:  WEAKNESSES  (-­‐)    S:  STRENGTHS  (+)   O:  OPPORTUNITIES  (+)   T:  THREATS  (-­‐)   (Value  &  SWOT  Analysis)    3-­‐ACT  BUSINESS  MODEL  
  • 16.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   PROFIT   MODEL     3-­‐ACT  BUSINESS  MODEL  STORYBOARD    First,  Visualize  the  Desired  Profitability  of  Your  Business  Model   (“E.R.I.C.”  Value  Innova'on  Tac'cs)   E:  Eliminate    I:  Increase   C:  Create   R:  Reduce    3-­‐ACT  BUSINESS  MODEL  
  • 17.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   Inputs/Partners           Internal  Resources           Processes/AcVviVes           Product/Value  ProposiVon           Channels  &  RelaVonships           Customer/Job-­‐To-­‐Get-­‐Done           Cost:  (Structure/Metrics)           Revenue:  (Streams/Metrics)           PROFIT            3-­‐ACT  BUSINESS  MODEL   PROFIT   MODEL   Dream  Viability  Tes8ng  (DVT):   First,  Visualize  the  Desired   Profitability  of  Your  Business  Model   Worm’s  Eye  View   (Each  sub-­‐model  consists  of  3  panels)    
  • 18. Disrup'on  Spot   Luxury  Spot   Strategic   Choice   Samson   Strategy   Delilah   Strategy   Goliath   Strategy   David   Strategy   4  GENERIC  WINNING  STRATEGIES  AND  VALUE  PROPOSITIONS   Trade-­‐off  Map  of  Weakness  vs.  Strength     (-­‐):  PAIN:  Weakness  (e.g.,  Size)   (+):  DELIGHT:   Strength   Key   Winning  Strategy     Losing  Strategy     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   Market  Segment  (Job-­‐To-­‐Get-­‐Done/Goal;  Product/Tool):  ………………..…..……..……. …………  ……………………………………………………………………….…………….………….……………….   “Insane”  Happiness  (Value)   Ideal  Final  Result  (IFR)   Infinite  Shared  Happiness   “Invisible  Hand”    
  • 19. Disrup'on  Spot   Luxury  Spot   Strategic   Choice   Sweet  Spot   Profit  Model/   Strategy/   Value  Proposi'on   Blue  Ocean   Profit  Model/   Strategy/   Value  Proposi'on   Luxury  Spot   (“Differen'a'on”)   Profit  Model/   Strategy/   Value  Proposi'on   DisrupVon  Spot/Lean   (“Low  Cost”)   Profit  Model/   Strategy/   Value  Proposi'on   4  GENERIC  PROFIT  MODELS,  WINNING  STRATEGIES,  AND  VALUE  PROPOSITIONS   Trade-­‐off  Map  of  Cost  vs.  Revenue     (-­‐):  PAIN:  Cost   (+):  DELIGHT:   Revenue   Key   Profitable  Model     Unprofitable  Model     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   Market  Segment  (Job-­‐To-­‐Get-­‐Done/Goal;  Product/Tool):  ………………..…..……..……. …………  ……………………………………………………………………….…………….………….……………….   “Insane”  Happiness  (Value)   Ideal  Final  Result  (IFR)   Infinite  Shared  Happiness   “Invisible  Hand”    
  • 20. Disrup'on  Spot   Luxury  Spot   Strategic   Choice   Sweet  Spot   Customer  Experience   Blue  Ocean   Customer  Experience   Luxury  Spot   Customer  Experience   DisrupVon  Spot/Lean   Customer  Experience   CUSTOMER  EXPERIENCE,  VALUE  PROPOSITION,  JOB-­‐TO-­‐GET-­‐DONE,  AND  (VALUE)  FACTORS   Trade-­‐off  Map  of  Customer  Pain  vs.  Customer  Delight     (-­‐):  PAIN:  Cost;  Size;  Complexity;  Inaccessibility;  Delay   (+):  DELIGHT:     Func'onality;   Performance;   Quality;   Brand;   Customiza'on   Key   Valuable  Experience     Non-­‐valuable  Experience     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   Market  Segment  (Job-­‐To-­‐Get-­‐Done/Goal;  Product/Tool):  Entertainment  Industry   (Music):  Listen  to  music   “Insane”  Happiness  (Value)   Ideal  Final  Result  (IFR)   Infinite  Shared  Happiness   “Invisible  Hand”    
  • 21. AGRICULTURE  &  MINING  Industry   SERVICE  Industry   INFRASTRUCTURE/PLATFORM  Management   MANUFACTURING  Industry          PROFIT  MODELS:  STRATEGIES,  TACTICS,  AND  PATTERNS        How  Businesses  Really  Make  Money  and  Win  Business  Model  Compe88ons  in  the  Imita8on  Economy     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   q Asset  Sale   q Long  Tail   q Open  Source  Collabora'on   q Dona'on   q So`ware  as  a  Service   q Two-­‐sided  Market   q Asset  Sale   q Razor  Blade  (Bait  &  Switch)   q Subscrip'on  Fee     q Crowdsourcing   q Lending/Ren'ng/Leasing   q Licensing   q Licensing   q Brokerage   q Usage  Fee   q Asset  Sale   q Adver'sing   q Co-­‐crea'on   q Usage  Fee   q Mul'-­‐sided  Market  Placorm   q Ad  Network   q Outsourcing   q Ecosystem  Management   q Direct  Sale   q Indirect  Sale   q Offline   q Online   q Discount   q Tiered  Payment   q Auc'on   q Facilitated  Network   q Brand  Mul'plier   q Reverse  Auc'on   q Customiza'on   q Cross-­‐subsidiza'on  q Franchise   q Product  Leadership   q Automa'on  (Self-­‐service)   q Gamifica'on   q B2C   q B2B   q Pre-­‐Payment   q Fair            Pricing   q Community  (Hub)   q On  Demand   q DIY   q Unbundling   q Unbundling   q Bundling   q Free   GENERIC  PROFIT  MODELS         q P2P  Placorm   q Landlord   q Leasing   q 2nd  Hand   q  Luxury  Spot                (Differen'a'on)   q  Disrup'on  Spot                  (Low  Cost;  Lean)   q  Blue  Ocean                  (Value  Innova'on)   q Creator   q Distributor   q Broker   q  Sweet  Spot   q Product  Extension   q Opera'onal  Excellence   q Frac'onaliza'on   q Customer  In'macy   q Affiliates   What  industry  is  the  business  (or  customer)  in?   Who  is  the  customer-­‐protagonist  (most  dissa'sfied)?   What  is  the  customer  Job-­‐To-­‐Get-­‐Done?   What  is  the  profit  model  of  the  business  (customer)?   What  are  analogs  and  an'logs  of  the  profit  model?   q Shared  Value  
  • 22. Case  Study  on     The  3-­‐Act  Business  Model  Storyboard   An'que  Toy  Store                     How  a  New  An8que  Toy  Store  Owner  Made   An  Annual  Profit  of  $250,000    
  • 23. Generate  and  Test       QuanVfiable  Hypotheses  (AssumpVons)     That  Are  Based     On     Generic  Profitable  Models  
  • 24. Past  Reality   Business  Profit                 Present  Reality   Business  Profit               Future  Reality   Business  Profit                 3-­‐Act  Business  Model  (3BM)  Plan  for  AnVque  Toy  Store     4  Pivot  Ques'ons     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   Strategy   Short/Medium/Long-­‐term   WHAT  to  pivot?   TO  WHAT  to  pivot?   WHY  pivot?   HOW  to  pivot?  
  • 25. Past  Reality   Business  Profit                 Present  Reality   Business  Profit               Future  Reality   Business  Profit     (Desired  Annual  Profit:   $250,000)             Business   Model   (3-­‐Act)   Business   Model   (3-­‐Act)   Business   Model   (3-­‐Act)   Industry   Ecosystem   Market   Ecosystem   Business  Model   (3-­‐Act)   Macro-­‐Economic  Influencers   Key  Trends  &  Complementors   AnVque  Toy  Store’s     Mission/Vision/ Purpose/Ideals/   Ideal  Final  Result   For   Business   Profit     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   Strategy   Short/Medium/Long-­‐term   3-­‐Act  Business  Model  (3BM)  Plan  for  AnVque  Toy  Store     4  Pivot  Ques'ons  
  • 26. Disrup'on  Spot   Luxury  Spot   Strategic   Choice   Sweet  Spot   Profit  Model/   Strategy/   Value  Proposi'on   Blue  Ocean   Profit  Model/   Strategy/   Value  Proposi'on   Luxury  Spot   (“Differen'a'on”)   Profit  Model/   Strategy/   Value  Proposi'on   DisrupVon  Spot/Lean   (“Low  Cost”)   Profit  Model/   Strategy/   Value  Proposi'on   4  GENERIC  PROFIT  MODELS,  WINNING  STRATEGIES,  AND  VALUE  PROPOSITIONS  FOR  ANTIQUE  TOY  STORE   Trade-­‐off  Map  of  Cost  vs.  Revenue     (-­‐):  PAIN:  Cost   (+):  DELIGHT:   Revenue   Key   Profitable  Model     Unprofitable  Model     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   Market  Segment  (Job-­‐To-­‐Get-­‐Done/Goal;  Product/Tool):  Have  fun/entertainment   ü      “Insane”  Happiness  (Value)   Ideal  Final  Result  (IFR)   Infinite  Shared  Happiness   “Invisible  Hand”    
  • 27. Disrup'on  Spot   Luxury  Spot   Strategic   Choice   Sweet  Spot   Customer  Experience   Blue  Ocean   Customer  Experience   Luxury  Spot   Customer  Experience   DisrupVon  Spot/Lean   Customer  Experience   SCENARIOS  OF  CUSTOMER  EXPERIENCE  AND  (VALUE)  FACTORS  FOR  ANTIQUE  TOY  STORE   Trade-­‐off  Map  of  Customer  Pain  vs.  Customer  Delight     (-­‐):  PAIN:  Cost;  Size;  Complexity;  Inaccessibility;  Delay   (+):  DELIGHT:     Func'onality;   Performance;   Quality;   Brand;   Customiza'on   Key   Valuable  Experience     Non-­‐valuable  Experience     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   “Insane”  Happiness  (Value)   Ideal  Final  Result  (IFR)   Infinite  Shared  Happiness   “Invisible  Hand”     Market  Segment  (Job-­‐To-­‐Get-­‐Done/Goal;  Product/Tool):  Have  fun/entertainment  
  • 28. ENVIRONMENT     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   3-­‐Act  Business  Model  for  AnVque  Toy  Store   Bird’s  Eye  View   Create  Value   Deliver  Value   Share  (Capture)  Value  CORE  JOBS:   SATISFY  DEMAND   CREATE  DEMAND   GENERATE  PROFIT   VALUE   CREATION   MODEL   VALUE   PROPOSITION   MODEL  (ARENA)   VALUE  SHARING   (PROFIT)   MODEL   Innovator’s   Perspec8ve   Marketer’s   Perspec8ve   Investor’s   Perspec8ve  
  • 29.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL  (ARENA)   Inputs/Partners           Internal  Resources   Annual  Salary  of  2  Employees  =     2  ($8/hr  x  40x52)  =  $33,280   Rent  =  $30  per  sq  o;  3,100  sq  o   Total  Rent  =  30x3,100  =  $93,000   Inv.  =  10%  of  Sales  =$50,000   Processes/AcVviVes           Product/Value  ProposiVon   q “An8que”  Toys:   Average  price  per  toy:  $25   Annual  no.  of  toys  to  be  sold  =   Sale/Price  per  item  =  500,000/25  =   20,000   Channels  &  RelaVonships   Adver8sing  per  Sale  of  Toy=  $3   -­‐>  Total  Adver8sing  =     Annual  no.  of  sale  x  Ad  per  sale  =   10,000x3  =  $30,000     Customer/Job-­‐To-­‐Get-­‐Done   q Kids  (Parent/Family)  who  want   non-­‐electronic  entertainment   Average  no.  of  items  per  sale  =  2   Annual  no.  of  sales  =  20,000/2  =   10,000  (Monthly  sale  =  833  toys)   Cost  (Pain)   Annual  Allowable  Cost   =  Sale  –  Profit   =  $500,000  -­‐  $250,000   =  $250,000  (incl.  con8ngencies)     Revenue  (Delight)   Annual  Return  On  Sale  =  50%  =   Profit/Sale   -­‐>  Sale  (Revenue)  =  Profit/0.50   =  250,000/0.50  =  $500,000   (Pricing:  $25  per  item)   PROFIT  (VALUE)   Desired  Annual  Profit  =   $250,000     Desired  Profit  Margin  =  50%     3-­‐ACT  BUSINESS  MODEL   For  ANTIQUE  TOY  STORE   PROFIT   MODEL   Dream  Viability  Tes8ng  (DVT):   First,  Visualize  the  Desired   Profitability  of  Your  Business  Model   Source  of  Informa8on:  McGrath,  R.G.;  MacMillan,  I.C.  (2009)  Discovery-­‐Driven  Growth.  MassachuseXs:  Harvard  Business  Press.   “Reverse  Income  Statement”  
  • 30.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   Inputs/Partners   q Famous  Railroad  Museum   (nearby  proposed  store)   q Old  fashioned  toys     Internal  Resources   q Employees/Team   q Store  Facility   q Office  Equipment/Supplies   q Culture/Brand   Processes/AcVviVes   q Discover   q Plan   q Build   q Measure   q Learn   Product/Value  ProposiVon   q “An8que”  Toys:  old  fashioned   toys  like  model  trains  and  board   game   q Play  with  unique  toys  back  in   'me   Channels  &  RelaVonships   q Offline   q In-­‐store  Purchases     Customer/Job-­‐To-­‐Get-­‐Done   q Kids  (Parent/Family)   q Have  fun  playing  with  non-­‐ electronic  toys:  unique  old   fashioned  toys   Cost  (Pain)   High  Cost   q Salary  of  Employees   q Rent;  Inventory   q Office  Supplies;  U8li8es   q Marke8ng/Adver8sing   Revenue  (Delight)   High  Revenue   q Asset  Sale   •  Engagement   •  Acquisi'on;  Ac'va'on   •  Reten'on;  Referral;  Revenue   PROFIT  (VALUE)   q High  Profit  Margin         Dream  Viability  Tes8ng  (DVT):   Then,  Design  and  Test   Your  Value  Proposi'on  Model   Source  of  Informa8on:  McGrath,  R.G.;  MacMillan,  I.C.  (2009)  Discovery-­‐Driven  Growth.  MassachuseXs:  Harvard  Business  Press.   Business  Model  Resources   (Hypotheses)   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL  (ARENA)   PROFIT   MODEL   3-­‐ACT  BUSINESS  MODEL   For  ANTIQUE  TOY  STORE  
  • 31.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL  (ARENA)   PROFIT   MODEL   ENVIRONMENT   Dream  Viability  Tes8ng  (DVT):  Bird’s  Eye  View   W:  WEAKNESSES  (-­‐)    S:  STRENGTHS  (+)   O:  OPPORTUNITIES  (+)   T:  THREATS  (-­‐)   Value  &  SWOT  Analysis   3-­‐ACT  BUSINESS  MODEL   For  ANTIQUE  TOY  STORE  
  • 32.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   PROFIT   MODEL   E:  Eliminate    I:  Increase   C:  Create   R:  Reduce   “E.R.I.C.”  Value  Innova'on  Tac'cs   3-­‐ACT  BUSINESS  MODEL   For  ANTIQUE  TOY  STORE   Dream  Viability  Tes8ng  (DVT):  Bird’s  Eye  View  
  • 33.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL  (ARENA)   Industry  Ecosystem  (IE):  Supply   Market  Ecosystem  (ME):  Demand   Key  Trends  &  Complementors  (KTC):  PESTLIED  (-­‐/+)   Macro-­‐Economic  Influencers  (MEI):  Global  Economy   PROFIT   MODEL   4  Global  Environment  Forces  for  External  Fitness  Analysis   3-­‐ACT  BUSINESS  MODEL   For  ANTIQUE  TOY  STORE   Dream  Viability  Tes8ng  (DVT):  Bird’s  Eye  View  
  • 34.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL  (ARENA)   PROFIT   MODEL   Bargaining  Power  of  Suppliers   Bargaining  Power  of  Customers   Threat  of  New  Entrants   Threat  of  SubsVtute  Products  or  Services   Porter’s  5  Forces  for  Industry  Profitability  &  Fitness  Analysis   3-­‐ACT  BUSINESS  MODEL   For  ANTIQUE  TOY  STORE   Dream  Viability  Tes8ng  (DVT):  Bird’s  Eye  View  
  • 35. REVENUE  LIFECYCLE  PROFILE  (RLP)  -­‐  Simplified  Diagram   First,  Visualize  the  Desired  Profitability  of  Your  Business  Model     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   TIME     REVENUE   Birth  of  Idea/   Prototyping/TesVng/   Product-­‐Market  Fit   (Agility)   T1   (Full  Product   Launch)   T2   (Entry  of     Main  Compe'tor)   T3   (Compe''veness   Erosion)   Source  of  Informa8on:  McGrath,  R.G.;  MacMillan,  I.C.  (2009)  Discovery-­‐Driven  Growth.  MassachuseXs:  Harvard  Business  Press.   Blank,  S.;  Dorf,  B.  (2012)  The  Startup  Owner’s  Manual.  California:  K  &  S  Ranch,  Inc.     Stability/   Steady  State/Sustainability   (Op'miza'on/Exploita'on)   T4   (Product   Termina'on)   Customer  CreaVon   Company  Building  Customer  Development     Customer  ValidaVon  
  • 36. COST  LIFECYCLE  PROFILE  (CLP)  –  Simplified  Diagram   First,  Visualize  the  Desired  Profitability  of  Your  Business  Model     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing     COST   T1   (Full  Product   Launch)   T2   (Entry  of     Main  Compe'tor)   T3   (Compe''veness   Erosion)   TIME  T4   (Product   Termina'on)   Source  of  Informa8on:  McGrath,  R.G.;  MacMillan,  I.C.  (2009)  Discovery-­‐Driven  Growth.  MassachuseXs:  Harvard  Business  Press.   Blank,  S.;  Dorf,  B.  (2012)  The  Startup  Owner’s  Manual.  California:  K  &  S  Ranch,  Inc.     Customer  Development     Customer  ValidaVon   Customer  CreaVon   Company  Building   Birth  of  Idea/   Prototyping/TesVng/   Product-­‐Market  Fit   (Agility)  
  • 37. The  3-­‐Act  Business  Model  Storyboard   A  Quick  and  Inexpensive  Toolkit  for  Tes8ng  the  Viability  of  Ideas  
  • 38. WHAT  to  pivot?       TO  WHAT  to  pivot?           HOW  to  pivot?       WHY  pivot?   4  Pivot  QuesVons       #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   4  PIVOT  QUESTIONS  FOR  THE  3-­‐ACT  BUSINESS  MODEL  (3BM)  PLAN   Pivot  Management  Story  for  Dream  Valida'on  Tes'ng  
  • 39.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   3-­‐ACT  BUSINESS   MODEL  (3BM)   STORYBOARD:   Visual  Checklist   BUSINESS  MODEL   BUSINESS  MODEL   ENVIRONMENT    VALUE   CREATION   MODEL   VALUE   PROPOSITION   MODEL   PROFIT   (SHARED  VALUE)   MODEL   Discover   (Iden'fy/Define/List/   Analyze)         Plan   (Design/Hypothesize/ Generate/Brainstorm)         Build   (Do/Test/Prototype/   Demo/Pilot/Execute)         Measure   (Check/Evaluate/   Validate  Impact:   Delight/Pain)         Learn   (Lessons/Insights/   To  Do)   THE  5  STAGES  OF  USING  THE  3-­‐ACT  BUSINESS  MODEL  STORYBOARD          Discover.  Plan.  Build.  Measure.  Learn  
  • 40. THE  5  STAGES  OF  USING  THE  3-­‐ACT  BUSINESS  MODEL  STORYBOARD          Discover.  Plan.  Build.  Measure.  Learn     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   3-­‐ACT  BUSINESS   MODEL  (3BM)   STORYBOARD:   Visual  Checklist   BUSINESS  MODEL   BUSINESS  MODEL   ENVIRONMENT    VALUE   CREATION   MODEL   VALUE   PROPOSITION   MODEL   PROFIT   (SHARED  VALUE)   MODEL   Discover   (Iden'fy/Define/List/   Analyze)   q  Team  Members   q  Core   Competences/ Capabili8es   q  Key  Processes/            Ac8vi8es   q  Internal   Resources   q  Market  (Study/   Research/Trends/ Segmenta8on)   q  Customer  Personas   q  Customer  Obstacles/   Job-­‐To-­‐Get-­‐Done   q  Business  Vision/Goal/ Job-­‐To-­‐Get-­‐Done   q  Targeted  Profit     q  Profit  Margin   q  Revenue  (Pricing)   q  Cost   q  Return  on  Assets   q  Profit  Model   Strategies/Tac8cs/            PaXerns   q  Industry  Classifica8on  &  Size   q  Industry  (AXrac8veness/Value)   Analysis,  Trends,  and  Opportuni8es   q  Compe8tor  Analysis  (Nearest   Compe8tor  Offers)  &  Strategy   q  Partners/Collaborators   q  Related  Communi8es   q  Lifecycle  Investment  Plan/Sponsors   Plan   (Design/Hypothesize/ Generate/Brainstorm)   q  Product/Service   q  Processes   q  Team/Culture   q  Int.  Resources   q  Value  Proposi8on   q  Customer  Obstacles/   Job-­‐To-­‐Get-­‐Done   q  Channels/Landing  Page   q  Profit  Margin   q  Revenue  (Pricing)   q  Cost   q  Customer  Behavior   q  “Unfair”  Compe88ve  Advantage   q  Compe88ve  Strategy  &  Tac8cs   q  Marke8ng  Strategy  &  Tac8cs   Build   (Do/Test/Prototype/   Demo/Pilot/Execute)   q  Product/Service   q  Processes   q  Team/Culture   q  Int.  Resources   q  Value  Proposi8on   q  Customer  Obstacles/   Job-­‐To-­‐Get-­‐Done   q  Channels/Landing  Page   q  Profit  Margin   q  Revenue  (Pricing)   q  Cost   q  Customer  Behavior   q  “Unfair”  Compe88ve  Advantage   q  Compe88ve  Strategy  &  Tac8cs   q  Marke8ng  Strategy  &  Tac8cs     Measure   (Check/Evaluate/   Validate  Impact:   Delight/Pain)   q  Product/Service   q  Processes   q  Team/Culture   q  Int.  Resources   q  Value  Proposi8on   q  Customer  Obstacles/   Job-­‐To-­‐Get-­‐Done   q  Channels/Landing  Page   q  Profit  Margin   q  Revenue  (Pricing)   q  Cost   q  Customer  Behavior   q  “Unfair”  Compe88ve  Advantage   q  Compe88ve  Strategy  &  Tac8cs   q  Marke8ng  Strategy  &  Tac8cs     Learn   (Lessons/Insights/   To  Do)   q  “Unfair”  Compe88ve  Advantage   q  Compe88ve  Strategy  &  Tac8cs   q  Marke8ng  Strategy  &  Tac8cs  
  • 41.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   Inputs/Partners           Internal  Resources           Processes/AcVviVes           Product/Value  ProposiVon           Channels  &  RelaVonships           Customer/Job-­‐To-­‐Get-­‐Done           Cost  (Pain)           Revenue  (Delight)           PROFIT  (VALUE)           PROFIT   MODEL   Dream  Viability  Tes8ng  (DVT):   First,  Visualize  the  Desired   Profitability  of  Your  Business  Model    3-­‐ACT  BUSINESS  MODEL   Worm’s  Eye  View   (Each  sub-­‐model  consists  of  3  panels)    
  • 42.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   Inputs/Partners   q What  material,  informa'on,   and  capital  are  needed  prior   to  launching  product?   q What  partners/alliances  are   needed?     Internal  Resources   q Who  are  team  members?   q What  hard  assets  (equip-­‐ ment/infra’)  will  are  needed   prior  to  launching  product?   q What  technology  is  needed?     Processes/AcVviVes   q What  are  development   ac8vi8es  that  must  be   completed  prior  to  launching   product/service/tool?     Product/Value  ProposiVon   q What  product/service/tool  will   customer  use  and/or  buy?   q Why  will  customer  buy  product/ service/tool?       Channels  &  RelaVonships   q How  will  product/service/tool   be  delivered  to  customer?   q What  sort  of  rela8onship  will   business  have  with  customer?   q How  will  customer  be  engaged,   acquired,  and  retained?   Customer/Job-­‐To-­‐Get-­‐Done   q What  customer  will  use  and/or   buy  product/service/tool?   q What  job  is  customer  trying  to   get  done?  What  are  obstacles?   q What  is  customer  pain?   q What  is  customer  delight?       Cost  (Pain)   q At  what  price  will  customer   buy  product/service/tool?   q What  effort  will  customer   expend  in  buying  product?   q What  is  customer  acqu.  cost?   q What  is  annual  total  cost?   Revenue  (Delight))   q How  soon  will  customer  buy?   q How  many  and  o`en  will   customer  buy?     q How  will  customer  pay?   q What  will  be  annual  total   revenue?   PROFIT  (VALUE)   q What  will  be  the  annual   profit  margin?   q What  will  be  the  annual   profit?       3-­‐ACT  BUSINESS  MODEL   …………………………………………………..   PROFIT   MODEL   Dream  Viability  Tes8ng  (DVT):   Ques'ons   Note:  The  above  ques8ons  are  based  on  John  Mullins  and  Randy  Komisar’s  book,  “Geyng  to  Plan  B”  
  • 43.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION  MODEL   (“Build”)   VALUE  PROPOSITION  MODEL   (“Discover”;  “Plan”)   Inputs/Partners   q Materials/Supplies   q Informa8on   q Investment  Capital   q Strategic  Alliances/Partners   q Co-­‐creators/Contractors     Internal  Resources   (Physical/Intellectual/Emo'onal/ Spiritual  Resources)   q Employees   q Machinery/Infra’  Facili8es   q Technology/IP   q Brand/Culture   Processes/AcVviVes   q Discover   q Plan   q Build   q Measure   q Learn   Product/Value  ProposiVon   q Value  Proposi8on  Requirements   q Value  Proposi8on  Statement   q Product/Service/Tool:  Features       Channels  &  RelaVonships   q Online  Channels   q Offline  Channels         Customer/Job-­‐To-­‐Get-­‐Done   q Customer-­‐Protagonist   q Stage  (Arena);  Conflict  Zone   q Cri8cal  Problem   q Task/Job-­‐To-­‐Get-­‐Done/Quest   q Constraints/Obstacles   q Success  Criteria  (Outcomes)   Cost  (Pain)   q Cost  of  Customer  Acquisi8on   q Total  Cost   q Opera'ng  Cost   q Working  Capital       Revenue  (Delight)   q E:  Engagement   q A:  Acquisi8on   q A:  Ac8va8on   q R:  Reten8on   q R:  Referral   q R:  Revenue   PROFIT  (VALUE)   q High  Profit  Margin  (Price):   Low  Volume;  Low  Velocity   q Low  Profit  Margin  (Price):   High  Volume;  High  Velocity   q Gross  Margin   q Customer  Life8me  Value   PROFIT  MODEL   (“Measure”)   Dream  Viability  Tes8ng  (DVT):   Checklist    3-­‐ACT  BUSINESS  MODEL   (“Learn”)  
  • 44.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION  MODEL:   COST  REDUCTION   VALUE  PROPOSITION  MODEL:   REVENUE  INCREASE   Inputs/Partners   q Co-­‐crea8on;  Social  Media   q Open  Source  Collabora8on   q Crowd-­‐funding/sourcing   q Frac8onaliza8on/Co-­‐owner   q Investor/Sponsor/Donor   q Mergers  &  Acquisi8ons   Internal  Resources   (Physical/Intellectual/Emo'onal/ Spiritual  Resources)   q Creator;  Broker;  Landlord   q Peer-­‐to-­‐Peer  Pla|orm   q Facilitated  Network   q Patents  (“Fences”;  Barriers)     Processes/AcVviVes   q Opera8onal  Excellence;  JIT   q Automa8on  (Self-­‐service/DIY)   q Gamifica8on;  Digitaliza8on   q Ecosystem  Management   q Problem  Solving;  Consul8ng   q Compe88ve  Strategies   Product/Value  ProposiVon   q Asset  Sale/Direct  Sale   q Product  Leadership/Extension   q Used/2nd  Hand  Product;  Bargain   q Customiza8on  (Value  Factors)   q Bundling/Unbundling   q Product/Sooware  as  a  Service   Channels  &  RelaVonships   q Offline/Online;  (In)direct  Sale   q Franchise;  Licensing;  Affiliates   q Distributor;  Disintermediator   q Ad  Network;  Brand  Mul8plier   q Aggrega8on/Disaggrega8on   q Auc8on/Reverse  Auc8on   Customer/Job-­‐To-­‐Get-­‐Done   q Customer  In8macy/Loyalty   q B2B;  B2C   q Long  Tail;  Community  (Hub)   q Two-­‐sided  Market  (Segments)   q Mul8-­‐sided  Market  (Pla|orm)   q Luxury/Mass  Market/Niche   Cost  (Pain)   q Outsourcing;  Specializa8on   q Group  Deals   q Lending/Ren8ng/Leasing   q Cross-­‐subsidiza8on   q Frac8onaliza8on/Co-­‐owner     Revenue  (Delight)   q Pre-­‐payment;  Amor8za8on   q Discount;  Dynamic  Pricing   q Razor  Blade  (“Bait  &  Switch”)   q Usage  Fee;  Subscrip8on  Fee   q Tiered  Payment;  Freemium   q Dona8on;  Free   PROFIT  (VALUE)   q Shared  Value  (Profit)   q Transient  Compe88ve  Adv.   q Sustainable  Compe88ve  Adv.   q Red  Ocean;  Low  Cost/Margin   q Blue  Ocean;  Luxury  Spot   q Disrup8ve  Innova8on  Spot   PROFIT  MODEL:   PROFIT  INCREASE   Dream  Viability  Tes8ng  (DVT):   Paserns/Tac'cs     51  BUSINESS  PROFIT  PATTERNS   (Business  Model  Choices  for  Compe''ve  Advantage)  
  • 45.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   3-­‐ACT  BUSINESS  MODEL  STORYBOARD    Bird’s  Eye  View  (Business  Model  Chain:  Macro-­‐Logic)   VALUE  SHARING   (PROFIT)  MODEL   delivers   requires   drives   requires  
  • 46.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   VALUE  SHARING   (PROFIT)  MODEL   delivers   requires   drives   requires   3-­‐ACT  BUSINESS  MODEL  STORYBOARD   Eagle’s  Eye  View  (Business  Model  Tree  –  Hierarchical  Decomposi'on  of  Macro-­‐Logic)   Product/Value  ProposiVon         Channels  &  RelaVonships         Customer/Job-­‐To-­‐Get-­‐Done         Inputs/Partners         Internal  Resources         Processes/AcVviVes         Cost  (Pain)         Revenue  (Delight)         PROFIT  (VALUE)        
  • 47.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   VALUE  SHARING   (PROFIT)  MODEL   delivers   requires   drives   requires   3-­‐ACT  BUSINESS  MODEL  STORYBOARD   Eagle’s  Eye  View  (Generic  Business  Model  Network:  Meso-­‐Logic)   Product/Value  ProposiVon         Channels  &  RelaVonships         Customer/Job-­‐To-­‐Get-­‐Done         Inputs/Partners         Internal  Resources         Processes/AcVviVes         Cost  (Pain)         Revenue  (Delight)         PROFIT  (VALUE)        
  • 48.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   VALUE  SHARING   (PROFIT)  MODEL   delivers   requires   drives   requires   3-­‐ACT  BUSINESS  MODEL  STORYBOARD   Eagle’s  Eye  View  (Generic  Business  Model  Network:  Meso-­‐Logic)   Product/Value  ProposiVon         Channels  &  RelaVonships         Customer/Job-­‐To-­‐Get-­‐Done         require(s)   sa'sfy/ies   require(s)   sa'sfy/ies   Inputs/Partners         Internal  Resources         Processes/AcVviVes         require(s)   affect(s)   require(s)   deliver(s)   Cost  (Pain)         Revenue  (Delight)         PROFIT  (VALUE)         requires   drive(s)   delights  
  • 49. AGRICULTURE  &  MINING  Industry   SERVICE  Industry   INFRASTRUCTURE/PLATFORM  Management   MANUFACTURING  Industry          PROFIT  MODEL  CLASSIFICATION  SYSTEM  (PMCS)    -­‐  By  Industry  (Categories  of  Products/Services)            How  Businesses  Really  Make  Money  and  Win  Business  Model  Compe88ons  in  the  Imita8on  Economy     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   GENERIC  POFIT  MODELS         What  industry  is  the  business  (or  customer)  in?  
  • 50. AGRICULTURE  &  MINING  Industry   SERVICE  Industry   INFRASTRUCTURE/PLATFORM  Management   MANUFACTURING  Industry          PROFIT  MODEL  CLASSIFICATION  SYSTEM  (PMCS)    -­‐  By  Sector  of  Industry  (Categories  of  Products/Services)      How  Businesses  Really  Make  Money  and  Win  Business  Model  Compe88ons  in  the  Imita8on  Economy     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hXp://businessmodels.ning.com  &  hXp://twiXer.com/RodKuhnKing   GENERIC  PROFIT  MODELS         q Healthcare,  Life  Sciences,  and  Pharmaceu'cals   q Chemicals  Manufacturing   q Autos,  Trucks,  Trains,          Ships,  and  Other  Vehicles   q Consumer  Products  Manufacturing   q Aerospace  &          Defense   q Food,  Beverage,  and  Tobacco  Manufacturing   q Mining,  Metals,  Energy,  U'li'es,  and          Environmental  Services   q Agriculture,  Forestry,  Fishing,          and  Hun'ng   q Insurance     q Food  Services  &  Lodging   q Construc'on  &  Eng.   q Healthcare   q Banking,  Fin.          Markets  &  Services   q Consumer,  Educa'on,  Real          Estate  and  Public  Services   q IT   Services   q Business  &  Consul'ng  Services   q Retail   q Media  &  Entertainment     Note:  The  above  descrip8on  of  sectors  is  based  on  the  IBBCS;  see  hXp://www.industrybuildingblocks.com/Industry-­‐Groups.php       q Travel   What  industry  is  the  business  (or  customer)  in?   Who  is  the  customer-­‐protagonist  (most  dissa'sfied)?   What  is  the  customer  Job-­‐To-­‐Get-­‐Done?   What  is  the  profit  model  of  the  business  (customer)?   What  are  analogs  and  an'logs  of  the  profit  model?  
  • 51. Past  Reality     Business  Profit                 Present  Reality   Business  Profit               Future  Reality   Business  Profit                 Business   Model   (3_Act)   Business   Model   (3-­‐Act)   Business   Model   (3-­‐Act)   Industry   Ecosystem   Market   Ecosystem   Business  Model   (3-­‐Act)   Macro-­‐Economic  Influencers   Key  Trends  &  Complementors   Mission/Vision/ Purpose/Ideals/   Ideal  Final  Result   For   Business   Profit     #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   Strategy   Short/Medium/Long-­‐term   3-­‐Act  Business  Model  (3BM)  Plan     4  Pivot  Ques'ons  
  • 52. Past  Reality   Business  Profit                 Present  Reality   Business  Profit               Future  Reality   Business  Profit                   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing   Strategy   Short/Medium/Long-­‐term   WHAT  to  pivot?   TO  WHAT  to  pivot?   WHY  pivot?   HOW  to  pivot?   3-­‐Act  Business  Model  (3BM)  Plan     4  Pivot  Ques'ons  
  • 53.                 Is  Your  Dream  Business  Idea  Viable?       #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hap://businessmodels.ning.com  &  hap://twiaer.com/RodKuhnKing  

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