2. agendaagenda
1. The BM canvas
2. The main BM patterns
3. Build your BM3. Build your BM
4. Evaluate your BM
5. Implement your BM
3. agendaagenda
1. The BM canvas
2. The main BM patterns
3. Build your BM3. Build your BM
4. Evaluate your BM
5. Implement your BM
4. What is a business modelWhat is a business model
A coherent & effective business logic, specific to the
company, time, environment
A company specific way to create, deliver and share
value
It involves
People with specific consumption & need patterns =
customer segments
People with skills within the company (ressources) and
outside of the company (partners)= ressources
Assets & processes = ressources
Business specific revenue streams = revenue model
5. Why is a BM necessary?Why is a BM necessary?
It makes value generation explicit:
Revenue streams
Growth
Value for stakeholdersValue for stakeholders
Brings together context/values/people
An explicit business logic helps
maximise efficiency
Critical to understand & optimise
competitive position
11. The canvas 1-1: customer segments
(theory)
The canvas 1-1: customer segments
(theory)
Intrinsic criteria (usage & customer driven)
Homogeneous & distinct
Specific behaviours, expectations & needs
Specific types of relationship & similar access to offering
Extrinsic criteria (operation driven)
Identifiable & Measurable (accurate data, time & resource consuming)
Substantial (not too big, not too small): global niches vs mass market
Operational: accessible/durable
Examples of segments
Demographics & user profiles, geographic
Behaviorist: benefits sought, brand loyalty, usage/purchase behaviour, readiness to buy
psychographic (activities, opinions, interests, attitudes, values…)
Operating: techno, capabilities
Purchasing functions & preferences (policies, criteria, …)
Situational (urgency, applications, size of order…)
12. The canvas 1-1: customer segmentsThe canvas 1-1: customer segments
The golden rule
A business model is specific to a customer segment
13. The canvas 1-1: customer segments
(practice 1/7)
The canvas 1-1: customer segments
(practice 1/7)
The more mature the market, the more segments
From mass marketing to target marketing
From segments to individualization of needs
Fashion : purchase pattern (ex: UK)
Male: 15 types/5 groupsMale: 15 types/5 groups
Female: 20 types/ 7 groups
In depth analysis
Demographics/ expenditures
Purchases
Typical shops
attitudes
14. The canvas 1-1: customer segments
(practice 2/7)
The canvas 1-1: customer segments
(practice 2/7)
15. The canvas 1-1: customer segments
(practice 3/7)
The canvas 1-1: customer segments
(practice 3/7)
Fashion : purchase pattern (ex: UK)
mid range
dressed in the
best
distinguished
classicsprofessional
lookquality not
quantity
functional
fashion seeker
14
16
18
20
spend/item/20
conventional
appearance
mid range
suitability
selective habit
mainstream
fathers
brand boy
low cost long
last
Any shirt will do
youthful
aspiration
budgetimage
sporty basics
0
2
4
6
8
10
12
14
0 2 4 6 8 10 12 14 16
age/20
16. The canvas 1-1: customer segments
(practice 4/7)
The canvas 1-1: customer segments
(practice 4/7)
Fashion : purchase pattern (ex: UK)
distinguished
classics
dressed in the best
20
25
spend/item/20
Circle =% pop
youthful aspiration
Any shirt will do
functional fashion
seeker
sporty basics
budgetimage
mainstream fathers
professional look
mid range suitability
classics
quality not quantity
brand boy
low cost long last
conventional
appearance
selective habit
0
5
10
15
-2 0 2 4 6 8 10 12 14 16 18
age/20
17. The canvas 1-1: customer segments
(practice 5/7)
The canvas 1-1: customer segments
(practice 5/7)
rank % male pop type spend
129 8,6 conventional appearance 15
108 7,2 mid range suitability 15
105,6 8,8 selective habit 12
104,5 5,5 dressed in the best 19
97,6 6,1 mainstream fathers 1697,6 6,1 mainstream fathers 16
97,5 7,5 brand boy 13
74,9 10,7 low cost long last 7
72 4 distinguished classics 18
71,4 4,2 professional look 17
61,6 7,7 quality not quantity 8
58,5 6,5 functional fashion seeker 9
55 5 Any shirt will do 11
50 5 youthful aspiration 10
40,8 6,8 budget image 6
31,5 6,3 sporty basics 5
18. The canvas 1-1: customer segments
(practice 6/7)
The canvas 1-1: customer segments
(practice 6/7)
Fashion : purchase pattern (ex: UK)
Circle =% pop
4- dressed in the best
distinguished classicsprofessional look
functional fashion seeker
20
25
spend/item/20
1- conventional
appearance
2- mid range suitability
3- selective habit
5- mainstream fathers
brand boy
low cost long last
quality not quantity
functional fashion seeker
Any shirt will do
youthful aspiration
budget image
sporty basics
0
5
10
15
-2 0 2 4 6 8 10 12 14 16 18
age/20
19. The canvas 1-1: customer segments
(practice 7/7)
The canvas 1-1: customer segments
(practice 7/7)
Other markets
Nuclear plants: 3 to 4 segments
Automotive: 9 segments
# A segment-mini
# B segment-small
# C segment-lower-medium
# D segment-upper-medium# D segment-upper-medium
# E segment-executive
# F segment-luxury
# G segment-sports
# H segment-dual-purpose
# I segment-multi-purpose vehicle (MPV)
Mobile phones
Cosmetics?
Real estate?
Beverages?
IT?
20. What are the targetted customer
segments
What are the targetted customer
segments
21. The canvas 1-2: value
proposition
The canvas 1-2: value
proposition
Economic equation between customer/ distributor &
company
The reason to be preferred… now and (everlasting) later
The job to be done (material/immaterial)
User perceived value, made ofUser perceived value, made of
Products (I provide you with )
Service (I do for you)
Relationship (we do/are together)
User generated value
Includes:
performance, quality, price,
Design, status
Convenience, accessibility,
Risk reduction
22. The canvas 1-2: value
proposition
The canvas 1-2: value
proposition
segment 1 segment 2 Segment 3
advantages 2000
compatibility 300
transparency 100
internal cost (direct/indirect) 200
risk 100
transfert costs 200
UVPC g-p 1900 0 0
A GENUINE VALUE PROPOSITION is an economic equation on how to share the value created
figures in 000
Usage Value
Perceived by
customer
gain
pain
UVPC g-p 1900 0 0
price 1000
Maintenance 100
Evolution 100
Training 100
exchange value 1 300 - -
margin 500 0 0
cost 600
investments 1000
# years 5 amortized investments 200 - -
total costs 800 - -
VALUE
PROPOSITION
UVPC-costs
1100 0 0
customer 500 0 0
% commission 10% distributors 100 0 0
company (margin) 500 0 0
value shared
exchange value
production
24. The canvas 1-3: channelsThe canvas 1-3: channels
sell in effort
sell out
effort
cost
brand
efficiency
delivery
efficiency
level of
service
required
value
added to
customer(% portfolio) (% of life)
own
direct
sales force
web
own
direct web
own store
partner
indirect
1/3 p stores
wholesaler
reseller
affiliation
customer network mkg
25. The canvas 1-3: channelsThe canvas 1-3: channels
sell in
effort
sell out
effort
cost
brand
efficiency
delivery
efficiency
level of
service
required
value
added to
customer
(%
portfolio)
(% of life)
own
direct
sales force N-A high high high high high high
web high low low medium medium low medium
own
direct web high low low medium medium low medium
own store N-A medium high high high high medium
partner
indirect
1/3 p stores high medium medium medium high high medium?
wholesaler low medium low low medium medium low
reseller medium medium low low medium medium medium?
affiliation high low low low low low low
customer network mkg high low low high low low high?
27. The canvas 1-4: Customer
relationships
The canvas 1-4: Customer
relationships
Deliver (transaction) + exchange
(relation)= build trust
Customer acquisition vs retention
Customer intimacy & upsell (one to one)Customer intimacy & upsell (one to one)
From short to long term
The tools
CRM (level 0)
Customer assistance & survey (level 1)
Training, user conferences (level 2)
Network & communities of practice (level 3)
Co-creation & supply chain (level 4)
28. What kind of customer
relationship?
What kind of customer
relationship?
29. The canvas 1-5: Revenue
streams (1/2)
The canvas 1-5: Revenue
streams (1/2)
fixed (static variables) dynamic (market conditions)
Price list yield management (airlines, hotels)
direct feature dependent real time market
licence/ subscription auctions
usage (ppu) Future value
renting/leasing
indirect
subsidised sales (advertising) free
revenue sharing/ embedded
brokerage
37. The canvas 1-8: Key
partnerships
The canvas 1-8: Key
partnerships
Strategic Allies = focus on speed & risk
Global & long term
Balanced relationship
Increase customer value
Share risk, reduce cost (ex:R&D)
Third party in customer relationship
Business / channel partners = focus on market accessBusiness / channel partners = focus on market access
Regional and/or opportunistic
Increase customer value
Share risk, enhance customer intimacy
Third party in customer relationship
Innovation Ecosystem = focus on R&D
Global or Regional, specific
Share technological risk
Advanced technology providers
Technology has the potential to become global tech
Subcontractors= focus on production capacity & cost
No risk sharing
Not part of customer relationship
39. The canvas 1-9: cost structuresThe canvas 1-9: cost structures
Economy of scale come when upstream components
(execution) can be shared between BM
Key activities
Key resources
Key partnershipsKey partnerships
Cost models
strategy consistency market efficiency
40. The canvas 1-9: cost structureThe canvas 1-9: cost structure
contribution
to value
Costs (F/V)
H-L strategic
H-H strategic
outsource
Key activities/ressources
high high
low low
L-L outsource
L-H change
outsource
Economies of scale (bulk purchase)
Economies of scope (mkg costs)
41. What could be their cost
structure?
What could be their cost
structure?
42. Summarize the canvasSummarize the canvas
Cust.
Seg.
value
prop cust. Rel channels
rev.
Streams key act. key res. key part.
cost
struct.
Nike
Apple
CitroënCitroën
Coca Cola
Facebook
Nintendo
EasyJet
Nespresso
43. agendaagenda
1. The BM canvas
2. The main BM patterns
3. Build your BM3. Build your BM
4. Evaluate your BM
5. Implement your BM
44. 2-1 BM patterns: unbundle the models2-1 BM patterns: unbundle the models
Identify core models in current business
Check trade-offs in 9 building blocks
(constraints & conflicts = self limitation to
value delivered)value delivered)
Evaluate potential added value from
unbundling (revenues, costs, investments,
ebit)
Simulate unbundled models
Examples: Amazon, mobile operators,
private banking
45. 2-2 BM patterns: multi-sided
platforms
2-2 BM patterns: multi-sided
platforms
1. Facilitate interactions between separate but interdependent customer
groups
2. Typical network effect (metcalf law)
3. Key success factors
1. A brand!
2. Scalable low cost platform
Customer
A
Customer
B
Value
gener.
Credit cards : consumers merchants
Media: eyeballs advertisers
Videogames players developpers
OS editors Users OEM service operators
LBS content providers
MVNO network operators
Customer
C
46. 2-2 BM patterns: long tail2-2 BM patterns: long tail
% total demand
NETFLIX
DVD popularity
47. 2-3 BM patterns: the long tail2-3 BM patterns: the long tail
http://www.thelongtail.com/the_long_tail/2007/10/are-facebook-ap.html
1. Theory
1. The natural shape of most markets is a powerlaw distribution (Pareto)= a
significant part of the market in the tail (25-50%)
2. If your market doesn't exhibit a powerlaw shape, you're probably doing
wrong in driving demand down the tail.
3. The best way to test whether a market is a powerlaw is to rank the items3. The best way to test whether a market is a powerlaw is to rank the items
in order of popularity and plot them on a log-log scale= straight line
2. Key success factors
1. Supply side factor: Inventory & distribution costs to zero
2. Demand side factor: traffic & networked recommendations
3. BM
1. Global niche players
2. Viral marketing & social networks, PPx
3. Massive multiple player platforms (games, e-training, education)
4. Micro-finance
5. User generated innovation & contents
4. Examples: Netflix/Glowria, Amazon, World of Warcraft, Facebook,
eBay, AdWords, Easyjet, Appstore…
48. 2-3 BM patterns: Open2-3 BM patterns: Open
1. Open XXL: everything goes open (innovation IS open!)
2. Outside/in (participatory innovation)
a) P&G Connect & Develop + YourEncore
b) Challenges.gov http://challenge.gov/
c) Orange Labsc) Orange Labs
d) EcoImagination GE
e) Innoplace Solvay
3. Inside/out (ecosystem building)
a) GsK Patent Pooling
b) Google / Apple
c) Sony/ Nokia
a) Business cases
a) Innocentive
b) Planet Eureka
49. 2-4 BM patterns: Loss leader2-4 BM patterns: Loss leader
1. attractive (free?) initial offer encourages further purchases of related
products & services
2. Key success factor
1. Controlled cost structure & delivery channels
2. Patent for lock-in
3. Brand
3. Examples3. Examples
1. Printers
2. Razor & blades
3. Mobile phones
4. Video game consoles
5. Free apps / mobile stores
50. 2-BM Patterns: applying the core
models
2-BM Patterns: applying the core
models
Key feature Platform
Mngt
Cust.
Relationship
Prod.
innovation
Examples
Multi-
sided
platforms
Facilitate interactions
between customer
groups
Economy of scale
Critical Critical derived eBay, Apple,
videogames,
Google, Media
Long tail Sell less to more
Requires low
Critical critical derived Amazon
Requires low
inventory/distrib cost,
scalable platform
Economy of Scale
Free Subsidize, freemium,
Loss leader
non monetary
Cost based
Economy of scope
Optional Critical critical Google,
Metro,
Open Outside/in & inside/out
Networked
optional critical derived P&G, Orange
Labs
loss
leadership
Cost management
Patent control
optional critical critical HP, mobile
operators
52. agendaagenda
1. The BM canvas
2. The main BM patterns
3. Build your BM3. Build your BM
4. Evaluate your BM
5. Implement your BM
53. industry
job
Issues segmentation
Build your BM (1): the
customer perspective
Build your BM (1): the
customer perspective
Business model
Solution(s)
expertise
organisation
53
54. CONTEXT
Build your BM (1): the
customer perspective
Build your BM (1): the
customer perspective
WAYS WANTS WISH
RELATIONS
CONTEXT
JOB DONE!
PAINS GAINS
TRANSACTION
RELATIONS
55. Build your BM(1): customer
perspective (Transaction)
Build your BM(1): customer
perspective (Transaction)
Jobs to be done
(issues)
Unsolved issues
Urgencies, second priorities
Major constraints (inside/outside) & risks
How do we help?
Pains
Key stakes per job to be done (objective)
Fears & frustrations (subjective)Pains Fears & frustrations (subjective)
obstacles
How do we help?
Gains
What the customer wants
Key benefits/targets
Key success factors
How do we help?
What is he ready to
pay for ?
What he is used to paying (budgets, models)
Other funding sources (already used) (internal/external)
Budget types (capex, opex, R&D)
56. Build your BM (1): customer
perspective (relations)
Build your BM (1): customer
perspective (relations)
The customer way
What he/she is used to – ready to try
What he wishes/ prefers
What he refuses
How do we fitHow do we fit
context
What he sees: environment, market, colleagues
What she hears: colleagues, boss, influencers, competitors
What he express: words, behaviours (public, private)
How the customer sees
the relationship?
Explicit/ formalised
Implicit /unformalised (suggested)
How do we cope
58. Build your BM (2):
prototype your BM
Build your BM (2):
prototype your BM
R$C$
KA
KR
KP
CR
VP
CH
CS R$C$
KA
KR
KP
CR
VP
CH
CS
R$C$
KA
KR
KP
CR
VP
CH
CS R$C$
KA
KR
KP
CR
VP
CH
CS
Resource driven Customer driven
Cost driven Offer driven
59. Build your BM (2):
prototype your BM
Build your BM (2):
prototype your BM
Mock up/ prototype / industrialize
Brainstorm & Sketch out
Elaborate / canvas
Define business case
Field test (VP, CH, R$...)Field test (VP, CH, R$...)
Design/provoke/decide
BM coherence & clarity
BM sustainability
Optimize & go beyond comfort of first results
60. Build your BM (3): tell a storyBuild your BM (3): tell a story
61. Build your BM (3): tell a storyBuild your BM (3): tell a story
Articulate stories
Company perspective
Customer perspective
VisualizeVisualize
Sketches & Images, videos, strips
Role play
Make the future tangible
Challenge status quo (demonstrate pitfalls)
Create urgency (context & evolution)
Demonstrate benefits
Show the way (articulate change)
62. Build your BM (3): tell THIS storyBuild your BM (3): tell THIS story
2- Build
innovative BM
3 minutes!
1- list
characteristics
Choose segment
Tell the story
(play, draw,
write, sing…)
Have fun!
64. Build your BM (3): Tell the storyBuild your BM (3): Tell the story
65. Build your BM (4):
build scenarios
Build your BM (4):
build scenarios
Identify key market drivers
Select two key ones (define Biz as Usual)
« what if?... »« what if?... »
Shape 4 scenarios, name them & tell the
story
Build BM for each scenario
Extract key info: thresholds, risk analysis,
cost & benefits
66. Building BM (4): scenariosBuilding BM (4): scenarios
Driver 1
R
$
C
$
KA
KR
CR
VP
C
S
R
$
C
$
KA
KR
CR
VP
C
S
Scenario 2
Scenario 4
Driver 2
$$
KR
KP
VP
CH
S $$
KR
KP
VP
CH
S
R
$
C
$
KA
KR
KP
CR
VP
CH
C
S
R
$
C
$
KA
KR
KP
CR
VP
CH
C
S
BUSINESS AS USUAL Scenario 3
67. Building BM (4):
the pharma industry scenarios
Building BM (4):
the pharma industry scenarios
R
$
C
$
KA
KR
CR
VP
C
S
R
$
C
$
KA
KR
CR
VP
C
S
The healthy
patient
Reinventing
pharmaScenario 2
Scenario 4
Prevention as main value generator
$$
KR
KP
VP
CH
S $$
KR
KP
VP
CH
S
R
$
C
$
KA
KR
KP
CR
VP
CH
C
S
R
$
C
$
KA
KR
KP
CR
VP
CH
C
S
BUSINESS AS USUAL
My medicine
Treatment as main value generator
Personal medicine
A fad
Personal medicine
mainstream
68. Building BM (4):
the telecom industry scenarios
Building BM (4):
the telecom industry scenarios
R
$
C
$
KA
KR
CR
VP
C
S
R
$
C
$
KA
KR
CR
VP
C
S
The BOX
model
The
MOBILE
GRID model
Scenario 2
Scenario 4
Device interconnection
A key driver
$$
KR
KP
VP
CH
S $$
KR
KP
VP
CH
S
R
$
C
$
KA
KR
KP
CR
VP
CH
C
S
R
$
C
$
KA
KR
KP
CR
VP
CH
C
S
BUSINESS AS USUAL
The WEB model
Infrastructure
as a key driver
Content (voice
messages/ data)
= main usage
Apps & services
= main usage
69. Building BM (4):
the XXX industry scenarios?
Building BM (4):
the XXX industry scenarios?
R
$
C
$
KA
KR
CR
VP
C
S
R
$
C
$
KA
KR
CR
VP
C
S
Scenario 2
Scenario 4
$$
KR
KP
VP
CH
S $$
KR
KP
VP
CH
S
R
$
C
$
KA
KR
KP
CR
VP
CH
C
S
R
$
C
$
KA
KR
KP
CR
VP
CH
C
S
BUSINESS AS USUAL
70. agendaagenda
1. The BM canvas
2. The main BM patterns
3. Build your BM3. Build your BM
4. Evaluate your BM resilience
5. Implement your BM
71. Evaluate your BM resilience
(1): environment impact
Evaluate your BM resilience
(1): environment impact
Identify Key trends
Regulation
Societal & culture
technologies
Identify potential changes in market forces
Segments evolution, Consumption patterns & demandSegments evolution, Consumption patterns & demand
Costs + Revenue models evolution & attractiveness
Identify potential changes in macro-economics
Cost of capital, currency gaps
Cost of goods
Economic downturn (regional/global)
Identify potential changes in industry forces
Porter 5 forces
Evaluate impact on 9 BM building blocks
72. Evaluate your BM resilience
(1): environment impact
Evaluate your BM resilience
(1): environment impact
+/- CS CR VP CH R$ KA KR KP C$
key trends
regulatory
societal
technos
changes in
segment evol.
consumpt patternschanges in
market forces
consumpt patterns
RM evol & attractiveness
IP/generic
changes in
macro-eco
capital/ currency
goods
eco. Downturns
changes in
industry
supply power
demand power
comp. Rivalry
new entrants
substitutes
78. Implement/optimise your BM (2):
the BSC
Implement/optimise your BM (2):
the BSC
Goal Target Values Key steps
Ability to serve
goal target values Key steps
profit EBIT 15% Red. Ext.
costs
Portfolio
analysis
finances
Ability to grow
Goal Target Values Key steps
Ability to execute
Vision & strategy
Goal Target Values Key steps
Cust.
Intim.
Contract
duration
From 2
to 4 y.
Mkg
campaign
# visits From 2
to 4/ y
Capture
plan
Cust. & markets
Goal Target Values Key steps
Adapt
managt
.
Personal
versatility
15%
chged /y
Training,
incentive plan
Init. DD 4 /y ISO 16001
Change dynamics
Ability to learn
Goal Target Values Key steps
Service
quality
24/7 Within 2
y.
Distributed
prod
Key processes
Ability
to
compete
79. Useful litteratureUseful litterature
Business Model Generation
A. Osterwalder/ Y. Pigneur + 470 practitioners
7 Etapes pour un BM solide
Denis Dauchy
The Lean Start-up
Eric Ries
HBR on business model innovation