0
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 appro...
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
model1
How you make
money
(Intervista Training)
The theory
of your
business
(Peter Drucker)
Stories to
explain how the
enterprise...
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 ...
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
 on...
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
invol...
Airports
Hospitals
Charities
images by JAM
Q2 - How does your value propositon satisfy the client’s need
Different client segments have
different needs...
images by JAM
Q3 - What channels connect you to your customers
Letting them know what
you have to offer and how
to get acc...
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
...
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...
www.businessmodelgeneration.com
The Business Model Canvas
For what value are our customers really willing to pay?
For what...
Customer-value Proposition
Profit Formula
Key Resources Key Processes
www.seizingthewhitespace.com
The Four-Box Business M...
Customer-value Proposition
Profit Formula
Key Resources Key Processes
www.seizingthewhitespace.com
The Four-Box Business M...
The Business
Model Canvas
The 4-box
Framework
Individual
components
Composite
component
s
Simple Detailed
Adaptable Focuss...
3
Objectives
A business model describes and contains the
core elements of how a business creates,
delivers and captures va...
www.businessmodelgeneration.com
The Business Model Canvas
Alexander Osterwalder
Customer-value Proposition
Profit Formula
Key Resources Key Processes
www.seizingthewhitespace.com
The Four-Box Business M...
If you wish to use material from this
presentation please observe the
rules of creative commons licensing.
Content and dev...
Lachapelle building a business model-ottawa nov
Lachapelle building a business model-ottawa nov
Lachapelle building a business model-ottawa nov
Lachapelle building a business model-ottawa nov
Lachapelle building a business model-ottawa nov
Lachapelle building a business model-ottawa nov
Lachapelle building a business model-ottawa nov
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What is a business model and how do I build one - presentation to BA World Ottawa Nov 2010

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  1. 1. So, what is a business model, and how do I build one? Presentation to BA World - Ottawa November 2010 Michael Lachapelle
  2. 2. 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
  3. 3. Let me introduce you to….
  4. 4. Bob… he’s been a BA for 15 years loves his job
  5. 5. now he has to write a BRD…
  6. 6. … but he is really confused about what the clients want
  7. 7. because the clients it seems … …can’t explain how their business works
  8. 8. It’s enough to make a grown analyst cry
  9. 9. If there was only some way to help them tell their story…. …so he could understand what they need to support the business
  10. 10. What is a business model1
  11. 11. 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 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 Strategy and organization Technology enabling transactions
  12. 12. 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.
  13. 13. 9 questions to ask about a business model 2
  14. 14. Welcome to… …and a great idea that didn’t get a deal
  15. 15. 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
  16. 16. images by JAM Q1 - Who are your customer / clients
  17. 17. 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
  18. 18. Airports Hospitals Charities
  19. 19. images by JAM Q2 - How does your value propositon satisfy the client’s need Different client segments have different needs to complete their jobs
  20. 20. 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
  21. 21. Q4 - how and how much will the customers pay How will you price your value proposition and create revenue
  22. 22. Q5 - what are the key things to be done - who will do them Key activities to create & deliver value proposition
  23. 23. Marketing & Sales Management This is where the wheelchair guys asked for … Manufacturing
  24. 24. Q6 - what are the key resources we need The key building blocks to create & deliver the value proposition
  25. 25. Intangible resources Human resources Start-up financing OOPS! Tangible resources
  26. 26. Q7 - who could help us as partners Integrate into the business or do stuff on our behalf
  27. 27. Q8 - how much will we need to run the business Cost to put the pieces of the model together
  28. 28. Development costs Production costs Product/Service + Overhead + Marketing + Distribution + ICT Sometimes these need to be separate
  29. 29. Q9 - what kind of relationship do our clients want How do we help and understand them images by JAM
  30. 30. So in the end they weren’t able to show they knew how the business should work…
  31. 31. 2 frameworks to describe business models 3
  32. 32. Finding a repeatable pattern to tell the story & analyse the business model Alexander Osterwalder Mark Johnson
  33. 33. 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
  34. 34. 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 Q1Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9
  35. 35. 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
  36. 36. 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 Q4Q5 Q6 Q7 Q8 Q9
  37. 37. The Business Model Canvas The 4-box Framework Individual components Composite component s Simple Detailed Adaptable Focussed Open Guided Q - how are these approaches different
  38. 38. 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
  39. 39. www.businessmodelgeneration.com The Business Model Canvas Alexander Osterwalder
  40. 40. Customer-value Proposition Profit Formula Key Resources Key Processes www.seizingthewhitespace.com The Four-Box Business Model Framework Mark W. Johnson
  41. 41. 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/ 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 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 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/ 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/
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