Business model as the backbone ofhow teams plan and act Business plan Strategic Financial 1 3 planning planning Business Business model Case Team Rollout Aspects Plan Knowledge Project planning 2 4 planning Business modeling as a guidance creates: ! a business “mindset” from day one consistency between teams a customer focus Business modeling 14
Analysis of the term ‘business model’… “The activity of buying and selling goods and services, or a particular company that does this, or work you do to earn money.” BUSINESS… …MODEL “A representation of something, either as a physical object which is usually smaller than the real object, or as a simple description of the object which might be used in calculations”. What is a business model? 15
From marketing segments tostrategic segments 1 most valuable customer: on which customers are we focussing? 2 what we offer: What do we deliver and how unique is this? 3 how we deliver Searching for strategic segments value drives asks for different value concepts Strategic segments 16
The challenge ! Choose the most important customers and organize around them WHO? WHAT? HOW? Unsatisfied customers Higher value Lower costs Non customers (yet) Lower prices The Challenge 17
Who is the most valued customer?businessman who doesn’t pay his own bill Everyone who’s paying for their own ticket Case 18
How unique is the value curve?* Value attributes Low Medium High worldwide network wide choice in distribution new airplanes punctuality seat selection business class seat spacing in-flight meals frequent flyer miles refunds if plane is late flexibility to change flight refund for missed flight price attractiveness*based on ‘marketing as strategy’, nirmalya kumar Case 19
Different segments asks for a different of realization of the value model flexibel single fare WHAT? full-service “no frills” high prices Low prices Purchasing Integrated outsourced Operations Multiple type of planes Single type aircraft Short- and long-haul routes point-2-point routes Prime airports (hubs) Rapid turnaround Assigned seating No 0n-flight meals HOW? Marketing Segmented customers Everyone is equal Varied meal services no frequent flyer programs Frequent flyer program one way ticket only Variable pricing Distribution Travel agents/worldwide systems direct sales*based on ‘marketing as strategy’, nirmalya kumar Case 20
Business modeling in all it’s aspectsWHO? WHAT? HOW? Target group Proposition Delivery model distribution product / service partner network target group core processes communication revenue model coorporation model €sources: G. Hamel - Leading the Revolution – 2000; A. Osterwalder - How to Describe and Improve yourBusiness Model to Compete Better – 2005; N. Kumar - Marketing as Strategy - 2004 Business model 23
From dream to business model WHO? WHAT? HOW? Target group Proposition Delivery model Correlation between definitions distribution WHAT? product / service HOW? partner networkgroup target group Proposition Delivery model core processes Business model communication revenue model coorporation model What value do we offer? distribution product / service € partner network How do we realize it? core processes communication revenue model coorporation model Earning model € How do we earn money with this business model? Business case What is the size of the target group? How much are they willing to pay? What are the cost to deliver? Is the P&L positive, or are there other advantages? Business model 24
Valued Customer Who are our valued customers? Are there customers who are unhappy with all the current offerings of the industry? Are there customers who have a need but are not being currently served by the industry? Are we trying to reach customers who are unaware that they need our product? If so, how are we going to create the need? Who is the user? The buyer? The influencer? The payer? What are the preferred criteria of each and their power in the buying decision? Is the target segment large enough to meet our sales objectives? What is the growth rate of the target segment? 3V’s 25
Value Proposition What are the core needs we are trying to address with our value proposition? Does the value proposition fit the needs of our valued customers? What benefits are we actually delivering to the customers? Is our value proposition differentiated from the competitors or are we positioning in a crowded space? Are our value proposition claims reinforced by underlying product and service features? Are we positioning on attributes that we can defend against competitive attacks? 3 V’s 26
Value Network Can we serve the valued customers with the value propositions at a profit? Do we have the necessary capabilities to deliver the value proposition? If not, could we acquire or partner with them? Would serving the valued customers have negative consequences on our existing customers of businesses? If so how are we going to control for this? Which high-cost or low-value-added activities could be eliminated, reduced, or outsourced in our value network? Where are the advantages of scale in our value network? Can we maintain scale while not losing flexibility? How different is our value network from the rest of the industry? What is our break-even point? Could we lower it by slightly varying the value network? 3V’s 27
Examples of earning models time spent & fees subscription performance based spot market (share of) value creation % of revenues/profits generated % of cost cutting sales minus purchase web & portal related hardware & consumable software add on services Earning models 28
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