Business models: UKSG presentation 2012

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This presentation is based on work I have been doing with libraries and some businesses in the library & information sector.I look at framework to explore business models that I believe is helpful for all kinds of organizations and businesses

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Business models: UKSG presentation 2012

  1. 1. Business Models UKSG breakout session March 2012 k enc ha dconsultingKen ChadKen Chad Consulting LtdTwitter @kenchadken@kenchadconsulting.comTe: +44 (0)7788 727 845www.kenchadconsulting.com
  2. 2. k enc ha dconsultingOrganisations involved in scholarlycommunication face the challenge of relentless,disruptive, technology-driven change and tougheconomic times
  3. 3. this presentation is based on work I have been doing with librariesand some businesses in the library & information sector.Ill be looking at framework to explore business models that Ibelieve is helpful for all kinds of organizations and businesses k enc ha dconsultingNavigational instruments: sextant, ships log, marine compass and telescope.Source: Museum Victoria Australia
  4. 4. Preliminariesbefore you get to business models youll have already figured out .... k enc ha dconsulting
  5. 5. our mission is....our strategy is.... k enc ha dconsulting
  6. 6. mission: why the organization exists the motivation for being in the business k enc ha dconsulting
  7. 7. mission…for example youll know thisone...... k enc ha dconsulting“… to organize the world’s information andmake it universally accessible and useful”
  8. 8. strategy is not goal setting it is…. ‘a cohesive response to an important challenge…. good strategy includes a set of coherent actions..’ k enc ha dconsultingGood Strategy/Bad Strategy: The difference and why it matters. Richard Rumelt . Profile Books 2011
  9. 9. strategy ‘a good strategy has…a kernel [that] contains three elements: a diagnosis, a guiding policy and coherent actions k enc ha dconsultingGood Strategy/Bad Strategy: The difference and why it matters. Richard Rumelt . Profile Books 2011
  10. 10. where should we be heading? k enc ha dconsulting strategic sweet spotAdapted from: Can you say what your strategy is. By David J Collis and Michael G Rukstad. Harvard Business Review. April 2008
  11. 11. ….and you’ll have thought hardabout the context in which your organisation operates k enc ha dconsulting
  12. 12. context: what’s going on? ..and more importantly why is it relevant….what threats are posed; whatopportunities open up? - whats your diagnosis k enc ha dconsulting
  13. 13. context: what’s going on?‘continuous environmental scanning is more important than everbecause of the growing complexity of the economic landscape…greater uncertainty…and sever market disruption. ..understandingchanges in the environment helps you adapt your model moreeffectively to shifting external forces’ k enc ha dconsulting‘Business model generation.’ By Alexander Osterwalder and Yves Pigneur. John Wiley. 2010
  14. 14. context: themes digital content, cheap, virtually error free copying network neutral, global, permissive social k enc ha dconsulting participation innovationdisruptive, low barriers to entry, millions have the ‘means of production’ commoditization cheaper, faster, better
  15. 15. k enc ha dconsulting
  16. 16. ….and you’ll have thought about your present and potentialcompetitors and their offerings….. k enc ha dconsulting
  17. 17. ….and you’ll have thought about your organisation’s present and potential ‘customers’(users, patrons, beneficiaries)…. and their needs. k enc ha dconsulting
  18. 18. ….and you’ll have thought aboutyour organisation’s capabilities… k enc ha dconsulting
  19. 19. a capabilities approachcapability: the ability to reliably andconsistently deliver a specified outcome,relevant to your business k enc ha dconsultingThe essential advantage. How to win with a capabilities driven strategy Paul Leinwand and Cesare Mianardi.Harvard Business Review Press. 2011
  20. 20. a capabilities approachwhat are the three to six capabilities thatdescribe what we do uniquely better thananyone else?can everyone in the organization articulate our k enc ha dconsultingdifferentiating capabilities?is our leadership reinforcing these capabilities?The essential advantage. How to win with a capabilities driven strategy Paul Leinwand and Cesare Mianardi.Harvard Business Review Press. 2011
  21. 21. a capabilities approach‘way to play’ (in the market)..means.....a considered approach for creating and capturing value in aparticular market..it means...having those capabilities that set the organization apart fromcompetitors, or be superior to those rivals. k enc ha dconsultinghaving not just great capabilities but the right capabilitiesknowing your organization has what it takes to genuinely satisfycustomers in that market and beat the competitionyour capabilities have to be stronger than competitors’ andbased on the long, not short, term
  22. 22. a capabilities approachessential advantagean ingrained ability to succeed...sustained overtime, and is almost impossible to copy(i.e. as opposed to a transitory advantage) k enc ha dconsultingbasically, it means taking what you do well and putting itinto practice in your chosen market
  23. 23. at the heart of this is the issue of valuewhat’s valuable/special about what we k enc ha dconsulting do. why should people use our products/services instead of alternatives?
  24. 24. business model‘a business model is the foundational architecture of a business describing in sum how a number of key pieces of the business system fit together.’ k enc ha dconsulting
  25. 25. business model at the most basic level a business model consists of four interlocking interdependent components:the customer value proposition that defines the products and or services(s) k enc ha dconsultingthe profit system or value proposition that an enterprise employs to deliver value to its stakeholdersthe key resources deployed to create valuethe critical processes that guide and shape operation: how the company organizes and acts
  26. 26. business model‘a business model describes the rationale of how anorganization creates, delivers and captures value‘Business model generation.’ By Alexander Osterwalder and Yves Pigneur. John k enc ha dconsultingWiley. 2010
  27. 27. business modelapplies as much to a public sector organisation andnot-for-profit, social ventures as much as acommercial company‘to survive every organization that creates anddelivers value must generate enough revenue to k enc ha dconsultingcover its expenses, hence it has a business model’‘Business model generation.’ By Alexander Osterwalder and Yves Pigneur. JohnWiley. 2010
  28. 28. business model -it’s about sustainability“‘Sustainability’ is a pressing topic for many funders,but we found that this can mean different things to k enc ha dconsultingdifferent people.....We observed that funders articulatea range of desirable outcomes under the umbrella termof ‘sustainability.’[there is a need to] ‘think deeply about the financialand other resources needed post-grant to reach theseoutcomes’ Ithaka report produced andLfunded by JISC through theJune 2011 Content Alliance: ‘Funding for sustainability. By Nancy Maron and Matthew Loy. Strategic http://www.ithaka.org/about-ithaka/announcements/looking-for-long-term-impact/
  29. 29. business model -it’s about sustainability ‘all too often funders and project leaders alike rely heavily on a university or other host institution as a back-up plan for long-term k enc ha dconsulting sustainability.’ “The need for guidance around this subject has never been so stark,” stated Stuart Dempster, Director of the Strategic Content Alliance. “As many of our peers in the funding community can attest, the path from initial funding to long-term sustainability has been a long and rocky roadIthaka report produced and funded by JISC through the Strategic Content Alliance: ‘Funding for sustainability. By Nancy L Maron andMatthew Loy. June 2011 http://www.ithaka.org/about-ithaka/announcements/looking-for-long-term-impact/
  30. 30. finding the right business model may take time [founded in 1998] ‘the truth is the company lacked a viable plan for making money until early 2001.....”we couldnt really figure out k enc ha dconsulting the business model...there was a period where things were looking bleak.”’Quoted in ‘The search’. How Google and its rival rewrote the rules of business and transformed our culture’ By John Battelle. NicholasBrealey Publishing . 2005 ISBN 1-85788-361-6
  31. 31. have you changed your business model?‘While CEOs still believe that product, service and operationalinnovations are important, they feel that innovation must also beapplied to a company’s very core — to the way it does businessand drives revenue. CEOs deemed these business modelinnovations vital to creating new and differentiating value k enc ha dconsultingfor their companies. Companies that can substantially change howthey add value to their own or other industries can differentiatethemselves and gain a competitive edge.’
  32. 32. business model building blocksBusiness model ‘building block’ Brief DescriptionCustomer segments The customer group(s) the organisation serves.Value propositions What value is the organisation delivering? Which customer ‘problems’ (JTBD) is it helping with?Channels What is the ‘interface’ with customers. k enc ha dconsulting How are they reached? How does the organisation enable customers to evaluate its value proposition? How does it provide support?Customer relationships What kind of relationship with existing customers. Are relationships driven by need to get new customers? How costly are these relationships to maintain?
  33. 33. business model building blocksRevenue Streams Where does the organisation get its cash from? What are the options? Subscriptions, asset sale? Licensing. Pricing options?Key Resources Physical, financial, intellectual or humanKey activities The most important actions an k enc ha dconsulting organisation must take to operate successfullyKey Partnerships Who are the key partners? Key suppliers? Which key resources are acquired from partners? Which key activities do partners perform?Cost structure Where do the costs come from? Is the organisation a ‘cost driven’ model or a value driven model.
  34. 34. building blocks…...customer segments k enc ha dconsulting do different segment have different value propositions?
  35. 35. building blocks…...value propositions k enc ha dconsulting meeting new needs? improving performance? brand? convenience/ease of use?
  36. 36. building blocks…...channels--phases k enc ha dconsulting awareness evaluation acqusition/purchase delivery support/after sales
  37. 37. building blocks…...customer relationships-types k enc ha dconsulting personal assistance self service automated services communities Co-creation (reviews, tagging)
  38. 38. building blocks…...revenue streams k enc ha dconsulting asset sale usage fee subscription fees lending/renting/leasing licensing
  39. 39. building blocks…...key resources k enc ha dconsulting physical intellectual human financial
  40. 40. building blocks…...key activities k enc ha dconsulting Production-designing, making problem solving platform/network
  41. 41. building blocks…...key partnerships k enc ha dconsulting optimisation –eg outsourcing Reduce risk-strategic alliance acquistion –from others
  42. 42. building blocks…...cost structure cost driven –minimise costs k enc ha dconsulting value driven-premium value fixed costs -eg salaries variable costs-vary with volume economies of scale-bulk purchase
  43. 43. two key building blocks…...value propositions seek tosolve customer problemsand satisfy needs k enc ha dconsulting revenue streams result from value propositions successfully offered to customers
  44. 44. so (to repeat) it all comes back to valuewhat’s valuable/special about what we k enc ha dconsulting do. why should people use our products/services instead of alternatives?
  45. 45. Business Models UKSG breakout session March 2012 k enc ha dconsultingKen ChadKen Chad Consulting LtdTwitter @kenchadken@kenchadconsulting.comTe: +44 (0)7788 727 845www.kenchadconsulting.com

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