Business model canvas 2013

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Entrepreneurship Course- Lecture on Business Models 2013

Entrepreneurship Course- Lecture on Business Models 2013

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  • A niche market is a focused, targetable portion of a market.By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. You can think of a niche market as a narrowly defined group of potential customers. In other words, a very specific market segment within a broader segment.A niche market involves specialist goods or services with relatively few or no competitors.
  • Why Swedish start ups are global?Number of Old people increasing..Which language do you provide service, Customer support languageNo infrastructure for banking, telecom,

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  • 1. Business Models Serdar Temiz, temiz@kth.se ME2603 Entrepreneurship 6.0 credits Serdar Temiz temiz@kth.se 2013
  • 2. About me • Master in ICT Entrepreneurship • SSES Alumni • Previously Software Developer/ Project Manager • PhD Candidate at Indek KTH • Business/ Project developer/adviser for private companies • www.Opensweden.net Serdar Temiz temiz@kth.se 2013
  • 3. In reallity... • Life long learner and a do-er Serdar Temiz temiz@kth.se 2013
  • 4. This presentation • Not about a specific business idea • About business processes • About business model innovation • It is pretty long • Feel free to fall asleep, interrupt or leave • I hope you know all this already. • If not, I really think it can give you a lot Serdar Temiz temiz@kth.se 2013
  • 5. Why should I listen to you? • Do not listen me! IT IS YOUR RESPONSIBILITY TO QUESTION ALL ASSUMPTIONS. MINE, YOURS, EXPERTS. Serdar Temiz temiz@kth.se 2013
  • 6. Recap: What is Entepreneurship? The process of coordinating resources to exploit or take advantage of opportunities that exists in the market or are created by innovation in an attempt to create value. (Brown, 1994) Serdar Temiz temiz@kth.se 2013
  • 7. Where Entepreneur Jumps in? product / service need/ expectation Serdar Temiz temiz@kth.se 2013
  • 8. Some Questions • Who is your customer? • What is Innovation • Why it matters Serdar Temiz temiz@kth.se 2013
  • 9. Invention vs Innovation Business Plan vs Business Model Serdar Temiz temiz@kth.se 2013
  • 10. There are many inventions, but far fewer innovations. An invention is a novel idea Innovation is the commercialization of that novel idea Serdar Temiz temiz@kth.se 2013
  • 11. FORTUNE 500 • “Two thirds of the original 1955 list was gone within three decades” William Shanklin* • The rate at which large American companies left the Fortune 500 increased four times between 1970 and 1990 a change of almost 50% from the 1999 Fortune 500 to the 2009 Fortune 500 John Micklethwait & Adrian* Wooldridge, • *(cited in Dane Stangler and Sam Arbesman WHAT DOES FORTUNE 500 TURNOVER MEAN ) Serdar Temiz temiz@kth.se 2013
  • 12. Turnover Rate in Fortuna 500 • Dane Stangler and Sam Arbesman WHAT DOES FORTUNE 500 TURNOVER MEAN Serdar Temiz temiz@kth.se 2013
  • 13. Types of Innovation 1. Technology innovation 2. Process innovation 3. Product & service innovation 4. Business Model innovation Serdar Temiz temiz@kth.se 2013
  • 14. Process innovation • Implementation of a new or significantly improved production or delivery method • Ford Car Production • Dell Computers Serdar Temiz temiz@kth.se 2013
  • 15. Technology innovation • 3D printing • Touch screen • You name it. Serdar Temiz temiz@kth.se 2013
  • 16. Product & service innovation • Customer Support & Communication via FB– airbaltic • Facebook itself Serdar Temiz temiz@kth.se 2013
  • 17. Business Model Innovation • Why is it important? Serdar Temiz temiz@kth.se 2013
  • 18. Why business models matter? Joan Magretta • Who is the customer and what does the customer value? • How do we make money from the business? • How can we deliver value to the customer at an appropriate cost? • Writing a new story • A better way than existing alternatives • Making the number add up • Tweaking on the fly based on feedback Serdar Temiz temiz@kth.se 2013
  • 19. Business Model Warfare Langdon Morris • Business mortality is high • Technology innovation by itself has rarely been sufficient to ensure the future. • Similar products and services • Advantages resulting from a successful business models are fleeting. Models need to be continuously reviewed and updated when necessary Serdar Temiz temiz@kth.se 2013
  • 20. Operating Margin Growth in Excess of Competitive Peers [Source: IBM, CEOs are expanding the innovation horizon: important implications for CIOs] Compound annual growth rate over five years Serdar Temiz temiz@kth.se 2013
  • 21. Benefits Cited by Business Model Innovators % of responders Source: IBM, Global CEDO Study 2006 Serdar Temiz temiz@kth.se 2013
  • 22. How Business Models Emerge (1 of 3) – The value chain is the string of activities that moves a product from the raw material stage, through manufacturing and distribution, and ultimately to the end user. • Primary activities are directly concerned with the creation or delivery of a product or service. • Support activities help to improve the effectiveness or efficiency of primary activities Raw Material Value Chain Primary & Secondary Activities + Margin Product / Service Serdar Temiz temiz@kth.se 2013
  • 23. How Business Models Emerge (2 of 3) The Value Chain (again) "Competitive Advan tage: Creating andSustaining superior Performance" (1985). Serdar Temiz temiz@kth.se 2013
  • 24. How Business Models Emerge (3 of 3) • The Value Chain (continued) – Entrepreneurs look at the value chain of a product or a service to pinpoint where the value chain can be made more effective or to spot where additional “value” can be added. • This type of analysis may focus on (1) a single primary activity of the value chain (such as marketing and sales), (2) the interface between one stage of the value chain and another (such as the interface between operations and outgoing logistics), or (3) one of the support activities (such as human resource management). Serdar Temiz temiz@kth.se 2013
  • 25. Business Models Generation Alexander Osterwalder • “A business model describes the rationale of how anorganization creates, delivers,and captures value.” Serdar Temiz temiz@kth.se 2013
  • 26. A business Model is.. • The business model is a strategic plan to be implemented through organizational structures, processes, and systems in order to need customer needs. Serdar Temiz temiz@kth.se 2013
  • 27. Simple Business Model Value Proposition Revenue Model Production Model Delivery Model Serdar Temiz temiz@kth.se 2013
  • 28. Simple Business ModelValueProposition 10 RevenueModel 10 ProductionModel 10 DeliveryModel 10 Serdar Temiz temiz@kth.se 2013
  • 29. Forces affecting the business model • Customer needs • Competition • Technological change • Social change • Legal environment Serdar Temiz temiz@kth.se 2013
  • 30. Pivoting • Changing important part of business model • - can be simple: chancing pricing • -can be complex: target customer, user needs change, feature set changes, new distribution channel Serdar Temiz temiz@kth.se 2013
  • 31. Basic Business Model Map Product/Service Ecosytem Customer EcoSystem Finance Value Serdar Temiz temiz@kth.se 2013
  • 32. • Who is customer • How do you reach customer • What is your value proposition /USP • How to you communicate customer • What are your resources • What is your enviromental costs/benefits • What are your key activities • What are your key partners • How do you make money? Serdar Temiz temiz@kth.se 2013
  • 33. There are different type of Business Model Maps Serdar Temiz temiz@kth.se 2013
  • 34. • Henry Chesbrough & Richard Rosenbloom Serdar Temiz temiz@kth.se 2013
  • 35. intacam's Business Model MapperTM Serdar Temiz temiz@kth.se 2013
  • 36. Serdar Temiz temiz@kth.se 2013
  • 37. Mark JohnsonSerdar Temiz temiz@kth.se 2013
  • 38. Business Model Canvas Serdar Temiz temiz@kth.se 2013
  • 39. The 9 building blocks for Business Model Canvas 1. Customer Segments 2. Value proposition 3. Channels 4. Customer Relationships 5. Revenue Streams 6. Key Resource 7. Key Activities 8. Key Partnerships 9. Cost Structure Serdar Temiz temiz@kth.se 2013
  • 40. 1. Customer Segment • For whom are we creating value? • Who are our most important customers? • Customer Segments – Mass Market – Niche market – Segmented - related customer segments: frequent flier program, bank customers with big assets – Diversified: Unrelated customer segments: Amazon – Multi sided: free newspaper-readers and advertisers Serdar Temiz temiz@kth.se 2013
  • 41. Find a Customer-I • Why? • Who is your customer? Grave, School, hospital, apotek, free newspaper • Can everyone be your customer? • "people who want to buy a flat," • "anyone needs job" • “Everyone who goes to university” Serdar Temiz temiz@kth.se 2013
  • 42. Find a Customer-II • Find a customer for solving a pain • Use the Customer Profile • Describe who is making purchasing decision? IT ? Operations Group? Management? • Make sure they are happy • Market is important but -do not only think market • Billion dollar market does not start in few minutes Serdar Temiz temiz@kth.se 2013
  • 43. Q’s for Customer IDENTIFIABLE – what distinguishes them? MEASURABLE – how many belong to your target segment? REACHABLE – how to reach, communicate with each segment WILLING– do they want it? ABLE– they want but can they afford it? Serdar Temiz temiz@kth.se 2013
  • 44. Q’s for Customer - Macro Level • Population size • Population character • Disposable income levels • Educational background • Primary languages • Infrastructure • Regulations • Political affiliation • And so on… Serdar Temiz temiz@kth.se 2013
  • 45. Keep In Mind -Paradox • Customer is important but you can not give all they want • Learn to stay No, • Learn to focus • Learn to ”change and adopt” • They may not know what they want: buying process is mysterious Serdar Temiz temiz@kth.se 2013
  • 46. 2.Value Proposition • a bundle that meets that meets a customer's needs or solve his/her problem. • benefits can be tangible and intangible • Reason why customers pick one business or another. • can be – innovative, new disruptive offer – similar to existing offers but just added feature or attribute in some sort of way Serdar Temiz temiz@kth.se 2013
  • 47. Q’s to answer – Value Proposition • What pain do we solve for customer? • What do we deliver for customer? • What value do we develop for customer • Which need of customer do we satisfy? Serdar Temiz temiz@kth.se 2013
  • 48. Some Elements that may add to value • newness • customization • getting job done • support • price • design • status/ brand • Accessibility • risk deduction • usability Serdar Temiz temiz@kth.se 2013
  • 49. 2. Value Proposition - Q’s to answer – • What pain do we solve for customer? • What do we deliver for customer? • What value do we develop for customer • Which need of customer do we satisfy? Serdar Temiz temiz@kth.se 2013
  • 50. 3. Channels • Awareness of products and services, Evaluation of value proposition, Purchase, Delivery, After sales • Direct: Brick and mortal stores, websales, sales force • Indirect: wholesales partner stores, Value Proposition Customer Segment Serdar Temiz temiz@kth.se 2013
  • 51. 3. Channels- Qs • Through which Channels do our Customer Segments want to be reached? • How are we reaching them now? • How are our Channels integrated? • Which ones work best? • Which ones are most cost-efficient? Serdar Temiz temiz@kth.se 2013
  • 52. 4. Customer Relations • Customer acquisition • Customer retention • Boosting sales (upselling) Value Proposition Customer Segment Serdar Temiz temiz@kth.se 2013
  • 53. Example Customer Services Can you give some example companies? • (Dedicated)Personal assistance • Self Service • Community • Co-creation • Automated Serdar Temiz temiz@kth.se 2013
  • 54. 4. Customer Relationships • What type of relationship does each of our Customer Segments expect us to establish and maintain with them? • Which ones have we established? • How costly are they? • How are they integrated with the rest of our business model? Serdar Temiz temiz@kth.se 2013
  • 55. 5. Revenue Streams • For what value are our customers really willing to pay? • One time/ recurring? • For what do they currently pay? • How are they currently paying? • How would they prefer to pay? • How much does each Revenue Stream contribute to overall revenues? Serdar Temiz temiz@kth.se 2013
  • 56. 5.Revenue Streams •ChannelsValue Proposition Customer Segment • Asset sale • Usage fee: use more, pay more • Subscription: monthly, yearly • Leasing/Lending/Renting • Licensing: patents, license fee • Brokerage fees • Advertising Fixed pricing Dynamic pricing Serdar Temiz temiz@kth.se 2013
  • 57. 5.Revenue Streams Fixed pricingDynamic pricing • List price • Product feature dependent • Customer segment dependent • Volume dependent • Yield management : hotels, airlines • Real-time-market :supply and demand • Auctions Price • Negotiation Serdar Temiz temiz@kth.se 2013
  • 58. 6. Key Resources Value Proposit ion physical financial intellectual human Key resources can be owned or leased by the company or acquired from key partners. Serdar Temiz temiz@kth.se 2013
  • 59. 6. Key Resources • What Key Resources do our Value Propositions require? • Our Distribution Channels? • Customer Relationships? • Revenue Streams? • What physical resources, intellectual, human, financial resources do we have? Serdar Temiz temiz@kth.se 2013
  • 60. 7. Key Activities • What Key Activities do our Value Propositions require? • Our Distribution Channels? • Customer Relationships? • Revenue streams? • Production- Microsoft • Problem Solving: Mc Kinsey • Network/Platform: Facebook, ebay, Visa Serdar Temiz temiz@kth.se 2013
  • 61. 8. Key Partnerships Why Partnership? – reduce cost, – Reduction of risk and uncertainty: Blu Ray Tech. – Acquisition of particular resources and activities: Nokia Windows, HTC phones • Strategic alliances between non-competitors • Coopetition: strategic partnerships between competitors • Joint ventures to develop new businesses • Buyer-supplier relationships to assure reliable supplies Serdar Temiz temiz@kth.se 2013
  • 62. 8. Key Partnerships -II • Who are our Key Partners? • Who are our Key suppliers? • Which Key Resources are we acquiring from partners? • Which Key Activities do partners perform? Serdar Temiz temiz@kth.se 2013
  • 63. 9. Cost Structure-I • Business model Cost Structures: cost-driven minimizing costs wherever possible value-driven Premium Value Propositions and a high degree of personalized service Serdar Temiz temiz@kth.se 2013
  • 64. 9. Cost Structure-II • Cost Structure Characteristics: • minimizing costs wherever possibleFixed costs • Premium Value Propositions and a high degree of personalized serviceVariable costs • average cost per unit to fall as output risesThe same Distribution Economies of scale • Channels for different products and servicesmay support multiple products. Economy of Scope Serdar Temiz temiz@kth.se 2013
  • 65. 9. Cost Structure • What are the most important costs inherent in our business model? • Which Key Resources are most expensive? • Which Key Activities are most expensive? Serdar Temiz temiz@kth.se 2013
  • 66. In Total Serdar Temiz temiz@kth.se 2013
  • 67. Problems with this canvas? Serdar Temiz temiz@kth.se 2013
  • 68. Serdar Temiz temiz@kth.se 2013
  • 69. Spotify Business Model Serdar Temiz temiz@kth.se 2013
  • 70. Business Model Canvas – Spotify- September 2013 Key Partners Key Activities Value Propositions • . Customer Relationships Customer Segments Key Resources Channels Cost Structure Revenue Streams Serdar Temiz Stockholm-Sweden Listeners• Legal music for free or minimum payment • Be social when you listen • Music based on mood • Automated service • self service (FAQ) • Community forum • Customer Service • Awareness at social media • Mobile application • Desktop application • Spotify.com Advertisers • self service : on learning how ads are located in the spotify etc. • personal assistance: to put ad, advertisers should get in touch directly • Targeted advertisement- • commercials between songs: make listeners sure to listen • Awareness with social media partners (fb, msn) • Customer center representative • Keep technology up and running • Adding more music, label, artists to Spotify offering • Launching Spotify in different countries • Music, • Server, • Brand • Employees • Labels, • aggregators (e.g merlin network ) • Facebook • License fee • Salaries • Technology cost • Subscription of unlimited and premium customers, • Advertisement revenue Serdar Temiz temiz@kth.se 2013
  • 71. • Are we done? Serdar Temiz temiz@kth.se 2013
  • 72. Business Model Canvas – Spotify- September 2013 Key Partners Key Activities Value Propositions • . Customer Relationships Customer Segments Key Resources Channels Cost Structure Revenue Streams Serdar Temiz Stockholm-Sweden Listeners• Legal music for free or minimum payment • Be social when you listen • Music based on mood • Automated service • self service (FAQ) • Community forum • Customer Service • Awareness at social media • Mobile application • Desktop application • Spotify.com Advertisers • self service : on learning how ads are located in the spotify etc. • personal assistance: to put ad, advertisers should get in touch directly • Targeted advertisement- • commercials between songs: make listeners sure to listen • Awareness with social media partners (fb, msn) • Customer center representative • Keep technology up and running • Adding more music, label, artists to Spotify offering • Launching Spotify in different countries • Music, • Server, • Brand • Employees • Labels, • aggregators (e.g merlin network ) • Facebook • License fee • Salaries • Technology cost • Subscription of unlimited and premium customers, • Advertisement revenue Developers • developer.spotify.com/ • physical meetups Can add music to their code ???? Serdar Temiz temiz@kth.se 2013
  • 73. Business Model Canvas – Spotify- September 2013 Key Partners • Labels, • aggregators (e.g merlin network ) • Facebook Key Activities • Keep technology up and running • Adding more music, label, artists to Spotify offering • Launching Spotify in different countries (currently only in Sweden, Norway, Finland, the UK, France, Spain, the Netherlands and the US ) Value Propositions • Legal music for free or minimum payment • Be social when you listen • Music based on mood • Targeted advertisement- • commercials between songs: make listeners sure to listen • Can add music to their code. Customer Relationships • Automated service • self service (FAQ) • Community forum • Customer Service • self service : on learning how ads are located in the spotify etc. • personal assistance: to put ad, advertisers should get in touch directly Customer Segments Listeners Advertisers Developers Key Resources • Music, • Server, • Brand • Employees Channels • Awareness at social media • Mobile application • Desktop application • Spotify.com • Awareness with social media partners (fb, msn) • Customer center representative • developer.spotify.com/ • physical meetups Cost Structure • License fee • Salaries • Technology cost Revenue Streams • Subscription of unlimited and premium customers, • Advertisement revenue StartupAcademy.se Stockholm-Sweden Serdar Temiz temiz@kth.se 2013
  • 74. Facebook’s Canvas? Serdar Temiz temiz@kth.se 2013
  • 75. Serdar Temiz temiz@kth.se 2013
  • 76. iTune’s Canvas Serdar Temiz temiz@kth.se 2013
  • 77. Serdar Temiz temiz@kth.se 2013
  • 78. Twitter’s Canvass Serdar Temiz temiz@kth.se 2013
  • 79. Serdar Temiz temiz@kth.se 2013
  • 80. Thank you Serdar Temiz temiz@kth.se Serdar Temiz temiz@kth.se 2013