0
DESIGNING &
TESTING
BUSINESS MODELS
AlexOsterwalder.com
@business_design

SteveBlank.com
@sgblank
?

where do I come
from, 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.le...
this workshop day combines two global bestsellers

+

BusinessModelGeneration.com

SteveBlank.com/books.html
Swiss Time
Machine
1958
[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
2009
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 major
bookstore chains (ʻ07-ʼ09)
?
so what did
we do?
we changed the product...
?

would a big publishing
house have taken us on
with this book?
No!
we changed the business model...
“

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

”
$24.-
$36.-
$54.-
$81.-
$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 models
enable (new) products
and technologies and
help solve (entirely
new) customer
problems
the 100
Million dollar
question
how do you search for the
right business model?
1
2
3
4

understanding
business models
prototyping alternatives
of “what could be”
evaluating your
business model design
t...
1

but hey,
what is a
business
model
anyways?
?
whatʼs a
business
model?
?

?
Business
Model Canvas
to describe, challenge,
design, and invent

business models more
systematically
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
activities

value
proposition

customer
relationships

key

customer

partners

segments

cost
structure

key
resource...
The Business Model Canvas
value

key

proposition

activities

KEY
PARTNERS
key

KEY
ACTIVITIES

OFFER

building

CUSTOMER...
BusinessModelGeneration.com/canvas
illustration
how much less or more do
the Swiss pay per gram of
coffee consumed at home
compared to a decade ago?
600% to
800%
more
Nespresso
changed the
business model
for espresso
RESULTS
own
recycling
containers
one of the fastestgrowing businesses in
the Nestlé group
average growth of
30% p.a. since 2000
global sales of
3.8+ billion USD
Nespresso’s business Model
KEY
PARTNERS

KEY
ACTIVITIES
B2C
tion
distribu

ine
coffee mach
rs
manufacture

Nespre

CUSTOME...
but Nespresso almost failed in
1987 due to a nonperforming
business model
Nespresso’s 1987 Model
KEY
PARTNERS

KEY
ACTIVITIES

machine

manufacturer

KEY
RESOURCES

Value
Proposition

Nespresso
sy...
now Nestlé is building a
portfolio of business models
in their coffee business
BusinessModelGeneration.com/canvas
2

prototype
alternatives
and ask
yourself what
could be
?

letʼs take some time to
work on a really, really big
issue in the world?
access to
proper
sanitation
2.6 billion
people lack
access
4 out of 10 people in the world lack
even the most simple latrine to perform
their needs
* single-use toilet bag
* self-sanitizing
* biodegradable
* turns into fertilizer
* (mainly) targeted at poor people
* low...
The Business Model Canvas
KEY
PARTNERS

KEY
ACTIVITIES

KEY
RESOURCES

COST STRUCTURE

OFFER

CUSTOMER
RELATIONSHIPS

CHAN...
mini
brainstorming
session
come up with as many business
model ideas as possible for the
Peepoo bag (not full Canvases)
* single-use toilet bag
* self-sanitizing
* biodegradable
* turns into fertilizer
* (mainly) targeted at poor people
* low...
make rough
prototypes of the
different alternatives
to analyze, evaluate
and compare them
rank
F
hry
Ge
[source: Sony Pictures]
[source: Sony Pictures]
[source: Sony Pictures]
[source: Wikimedia Commons]
?

what does that have to do
with business models and
my organization?
no architect would
build something that
resembles his first
sketch
?

what does that
mean for us?
BusinessModelGeneration.com
business model prototyping

napkin sketch

Canvas

business case

field test
“

prototyping is the
conversation you
have with your
ideas

”

Tom Wujec
3

evaluate
your
business
model
design
building
block
building
block

buildin

g blo
ck

building
block

building
block

build
ing
block
building
block

building...
SWITCHING	
  
COSTS
How	
  easy	
  or	
  difficult	
  is	
  it	
  for	
  customers	
  
to	
  switch	
  to	
  another	
  comp...
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	
  devi...
RECURRING	
  
REVENUES
Is	
  every	
  sales	
  a	
  new	
  effort	
  or	
  will	
  it	
  result	
  
in	
  follow-­‐up	
  re...
EARN	
  BEFORE	
  
YOU	
  PAY
Are	
  you	
  earning	
  money	
  before	
  
you	
  are	
  spending	
  it?
GAME	
  CHANGING	
  
COST	
  STRUCTURE
Is	
  your	
  cost	
  structure	
  substanSally	
  
different	
  and	
  beTer	
  tha...
phone	
  
calls	
  will	
  be	
  totally	
  
free	
  in	
  the	
  future
GETTING	
  OTHERS	
  
TO	
  DO	
  THE	
  WORK
How	
  much	
  does	
  your	
  business	
  
model	
  get	
  customers	
  or	...
go	
  
ahead	
  and	
  share	
  
on	
  your	
  facebook	
  
page...
...that	
  
will	
  make	
  my	
  
plaWorm	
  more	
  
valuable...
...and	
  
raise	
  my	
  plaWorm’s	
  
value(aSon)...
SCALABILITY
How	
  rapidly	
  and	
  how	
  easily	
  can	
  you	
  
grow	
  your	
  business	
  model	
  without	
  
hi[n...
VIRALITY/
NETWORK	
  EFFECT
How	
  viral	
  is	
  your	
  business	
  model?	
  
How	
  substanSal	
  are	
  the	
  benefit...
PROTECTION	
  FROM	
  
COMPETITION
How	
  much	
  is	
  your	
  business	
  model	
  
protecSng	
  you	
  from	
  compeSSo...
a product/
technology focus is
just not enough
anymore
break-out
session
BusinessModelGeneration.com/canvas
The Business Model Canvas
KEY
PARTNERS

KEY
ACTIVITIES

KEY
RESOURCES

COST STRUCTURE

OFFER

CUSTOMER
RELATIONSHIPS

CHAN...
4

testing
business
models with
customer
development
a business model might look
great on paper...

building
block
building
block

buildin

g blo
ck

building
block

building
...
... a set of hypotheses

guess

guess

guess

guess

guess

uess
g

guess

guess

guess

guess
guess
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.le...
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  1. 1. DESIGNING & TESTING BUSINESS MODELS AlexOsterwalder.com @business_design SteveBlank.com @sgblank
  2. 2. ? where do I come from, what do I do?
  3. 3. )-: my workplace
  4. 4. )-: my current MVP
  5. 5. BusinessModelGeneration.com/toolbox iPad stencil, actual scale, template by hortis, le studio. Feb. 2010. http://hortis.lestudio.ch screen: author: project: date:
  6. 6. this workshop day combines two global bestsellers + BusinessModelGeneration.com SteveBlank.com/books.html
  7. 7. Swiss Time Machine
  8. 8. 1958
  9. 9. [sources: Henry Chesbrough, photo: life.com]
  10. 10. revenue growth of 41% compounded for the next 20 years [sources: Henry Chesbrough, photo: xerox.com]
  11. 11. Swiss Time Machine
  12. 12. 2009
  13. 13. BusinessModelGeneration.com
  14. 14. 1,000,000 new book titles were published in the U.S. in ʼ10
  15. 15. 11,000 new business books appear every year
  16. 16. 12% decline of sales in major bookstore chains (ʻ07-ʼ09)
  17. 17. ? so what did we do?
  18. 18. we changed the product...
  19. 19. ? would a big publishing house have taken us on with this book?
  20. 20. No!
  21. 21. we changed the business model...
  22. 22. “ you canʼt write about business model innovation without an innovative business model ”
  23. 23. $24.-
  24. 24. $36.-
  25. 25. $54.-
  26. 26. $81.-
  27. 27. $250.-
  28. 28. Results
  29. 29. # in the top 10 of softcover business books in the US
  30. 30. # 170ʼ000+ English #bmgen copies in print (June 2011)
  31. 31. # 18 #bmgen translations upcoming in 2011
  32. 32. more importantly...
  33. 33. business models enable (new) products and technologies and help solve (entirely new) customer problems
  34. 34. the 100 Million dollar question
  35. 35. how do you search for the right business model?
  36. 36. 1 2 3 4 understanding business models prototyping alternatives of “what could be” evaluating your business model design testing business models with customer development
  37. 37. 1 but hey, what is a business model anyways?
  38. 38. ? whatʼs a business model?
  39. 39. ? ?
  40. 40. Business Model Canvas
  41. 41. to describe, challenge, design, and invent business models more systematically
  42. 42. 9 building blocks
  43. 43. CUSTOMER SEGMENTS images by JAM
  44. 44. VALUE PROPOSITIONS images by JAM
  45. 45. CHANNELS images by JAM
  46. 46. CUSTOMER RELATIONSHIPS images by JAM
  47. 47. REVENUE STREAMS images by JAM
  48. 48. KEY RESOURCES images by JAM
  49. 49. KEY ACTIVITIES images by JAM
  50. 50. KEY PARTNERS images by JAM
  51. 51. COST STRUCTURE images by JAM
  52. 52. key activities value proposition customer relationships key customer partners segments cost structure key resources revenue channels streams images by JAM
  53. 53. The Business Model Canvas value key proposition activities KEY PARTNERS key KEY ACTIVITIES OFFER building CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS customer block segments building building building block block building relationships building block partners block customer KEY RESOURCES block CHANNELS building block building block building block cost COST STRUCTURE key structure building resources block REVENUE STREAMS buildi ng block building channelsck blo revenue streams images by JAM
  54. 54. BusinessModelGeneration.com/canvas
  55. 55. illustration
  56. 56. how much less or more do the Swiss pay per gram of coffee consumed at home compared to a decade ago?
  57. 57. 600% to 800% more
  58. 58. Nespresso changed the business model for espresso
  59. 59. RESULTS
  60. 60. own recycling containers
  61. 61. one of the fastestgrowing businesses in the Nestlé group
  62. 62. average growth of 30% p.a. since 2000
  63. 63. global sales of 3.8+ billion USD
  64. 64. Nespresso’s business Model KEY PARTNERS KEY ACTIVITIES B2C tion distribu ine coffee mach rs manufacture Nespre CUSTOMER SEGMENTS households sso (espresso fans) Club *** Nespresso machines businesses KEY RESOURCES Nespresso distribu e coffe pods tion channel s facilities ion mail order m n COST STRUCTURE B2C distrib ut CHANNELS etail **** r ts outle Nespresso.co pod produ ctio ts paten production CUSTOMER RELATIONSHIPS marketing pod production coffee growers Value Proposition call center Nespresso stores REVENUE STREAMS marketing resso sales of Nesp pods sales of Nespress o machines
  65. 65. but Nespresso almost failed in 1987 due to a nonperforming business model
  66. 66. Nespresso’s 1987 Model KEY PARTNERS KEY ACTIVITIES machine manufacturer KEY RESOURCES Value Proposition Nespresso system CUSTOMER RELATIONSHIPS offices CHANNELS joint venture with machine manufacturer COST STRUCTURE CUSTOMER SEGMENTS REVENUE STREAMS
  67. 67. now Nestlé is building a portfolio of business models in their coffee business
  68. 68. BusinessModelGeneration.com/canvas
  69. 69. 2 prototype alternatives and ask yourself what could be
  70. 70. ? letʼs take some time to work on a really, really big issue in the world?
  71. 71. access to proper sanitation
  72. 72. 2.6 billion people lack access
  73. 73. 4 out of 10 people in the world lack even the most simple latrine to perform their needs
  74. 74. * single-use toilet bag * self-sanitizing * biodegradable * turns into fertilizer * (mainly) targeted at poor people * low production cost * people already pay for sanitation
  75. 75. The Business Model Canvas KEY PARTNERS KEY ACTIVITIES KEY RESOURCES COST STRUCTURE OFFER CUSTOMER RELATIONSHIPS CHANNELS REVENUE STREAMS CUSTOMER SEGMENTS
  76. 76. mini brainstorming session
  77. 77. come up with as many business model ideas as possible for the Peepoo bag (not full Canvases)
  78. 78. * single-use toilet bag * self-sanitizing * biodegradable * turns into fertilizer * (mainly) targeted at poor people * low production cost * people already pay for sanitation
  79. 79. make rough prototypes of the different alternatives to analyze, evaluate and compare them
  80. 80. rank F hry Ge [source: Sony Pictures]
  81. 81. [source: Sony Pictures]
  82. 82. [source: Sony Pictures]
  83. 83. [source: Wikimedia Commons]
  84. 84. ? what does that have to do with business models and my organization?
  85. 85. no architect would build something that resembles his first sketch
  86. 86. ? what does that mean for us?
  87. 87. BusinessModelGeneration.com
  88. 88. business model prototyping napkin sketch Canvas business case field test
  89. 89. “ prototyping is the conversation you have with your ideas ” Tom Wujec
  90. 90. 3 evaluate your business model design
  91. 91. building block building block buildin g blo ck building block building block build ing block building block building block build ing block building block buil di blo ng ck buildin g block
  92. 92. SWITCHING   COSTS How  easy  or  difficult  is  it  for  customers   to  switch  to  another  company?
  93. 93. with   this  amazing  device   you  can  have  thousand   songs  in  a  pocket
  94. 94. ...and   you’r  screwing  us   because  it  has  just   become  more  difficult  to   switch  devices
  95. 95. RECURRING   REVENUES Is  every  sales  a  new  effort  or  will  it  result   in  follow-­‐up  revenues  and  purchases?   How  evenly  distributed  are  your  revenues   through  the  year?
  96. 96. EARN  BEFORE   YOU  PAY Are  you  earning  money  before   you  are  spending  it?
  97. 97. GAME  CHANGING   COST  STRUCTURE Is  your  cost  structure  substanSally   different  and  beTer  than  those  of   compeStors?
  98. 98. phone   calls  will  be  totally   free  in  the  future
  99. 99. GETTING  OTHERS   TO  DO  THE  WORK How  much  does  your  business   model  get  customers  or  third  parSes   to  create  value  for  you?
  100. 100. go   ahead  and  share   on  your  facebook   page...
  101. 101. ...that   will  make  my   plaWorm  more   valuable...
  102. 102. ...and   raise  my  plaWorm’s   value(aSon)...
  103. 103. SCALABILITY How  rapidly  and  how  easily  can  you   grow  your  business  model  without   hi[ng  roadblocks  (e.g.  infrastructure,   customer  support,  etc.)?
  104. 104. VIRALITY/ NETWORK  EFFECT How  viral  is  your  business  model?   How  substanSal  are  the  benefits  to   share  with  others?
  105. 105. PROTECTION  FROM   COMPETITION How  much  is  your  business  model   protecSng  you  from  compeSSon?
  106. 106. a product/ technology focus is just not enough anymore
  107. 107. break-out session
  108. 108. BusinessModelGeneration.com/canvas
  109. 109. The Business Model Canvas KEY PARTNERS KEY ACTIVITIES KEY RESOURCES COST STRUCTURE OFFER CUSTOMER RELATIONSHIPS CHANNELS REVENUE STREAMS CUSTOMER SEGMENTS
  110. 110. 4 testing business models with customer development
  111. 111. a business model might look great on paper... building block building block buildin g blo ck building block building block build ing block building block building block build ing block building block buil di blo ng ck buildin g block .. but after all it is only a...
  112. 112. ... a set of hypotheses guess guess guess guess guess uess g guess guess guess guess guess guess
  113. 113. StevenBlank.com/books.html
  114. 114. THANK YOU! BusinessModelGeneration.com AlexOsterwalder.com / @business_design BusinessModelAlchemist.com
  115. 115. BusinessModelGeneration.com/toolbox iPad stencil, actual scale, template by hortis, le studio. Feb. 2010. http://hortis.lestudio.ch screen: author: project: date:
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