Lachapelle building a business model-ottawa nov

So, what is a business model, and how do I build one? Presentation to BA World - Ottawa November 2010 Michael Lachapelle

3 Objectives core characteristics of a business model 9 essential questions to ask yourself about a business model 2 approaches to building a business model

Let me introduce you to….

Bob… he’s been a BA for 15 years loves his job

now he has to write a BRD…

… but he is really confused about what the clients want

because the clients it seems … … can’t explain how their business works

It’s enough to make a grown analyst cry

If there was only some way to help them tell their story…. … so he could understand what they need to support the business

What is a business model 1

What do you mean when you say “Business Model” Some see it at a high-level Some see it at a low-level Some as a combined elements How you make money (Intervista Training) The theory of your business (Peter Drucker) Stories to explain how the enterprise works (John Magretta) The profit formula How your processes work Strategy and organization Technology enabling transactions

If not those things, then what is a “Business Model”
It is a way to look at the key elements of how a business:
creates value
delivers value to its customers/clients
captures return value
in a systematic way.

9 questions to ask about a business model 2

Welcome to… … and a great idea that didn’t get a deal

The ask:
$500,000 for 20% equity
Company valued at $2.5M
The pitch:
6 months to market
first year sales - 350
only adjustable type of chair
no competitor
lighter, more agile
almost half the cost
The Dragon’s Den and the wheelchair

images by JAM Q1 - Who are your customer / clients

images by JAM Q1 - Who are your customer / clients
What if they had looked at:
people who have a job-to-be-done that involves providing wheelchair

Airports Hospitals Charities

images by JAM Q2 - How does your value propositon satisfy the client’s need Different client segments have different needs to complete their jobs

images by JAM Q3 - What channels connect you to your customers Letting them know what you have to offer and how to get access to it

Q4 - how and how much will the customers pay How will you price your value proposition and create revenue

Q5 - what are the key things to be done - who will do them Key activities to create & deliver value proposition

Marketing & Sales Management This is where the wheelchair guys asked for … Manufacturing

Q6 - what are the key resources we need The key building blocks to create & deliver the value proposition

Intangible resources Human resources Start-up financing OOPS! Tangible resources

Q7 - who could help us as partners Integrate into the business or do stuff on our behalf

Q8 - how much will we need to run the business Cost to put the pieces of the model together

Development costs Production costs Product/Service + Overhead + Marketing + Distribution + ICT Sometimes these need to be separate

Q9 - what kind of relationship do our clients want How do we help and understand them images by JAM

So in the end they weren’t able to show they knew how the business should work…

2 frameworks to describe business models 3

Finding a repeatable pattern to tell the story & analyse the business model Alexander Osterwalder Mark Johnson

www.businessmodelgeneration.com The Business Model Canvas For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How much does each Revenue Stream contribute to overall revenues? Through which Channels do our Customer Segments want to be reached? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? What type of relationship does each Customer Segments expect us to establish and maintain? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? For whom are we creating value? Who are our most important customers? How do we differentiate our Customer Segments What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? Which customer needs are we satisfying? What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? Alexander Osterwalder

www.businessmodelgeneration.com The Business Model Canvas For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How much does each Revenue Stream contribute to overall revenues? Through which Channels do our Customer Segments want to be reached? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? What type of relationship does each Customer Segments expect us to establish and maintain? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? For whom are we creating value? Who are our most important customers? How do we differentiate our Customer Segments What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? Which customer needs are we satisfying? What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? Alexander Osterwalder Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9

www.seizingthewhitespace.com The Four-Box Business Model Framework Mark W. Johnson
Job-to-be-done by customer
Offering to satisfy need
Customer satisfaction
Revenue model (price X quantity)
Cost structure - direct, indirect, overhead, economies of scale
Target unit margin - achieving desired profit levels
Resource velocity - throughput, inventory turnover, asset utilization
People
Technology
Equipment
Channels
Partnerships
Brand
Processes
Business Rules
Success metrics
Behavioural norms
Customer-value Proposition Profit Formula Key Resources Key Processes

www.seizingthewhitespace.com The Four-Box Business Model Framework Mark W. Johnson
Job-to-be-done by customer
Offering to satisfy need
Customer satisfaction
Revenue model (price X quantity)
Cost structure - direct, indirect, overhead, economies of scale
Target unit margin - achieving desired profit levels
Resource velocity - throughput, inventory turnover, asset utilization
People
Technology
Equipment
Channels
Partnerships
Brand
Processes
Business Rules
Success metrics
Behavioural norms
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Customer-value Proposition Profit Formula Key Resources Key Processes

The Business Model Canvas The 4-box Framework Individual components Composite components Simple Detailed Adaptable Focussed Open Guided Q - how are these approaches different

3 Objectives A business model describes and contains the core elements of how a business creates, delivers and captures value 9 essential questions:
2 approaches:
Business model canvas
4-box framework
What is our customer’s job-to-be-done
What need of theirs are we satisfying
How will we interact with them
How and how much will they pay
What are the key things to be done
What are the key resources we need
Who will help
How do we help our customers

www.businessmodelgeneration.com The Business Model Canvas Alexander Osterwalder

www.seizingthewhitespace.com The Four-Box Business Model Framework Mark W. Johnson Customer-value Proposition Profit Formula Key Resources Key Processes

If you wish to use material from this presentation please observe the rules of creative commons licensing. Content and development support provided by: Dr. Alexander Osterwalder, PhD Web site: www.businessmodelalchemist.com/ For further information, discussion you can contact me at: (w) mike.lachapelle@tbs-sct.gc.ca (h) michaell@magma.ca For more information on the business model canvas - and a pdf download of 70 pages of the book go to: Business Model Generation book: www.businessmodelgeneration.com For more information on the the 4-box business model framework go to: Seizing the White Space | Business Model Innovation for Growth and Renewal : http://www.seizingthewhitespace.com/

Lachapelle building a business model-ottawa nov

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