Fielt - Business models and the BMG Canvas

An introduction into Business Models and the BMG Canvas Erwin Fielt 2010, 2010 October See also the blog Fieltnotes at http://fieltnotes.blogspot.com/

Business models? Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 2

What about? • Razor and blade (Gillette) • Direct sales and build to order (Dell) ( ) • Power-by-the-hour (Rolls Roys) • From product to service company (IBM) • Music experience (Apple’s iPod and iTunes) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 3

Business & Model Business Model Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 4

Business & Model "the activity of "a simplified providing goods and description and services involving representation of a financial, commercial complex entity or and industrial aspects" process" Source: Osterwalder, Pigneur & Tucci (2005) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 5

Addressing basic fundamental questions basic, • A good business model answers Peter Drucker’s age old Drucker s age-old questions: – Who is t e custo e o s the customer? – And what does the customer value? • It also answers the fundamental questions every manager must ask: – How do we make money in this business? – What is the underlying economic logic that explains how we can de e a ue customers an appropriate cost?’ deliver value to custo e s at a app op ate cost Source: Magretta (2002, HBR) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 6

Business model essentials • It is about creating and capturing value – Use value and exchange value • It captures business logic/rationale – Narrative or conceptual model • It relates to an organizational entity – Si l organisation or network of organisations Single i ti t k f i ti Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 7

Business logic • Proposition oriented – Customer/value/offering • Organization oriented • Integration oriented g – Role/activity/architecture – Holistic/balance/ • Fi Finance oriented i t d synergy – Revenue model Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 8

Business models and innovation • Innovations need • Business models can business models be innovated – Turning ideas into (business model marketable products innovation) and processes d – New for the – Mediates between organization, the new technology and market/industry and/or k t/i d t d/ economic value totally new – Often driven by or enabled by IT Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 9

Business & Model Referring to the Emphasizing way a company the model does business aspect Stories, Formal models, sketches business modelling Source: Osterwalder, Pigneur & Tucci (2005) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 10

Business Model Canvas Infrastructure Offering Customer Finance Source: Osterwalder (2004) ; Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 11

Business Model Canvas Customer Customer Key activities relationships Value Value Customer Key partners propositions Segments Key Key Channels resources Cost structure Cost structure Revenue streams Revenue streams Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 12

Customer • An organization serves one or several Customer Segments. – Customer groups represent separate segments if: • Their needs require and justify a distinct offer • They are reached through different Distribution Channels • They require different types of relationships • They have substantially different profitabilities • They are willing to pay for different aspects of the offer – Examples: Mass markets, niche markets, segmented, diversified, multi-sided Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 13

Offering • It seeks to solve customer problems and satisfy customer needs with Value Propositions. – Each Value Proposition consists of a selected bundle of products and/or services that caters to the requirements of a specific Customer S i t f ifi C t Segment. t – Examples: Newness, performance, customization, “getting the job done ” design brand/status price getting done, design, brand/status, price, cost reduction, risk reduction, accessibility, convenience/usability Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 14

Customer • Customer Relationships are established and maintained with each Customer Segment. – E Examples: A l l Arm-length or affiliated? P th ffili t d? Personal or mediated? l di t d? Communities? Co-creation? • Value Propositions are delivered to customers through communication, distribution, and sales Channels. – Examples: Own or partner channels? Direct or indirect channels? Full service or self-service? Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 15

Infrastructure • Key resources are the assets required to offer and deliver the previously described elements… • …by performing a number of Key Activities. yp g y • Some activities are outsourced and some resources are acquired outside the enterprise via Key Partnerships Partnerships. Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 16

Finance • Revenue Streams result from Value Propositions successfully offered to Customer Segments. – Examples: Asset sale, Usage fees, Subscription fees, Lending/renting/leasing, Licensing, Brokerage fees, Advertising • The business model elements result in the Cost Structure. Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 17

Apple s Apple’s iPod and iTunes Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 18

Apple iPod/iTunes Customer Customer Key activities relationships Value Value Seamless Target Target Key partners music propositions experience customers Key Key Customer Customer resources channels Cost structure Cost structure Revenue streams Revenue streams Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 19

Apple iPod/iTunes Customer Customer Key activities relationships Value Value Seamless Target Target Mass Key partners music market propositions experience customers Key Key Customer Customer resources channels Cost structure Cost structure Revenue streams Revenue streams Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 20

Apple iPod/iTunes Customer Customer Key activities relationships Value Value Seamless Target Target Mass Key partners music market propositions experience customers Retail stores Key Key Customer Customer resources channels Apple stores Apple.com iTunes store Cost structure Cost structure Revenue streams Revenue streams Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 21

Apple iPod/iTunes Customer Customer Key activities relationships Value Value Seamless Target Target Mass Key partners music market propositions experience customers Retail stores Key Key Customer Customer resources channels Apple stores Apple.com iTunes store Cost structure Cost structure Revenue streams Revenue streams Large Some music hardware revenues revenues Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 22

Apple iPod/iTunes Customer Customer Record Key activities companies relationships OEMs O Value Value Seamless Target Target Mass Key partners music market propositions experience customers Retail stores Key Key Customer Customer resources channels Apple stores Apple.com iTunes store Cost structure Cost structure Revenue streams Revenue streams Large Some music hardware revenues revenues Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 23

Apple iPod/iTunes Hardware design Love mark Customer Customer Record Key activities companies Marketing relationships Switching costs OEMs O Value Value Seamless Target Target Mass Key partners music market Apple brand propositions experience customers Retail stores People Key Key iPod Customer Customer hardware resources Content & channels Apple stores Apple.com agreements iTunes software iTunes store Marketing & People Cost structure Cost structure Manufacturing sales Revenue streams Revenue streams Large Some music hardware revenues revenues Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 24

Business Model Canvas Customer Customer Key activities relationships Value Value Value creates Customer Key partners propositions revenue Segments Key Key Channels resources Cost structure Cost structure Revenue streams Revenue streams Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 25

Business Model Canvas Customer Customer Key activities relationships C eat g a ue Creating value Value Value Customer Key partners requires propositions Segments infrastructure Key Key Channels resources Cost structure Cost structure Revenue streams Revenue streams Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 26

Business Model Canvas Customer Customer Key activities relationships Infrastructure Value Value Customer Key partners generates propositions Segments costsey K Key Channels resources Cost structure Cost structure Revenue streams Revenue streams Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 27

Business Model Canvas Customer Customer Key activities relationships Value Value Customer Key partners propositions Segments Key Key Channels resources Cost structure Cost structure The sweet spot Revenue streams Revenue streams Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 28

More information on the Canvas www.businessmodelgeneration.com Source: Osterwalder & Pigneur (2009) Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 29

Business model patterns • Long-tail ( L t il (vs. Bl kb t ) Blockbuster) • Free/freemium • Bottom of the Pyramid B tt f th P id • Bundling/Unbundling • Servitization • Total Solution • Intermediation • Platform • Open (source/innovation) • ... Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 30

Free Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 31

The Long Tail Introduction into business models (Fielt, 2010) [see also http://fieltnotes.blogspot.com/] 32

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