We need a business model – Can you create one for us please?


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This is a basic introduction to composing a business model using the Business Model Canvas. It explains the different types of business models and the Business Model Canvas elements. This was a presentation given by Anthony Draffin to the Canberra chapter of BPMLink.

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  • This is how I started my journey into creating business models. It changed from being an academic interest, to a concrete deliverable that I had to achieve.
    Often the project manager giving the task had very little knowledge of how they were going to produce a business model. They just knew that it would be a good place to start to drive their work down the track.
  • I won’t be able to give you a lot of detail in today’s presentation. So I’m going to start by giving a brief overview of the subject from a number of different points of view.
    I want to pin out the corners of the subject and then concentrate on one particular aspect that I think is very important – how to go about communicating business models.
    So I’m going to start with the basics:
    - What
    - When
    - Why
    Then as I mentioned I’m going to concentrate on the how.
  • In the past, management books have presented a finite number of business models. The advice is to pick one of these models and use that to build your own model.
    Today that thinking has changed vastly. No longer is there a finite number of categories. There are an infinite number of business model possibilities.
  • There are many different business model definitions . Because of this, it has been a difficult subject to pin down and get a consensus amongst practitioners and academics.
    When Alexander Osterwalder was doing his PhD on business models, he interviewed one CEO and the CEO said ““I’m happy that somebody is trying to define the term business model. It was one of the most violated terms. Everything was a business model. Everybody asked me
    what a business model is. I could never really define it. It is good that somebody is looking at this”
  • Despite the difficulty of getting to one specific definition. There are some common consensuses as to what business models are about.
  • So how do they relate?
    Business models are the foundations upon which the processs models sit. Process models show how you achieve the outcome depicted in the process models.
  • In the commercial world – when you’re starting a business
  • Apple launched the iPod in 2001. It was a direct competitor to existing mp3 players and discmans. iPod soon came to be relied on
  • Why do we document business models?
  • Alexander Osterwalder
  • We need a business model – Can you create one for us please?

    1. 1. “We need a business model” “Can you create one for us please?”
    2. 2. The subject of business models is a wide and varied topic
    3. 3. There are an infinite number of business models ∞
    4. 4. patte rn et s nt se p re re ion at model st te ruc m tu pl ra at l e Business models: what the? concep archit ecture tual to ol de on pti ri sc fr ork ew am
    5. 5. “Business models are about relationships’’
    6. 6. “Business models are stories that explain how enterprises work” Margretta, ‘Why Business Models Matter’, Harvard Business Review, 2002
    7. 7. “A business model is a reflection of a firm’s realised strategy”
    8. 8. Process models are not business models
    9. 9. “... the Government is pursuing the biggest changes to the health system since the introduction of Medicare.” Nicola Roxon, MP
    10. 10. Songs bought from the iTunes store can be likened to razor blades
    11. 11. Revamping IP Australia from receiving applications by fax and paper to having a direct B2B channel
    12. 12. Understanding how to achieve the business outcome in a green fields development project
    13. 13. For competitive advantage and differentiation
    14. 14. Inform our business plans
    15. 15. “I’m convinced that the economic landscape has changed and that companies will have to find new ways of analysis in business management...” Alexander Osterwalder
    16. 16. 470 9 years in the practitioners, making contributed as co-authors 4 000 hours work 45 different countries 8 prototypes PhD from Lausanne in Switzerland, his thesis was on business model ontologies
    17. 17. This work in applying business models is true thought leadership. It has replaced this poorly defined yet widely discussed concept with a sharply defined framework and tools for executives to use in understanding and improving their businesses. It is utterly practical, easily understood, and very valuable – a genuinely useful contribution to business leaders in every industry.” Richard Hunter, Gartner Fellow
    18. 18. The Business Model Canvas is a breakthrough product. Its capture of all the strategic elements of a business model design, allows for rapid exploration of strategic options and subsequent risk/reward comparisons. John Sutherland, Owner, Ennova Inc.
    19. 19. The nine building blocks of the Business Model Canvas
    20. 20. 1 Customer Segments An organisation serves one or several customer segments
    21. 21. 2 Value Propositions It seeks to solve customer problems and satisfy customer needs with value propositions
    22. 22. 3 Channels Value propositions are delivered to customers through communication, distribution and sales channels
    23. 23. 4 Customer Relationships Customer relationships are established and maintained with each customer segment
    24. 24. 5 Revenue Streams Revenue streams result from value propositions successfully offered to customers
    25. 25. 6 Key Resources Key resources are the assets required to offer and deliver the other elements
    26. 26. 7 Key Activities … by performing a number of key activities.
    27. 27. 8 Key Partnerships Some activities are outsourced and some resources are acquired outside the enterprise
    28. 28. 9 Cost Structure The business model elements result in the cost structure
    29. 29. M ot N ed h tc a
    30. 30. e: anthony.draffin@itstrategies.info w: www.itstrategies.info t: www.twitter.com/adraffin