Business model design

Innovate your business model
An Innovation Catalyst™ Seminar
Presented 06/05/10 at 10am
Prepared and Presented by
Marcus Tarrant
Managing Director
Mission HQ Pty. Ltd. ATF the Innovate Trust
Guest Presenter:
Simon Crean
Online Manager
Hallmark Cards

Contact Details
Marcus Tarrant
Managing Director
Mission HQ Pty. Ltd. ATF the Innovate Trust
Marcus.tarrant@missionhq.com.au
+61 3 9005 9710
www.missionhq.com.au
© Mission HQ Pty. Ltd. All Rights Reserved
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Copyright ©2010 Mission HQ.
The content, format, structure and communication technique utilised in this document are the intellectual property of Mission HQ Pty. Ltd.
This document is strictly classified as “Commercial in Confidence” and intended only for recipients expressly authorised by Mission HQ. Any modification or distribution under altered expression, by any means, in its entirety or in parts, to any person without written approval from Mission HQ is expressly prohibited.
Natural Persons or bodies corporate may not copy, retransmit, distribute, publish or otherwise transfer any copyrighted material to third parties or contractors without the express permission of Mission HQ.
This document is intended to reflect MISSION HQ’s high-level overview of the Business Model Design Framework. It does not constitute formal professional advice or a recommendation to potential licensors, tax advisors, inventors or other third parties as to a course of action in respect of the processes addressed, and should not be relied on as such. All care is taken in the preparation of this document but MISSION HQ bears no responsibility as to the contents of this document and disclaims any liability with respect to its use or misuse.
Intellectual Property & Disclaimer

Seminar Agenda
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There are three kinds of companies, those that make new things happen, those that watch new things happen, and those that wonder what happened
Anonymous
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About Mission HQ Pty. Ltd.
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Some recent past clients of Mission HQ and the team:

So what can we use a business model for?
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We have used business model design to...
Underpin the business planning process
Provide an absolutely IDEAL starting point for the creation of a financial model.
Create a deeper understanding of you plans with collaborators, partners and suppliers
Provide a clear picture of a planned business to investors or internal stakeholders
Develop business cases for market entry
Optimise the value obtainable for a given business concept
Assist in evaluating alignment with organisational strategy
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Designing your business model
The business model matrix
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The 9 Element business model Matrix
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The business model matrix
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Value Proposition – What are you offering?
Capabilities/Resources – What skills and capacity do you require?
Partnership – Who do you need to work with?
Activities – What will you do?
Costs – What are your significant costs likely to be?
Relationship – What formal and informal relationships are required
Channel – What are our channels to market?
Revenues – What will our customers pay for?
Customers – Who are our customers?

A real world example.
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1. The Value Proposition
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Defining the value proposition
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Value can occur in any of the following elements

Mapping out your value proposition
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Evaluation Process
Simplify a customer’s evaluation process
Example: ISELECT

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Value Co-Creation
Through various technological advances the integration and participation of the customer in the value creation process is increasingly possible.
Together with the knowledge and networks of customers additional value can be created and facilitated.
Examples: Ebay & Amazon

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Purchasing Process
Customers highly value an efficient, simple and convenient purchase process.Example: Creative Mobile Technologies back-seat swipe and entertainment for Taxi Cabs

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Set-Up/Installation
In some cases set-up or installation is necessary. The simplification of this process is of enormous value to the customer.
Example: Dick Smith: Mobile Techxphert Services

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Use/Operation
In many cases most of the value in a value proposition comes from the use or operation of an actual product or service. However, to differentiate themselves companies try to create value beyond a simple product or service.
Salesforceis carefully creating additional value by offering continuous updating "behind the scenes" and providing easy access to complementary products by third party vendors.

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Maintenance & aftersales support
Value is often created during the maintenance and after-sales phase. This can be either by offering high quality service or by offering a value proposition that minimizes the need for maintenance & after-sales.
Example: The attractiveness of salesforce.com’s value proposition essentially comes from the fact that the hosted software model (application service provider - ASP) minimizes the need of software maintenance by the customer.

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Ending and value transfer
In many cases once a customer does not need a product or service anymore he has to terminate the service or dispose of the product.Example: BMW Recycling Programme

2. Capabilities/Resources
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2. Capabilities/Resources
What physical assets does our business model require?
Factory
Machinery
Etc.
Intellectual Assets
Trademarks (licensed or owned)
Patents
Processes
Systems
Human Resources
Skills
Team structures
Financial
Access to finanance
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3. Partnerships
Describes the network of suppliers and partners that will make the business model work
Joint Ventures
Strategic Alliances
License agreements
Service agreements
Outsourcing arrangements
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4. Activities
The activities outline the most important things that the organisation will do.
Production
Problem Solving
Platform management
License mangement
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5. Costs
Outlines the primary areas of cost under the business model
Fixed Costs
Variable Costs
Economies of scale
Key cost rachet points
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6. Relationships
What relationships other than partnerships may be required.
Particularly relevant in web 2.0 companies, where a customer has data vested with the company.
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7. Channel
What channels to market with the model employ?
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8. Revenue
What element of our value proposition will our customers actually pay for?
Asset Sales
Usage fees
Subscription
Advertising revenue
Renting or leasing
Licensing
Financing
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9. Customers
The different groups of people or organisation that the organisation hopes to reach and serve.
Segmenting requires:
Distinct groups and value segments
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How can Mission HQ help?
Business Model Design Training
Facilitating business model design workshops
Evaluating alternative business models
Financial modelling and business planning for alternate business models
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Business model design

by Marcus Tarrant on May 24, 2010

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Business model design — Presentation Transcript