Business Model Generation                Iskandar Muda                  Oct 18, 2012
change is the process by which   the future invades our lives                      -> Alvin Toffler
first of all: what    are YOUR    concerns?    (buzz groups)
what are YOUR biggest issues and fearsyou face in strategic management today?
where do YOU see the largest opportunitiesto improve strategic management today?
your expectations for today?
what is innovation?
tell me about the most important     innovations in your company
types ofinnovation?
technology innovation
process innovation
product & serviceinnovation
business model innovation
four rings of innovation      business model innovation     product & service innovation         process innovation       ...
which one of yourexamples qualify as  business model   innovation?
“Business model innovation matters” and it is           a top priority of CEOs
why talk aboutbusiness models?
how do you describe abusiness model?
without a common language
how do you communicate      a business model?
1%                                                                      18%Strategy                                       ...
Here                             Ok                         HereCEOs 10°              Managers                60°         ...
how do you implement a business model?
with outdated methods
how do you measure thesuccess of a business model?
we don’t
how do you change a businessmodel and innovate?
we re-invent the wheel
what is a business     model?
Alexander Osterwalder, PhD.
business model framework           a business model describes the value an organization offers to            various custo...
Value Proposition
The Channel
Customer Relationship
Revenue Stream
Key Resources
Key Activities
Key Partnership
Cost Structure
the big picture    Key Partner         Key Activities   Value Proposition       Customer Relationship   Target Customer   ...
value create revenue   Key Partner         Key Activities   Value Proposition       Customer Relationship   Target Custome...
creating value requires infrastructure   Key Partner         Key Activities   Value Proposition       Customer Relationshi...
Infrastructure generating costs   Key Partner         Key Activities   Value Proposition       Customer Relationship   Tar...
The profit zone   Key Partner         Key Activities   Value Proposition       Customer Relationship   Target Customer    ...
case study
you become the new owner of asoccer club …
describe YOURclub’s business     model
what value proposition do you offer, towhich customer segments?                    describing how a wealth management bank...
what value proposition do you offer, towhich customer segments? (model)               OFFER             CUSTOMER          ...
what value proposition do you offer, towhich customer segments? (example)                OFFER            CUSTOMER        ...
how do you reach your customers?
how do you reach your customers? (model)        OFFER                            CUSTOMER                          COMMUNI...
how do you reach your customers? (example)         OFFER                              CUSTOMER                          st...
how do you build relationships?
how do you build relationshipswith your customers? (model)        OFFER                        CUSTOMER        VALUE      ...
how do you build relationshipswith your customers? (example)        OFFER                           CUSTOMER              ...
how do you earn your money withthis business model?
how do you earn your money withthis business model? (model)        OFFER                            FINANCE        VALUE  ...
how do you earn your money withthis business model? (example)        OFFER                               FINANCE          ...
the businessmodels place in a   company
STRATEGY                   BUSINESS                    MODEL ORGANIZATION                   TECHNOLOGYthe business model’s...
external forces
5 forces         customer                 technological          needs                      change                    BUSI...
the big picture (business model)
the big picture                                        Partner Network                                           Customer ...
value creates revenues                                        Partner Network                                           Cu...
creating value requires infrastructure                                        Partner Network                             ...
infrastructure generates costs                                        Partner Network                                     ...
the profit zone                                        Partner Network                                               Custo...
the process ofdesigning innovative  business models
the focus of the   business modelinnovator & designer
user-centered
PARTNER                       CUSTOMER                 NETWORK                     RELATIONSHIPS   CORE                   ...
creativity & exploration
Googleplex
70:20:10
PARTNER                       CUSTOMER                 NETWORK                     RELATIONSHIPS   CORE                   ...
continuous innovation
interdisciplinary approach
Grameen Phone Bangladesh
Grameen                  Bank                                              customer                                       ...
holistic design
Apple iTunes & iPod
content               producers                                            lifestyle brand                hardware        ...
strategic fit
the Amazon.com you know
Amazon Simple Storage Services (S3)
customer                  partners                       relationships   product  selection                  content      ...
the businessmodeler’s toolbox
co-creation
ideation
visualization
prototyping
the design process
1. identify interdisciplinary stakeholders   -> set-up team
do you have to get the ITteam out of their cubicles?
2. understand (business) environment   –> frame problem
various starting points / depending on context                 PARTNER                            CUSTOMER                ...
3. suspend reality   -> ideate
4. bring back reality   -> prototype
5. chose suitable design   -> decide
6. sketch out projects & workload   -> draw implementation plan
Project     Estimated   Area                name        workload                            10               Project V1Val...
7. outline key indicators to follow   -> choose measures
Project     Estimated   KPI         Target   Area                name        workload    (measure)   level                ...
8. select the right teams and people   -> make responsible
Project     Estimated   KPI         Target   Area                                                      leader             ...
9. execute the plan   -> manage implementation & change
10. evaluate, learn and redesign    -> manage improvement
Exercise
Google’s Business Model       Key Partner            Key Activities        Value Proposition        Customer Relationship ...
from bloated head to the long tail
> market boundaries are  not given> they are reconstructed  by the actions & beliefs  of industry players
RED OCEAN                        BLUE OCEAN• compete in existing markets     • create uncontested markets• beat the compet...
differentiate your value proposition
working definition value proposition   • a customer value proposition gives an overall view of a     companys bundle of pr...
group warm-up what are the 5 most important competitive attributes that characterize a game console’s offer? (e.g. price, ...
5 attributes    1                2                    1. most important attribute                    2. second most import...
1. …2. …3. …4. …5. …
draw a value proposition                          5 - high  bank’s performance                       3 - medium           ...
live Excel
eliminate   raise reduce     create
strong & valuable approach, but limited view
PARTNER                       CUSTOMER                 NETWORK                     RELATIONSHIPS   CORE                   ...
examples
Goldcorp              “geology prize”                CUSTOMER                500’000 $US                RELATIONSHIPSexplo...
from copyright to creative commons
Skype                     “eBay”                           website deliver voice &                 free VoIP & value      ...
1291 Cityhomes               low-cost hotel/rental in New York City                 young                curious          ...
Tecnovate             “import” young                 curious                          CUSTOMER              Europeans to  ...
Netflix                independent                                                profile                    filmslarge mo...
Business model canvas ism
Business model canvas ism
Business model canvas ism
Business model canvas ism
Business model canvas ism
Business model canvas ism
Business model canvas ism
Business model canvas ism
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Business model canvas ism

  1. 1. Business Model Generation Iskandar Muda Oct 18, 2012
  2. 2. change is the process by which the future invades our lives -> Alvin Toffler
  3. 3. first of all: what are YOUR concerns? (buzz groups)
  4. 4. what are YOUR biggest issues and fearsyou face in strategic management today?
  5. 5. where do YOU see the largest opportunitiesto improve strategic management today?
  6. 6. your expectations for today?
  7. 7. what is innovation?
  8. 8. tell me about the most important innovations in your company
  9. 9. types ofinnovation?
  10. 10. technology innovation
  11. 11. process innovation
  12. 12. product & serviceinnovation
  13. 13. business model innovation
  14. 14. four rings of innovation business model innovation product & service innovation process innovation technology innovation
  15. 15. which one of yourexamples qualify as business model innovation?
  16. 16. “Business model innovation matters” and it is a top priority of CEOs
  17. 17. why talk aboutbusiness models?
  18. 18. how do you describe abusiness model?
  19. 19. without a common language
  20. 20. how do you communicate a business model?
  21. 21. 1% 18%Strategy 300%Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Cras in tortor. Sed posuere erat. Maecenas pulvinar nulla eu magna. Vivamus semper,risus ut egestas pulvinar, lectus ante feugiat quam, sit amet congue odio lacus ac ipsum. Aliquam suscipit, est ut volutpat vulputate, nulla felispulvinar libero, non ornare libero ipsum tristique tortor. Fusce sed lorem vitae justo feugiat malesuada. Donec aliquet. Vivamus semper eros necText Textdiam. Vivamus sem arcu, imperdiet nec, congue ac, scelerisque vel, nulla. Donec et mauris. Integer a nulla vulputate pede consequat euismod.Praesent molestie urna nec leo. Proin eros. Maecenas ac sem nec dui sodales tempus. Maecenas suscipit egestas velit. Suspendisse vel tortor.Proin imperdiet, sem nec aliquet ultrices, nunc est egestas eros, non hendrerit magna eros eget augue. Maecenas sed leo vitae leo faucibusvulputate. Proin dignissim eros at augue.Nam luctus nulla non nibh. Nam at lorem ac mauris laoreet viverra. In placerat consequat nunc. Donec rhoncus nunc ac urna. Integer vestibulumcondimentum orci. Fusce velit turpis, malesuada quis, scelerisque ut, eleifend vitae, ipsum. Vestibulum eu erat. Vestibulum justo nisl, tinciduntet, semper vel, tristique quis, eros. Vestibulum tempus, massa vel consectetuer congue, erat magna consequat purus, a facilisis orci nibh vitaeTextpurus. Nam tincidunt venenatis ligula. Nunc orci nulla, ornare quis, lobortis viverra, dapibus at, turpis. Suspendisse sit amet nisl at enim tinciduntblandit. Curabitur augue est, suscipit sed, egestas sit amet, vehicula vitae, tellus. Maecenas nec metus vel nisi interdum pellentesque.Development plan• Quisque augue felis, commodo a, elementum id, faucibus id, sem. Aenean rutrum enim. Praesent pulvinar dignissim nisl. Cras a nunc. Donec tincidunt odio sit amet lacus. Pellentesque metus tortor, ullamcorper vitae, lobortis vel, euismod in, mi. Ut laoreet, tellus laoreet blandit mollis, massa purus posuere purus, quis molestie ligula massa eu metus. Duis placerat, nulla sit amet ornare interdum, neque nunc mollis leo, vitae porttitor mi orci sit amet neque. Donec at enim. In facilisis tellus gravida ligula. Phasellus ut lorem. Pellentesque ac tortor eget augue suscipit ullamcorper. Aenean eleifend porta orci.• Etiam at arcu. Vestibulum lacinia nunc in eros. Suspendisse potenti. Aliquam erat volutpat. Donec gravida. Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Maecenas vel enim et metus semper fringilla. Donec ornare arcu. Maecenas faucibus ligula convallis nibh. Mauris dui quam, congue eu, commodo nec, tristique in, enim. Nulla auctor semper urna. Quisque a elit eu purus iaculis vestibulum. Aliquam dictum risus at odio. Fusce at lorem et elit faucibus placerat. Aenean velit. Proin elit odio, blandit et, scelerisque quis, pulvinar a, dui. Nunc magna dolor, bibendum ut, accumsan congue, tincidunt sit amet, neque. Proin consequat tincidunt lacus. In urna dui, congue nec, tincidunt sit amet, facilisis imperdiet, lorem.• Morbi sed nibh. Vivamus vitae dolor. Ut bibendum volutpat mi. Pellentesque quis magna non lectus elementum pretium. Aliquam quis est vitae arcu consequat fringilla. Cras magna risus, placerat eget, egestas consectetuer, ornare vel, felis. Nam ornare justo id orci mattis ultricies. Morbi luctus. Ut pretium odio ac12% libero. Nunc sollicitudin pharetra lorem. Aenean scelerisque, lacus eget ullamcorper scelerisque, ipsum urna viverra mi, eget viverra quam eros eget velit. Ut lacinia feugiat purus. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Etiam nunc nisl, aliquam blandit, luctus id, Words commodo laoreet, sem. Phasellus sit amet orci ut sapien vulputate pellentesque. Pellentesque dapibus purus et quam. Nam sit amet magna in neque dignissim sodales. Aenean non justo nec magna lobortis volutpat. through inappropriate means
  22. 22. Here Ok HereCEOs 10° Managers 60° Staff 360°
  23. 23. how do you implement a business model?
  24. 24. with outdated methods
  25. 25. how do you measure thesuccess of a business model?
  26. 26. we don’t
  27. 27. how do you change a businessmodel and innovate?
  28. 28. we re-invent the wheel
  29. 29. what is a business model?
  30. 30. Alexander Osterwalder, PhD.
  31. 31. business model framework a business model describes the value an organization offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and sustainable revenue streams [Osterwalder (2004) The Business Model Ontology]
  32. 32. Value Proposition
  33. 33. The Channel
  34. 34. Customer Relationship
  35. 35. Revenue Stream
  36. 36. Key Resources
  37. 37. Key Activities
  38. 38. Key Partnership
  39. 39. Cost Structure
  40. 40. the big picture Key Partner Key Activities Value Proposition Customer Relationship Target Customer Key Resources Channel … Cost Structure Revenue Stream
  41. 41. value create revenue Key Partner Key Activities Value Proposition Customer Relationship Target Customer Key Resources Channel … Cost Structure Revenue Stream
  42. 42. creating value requires infrastructure Key Partner Key Activities Value Proposition Customer Relationship Target Customer Key Resources Channel … Cost Structure Revenue Stream
  43. 43. Infrastructure generating costs Key Partner Key Activities Value Proposition Customer Relationship Target Customer Key Resources Channel … Cost Structure Revenue Stream
  44. 44. The profit zone Key Partner Key Activities Value Proposition Customer Relationship Target Customer Key Resources Channel … Cost Structure Revenue Stream <
  45. 45. case study
  46. 46. you become the new owner of asoccer club …
  47. 47. describe YOURclub’s business model
  48. 48. what value proposition do you offer, towhich customer segments? describing how a wealth management bank acquires its clients
  49. 49. what value proposition do you offer, towhich customer segments? (model) OFFER CUSTOMER VALUE CUSTOMER PROPOSITION SEGMENTS value proposition 1 target customer 1 value proposition 2 target customer 2 … …
  50. 50. what value proposition do you offer, towhich customer segments? (example) OFFER CUSTOMER spectacular fans offensive football advertising space & advertisers high visibility … …
  51. 51. how do you reach your customers?
  52. 52. how do you reach your customers? (model) OFFER CUSTOMER COMMUNICATION VALUE CUSTOMER & DISTRIBUTION PROPOSITION SEGMENTS CHANNELS value proposition 1 channel 1 target customer 1 value proposition 2 channel 2 target customer 2 … … …
  53. 53. how do you reach your customers? (example) OFFER CUSTOMER stadium & box office spectacular club owned TV fans offensive football channel mobile phone TV advertising space & sales force advertisers high visibility
  54. 54. how do you build relationships?
  55. 55. how do you build relationshipswith your customers? (model) OFFER CUSTOMER VALUE CUSTOMER CUSTOMER PROPOSITION RELATIONSHIP SEGMENTS value proposition 1 mechanism 1 target customer 1 value proposition 2 mechanism 2 target customer 2 … … …
  56. 56. how do you build relationshipswith your customers? (example) OFFER CUSTOMER personalized website (ticketing) spectacular team blog (RSS) fans offensive football …
  57. 57. how do you earn your money withthis business model?
  58. 58. how do you earn your money withthis business model? (model) OFFER FINANCE VALUE REVENUE CUSTOMER PROPOSITION STREAMS SEGMENTS value proposition 1 revenue stream 1 target customer 1 value proposition 2 revenue stream 2 target customer 2 … … …
  59. 59. how do you earn your money withthis business model? (example) OFFER FINANCE ticket sales spectacular TV channel fans offensive football subscriber fees mobile phone TV subscriber fees advertising space & advertising revenues advertisers high visibility
  60. 60. the businessmodels place in a company
  61. 61. STRATEGY BUSINESS MODEL ORGANIZATION TECHNOLOGYthe business model’s place in the company
  62. 62. external forces
  63. 63. 5 forces customer technological needs change BUSINESS MODEL legal social environment environment competition
  64. 64. the big picture (business model)
  65. 65. the big picture Partner Network Customer Relationship • food & beverages • personalized web profile • ticketing services • newsletter • promoters • team blog (RSS) • ad placement • VIP events with team • telecom operator • … • TV operator • … Core Capability Activity Configuration Value Proposition Distribution Channel Target Customer • play attractive & win • team management • attractive soccer • stadium • fans (families, etc.) games • event management • 360º event (match, • POS networks • fan groups • brand management • venue management dining, shopping) • club website (+online TV) • companies • video images • ticketing • exclusive VIP lounges • club cable TV channel • event/concert organizers • channel management • VIP relationship • merchandising • mobile phone TV channel • advertisers management • renting out stadium • … • … • video crew •… •… Cost Structure Revenue Model • team & maintenance • Ticket fees & season tickets • infrastructure management • online TV subscription revenues • marketing • revenue sharing cable & mobile phone TV • video • renting out stadium for events • advertising revenues • merchandising revenues
  66. 66. value creates revenues Partner Network Customer Relationship • food & beverages • personalized web profile • ticketing services • newsletter • promoters • team blog (RSS) • ad placement • VIP events with team • telecom operator • … • TV operator • … Core Capability Activity Configuration Value Proposition Distribution Channel Target Customer • play attractive & win • team management • attractive soccer • stadium • fans (families, etc.) games • event management • 360º event (match, • POS networks • fan groups • brand management • venue management dining, shopping) • club website (+online TV) • companies • video images • ticketing • exclusive VIP lounges • club cable TV channel • event/concert organizers • channel management • VIP relationship • merchandising • mobile phone TV channel • advertisers management • renting out stadium • … • … • video crew •… •… Cost Structure Revenue Model • team & maintenance • Ticket fees & season tickets • infrastructure management • online TV subscription revenues • marketing • revenue sharing cable & mobile phone TV • video • renting out stadium for events • advertising revenues • merchandising revenues
  67. 67. creating value requires infrastructure Partner Network Customer Relationship • food & beverages • personalized web profile • ticketing services • newsletter • promoters • team blog (RSS) • ad placement • VIP events with team • telecom operator • … • TV operator • … Core Capability Activity Configuration Value Proposition Distribution Channel Target Customer • play attractive & win • team management • attractive soccer • stadium • fans (families, etc.) games • event management • 360º event (match, • POS networks • fan groups • brand management • venue management dining, shopping) • club website (+online TV) • companies • video images • ticketing • exclusive VIP lounges • club cable TV channel • event/concert organizers • channel management • VIP relationship • merchandising • mobile phone TV channel • advertisers management • renting out stadium • … • … • video crew •… •… Cost Structure Revenue Model • team & maintenance • Ticket fees & season tickets • infrastructure management • online TV subscription revenues • marketing • revenue sharing cable & mobile phone TV • video • renting out stadium for events • advertising revenues • merchandising revenues
  68. 68. infrastructure generates costs Partner Network Customer Relationship • food & beverages • personalized web profile • ticketing services • newsletter • promoters • team blog (RSS) • ad placement • VIP events with team • telecom operator • … • TV operator • … Core Capability Activity Configuration Value Proposition Distribution Channel Target Customer • play attractive & win • team management • attractive soccer • stadium • fans (families, etc.) games • event management • 360º event (match, • POS networks • fan groups • brand management • venue management dining, shopping) • club website (+online TV) • companies • video images • ticketing • exclusive VIP lounges • club cable TV channel • event/concert organizers • channel management • VIP relationship • merchandising • mobile phone TV channel • advertisers management • renting out stadium • … • … • video crew •… •… Cost Structure Revenue Model • team & maintenance • Ticket fees & season tickets • infrastructure management • online TV subscription revenues • marketing • revenue sharing cable & mobile phone TV • video • renting out stadium for events • advertising revenues • merchandising revenues
  69. 69. the profit zone Partner Network Customer Relationship • food & beverages • personalized web profile • ticketing services • newsletter • promoters • team blog (RSS) • ad placement • VIP events with team • telecom operator • … • TV operator • … Core Capability Activity Configuration Value Proposition Distribution Channel Target Customer • play attractive & win • team management • attractive soccer • stadium • fans (families, etc.) games • event management • 360º event (match, • POS networks • fan groups • brand management • venue management dining, shopping) • club website (+online TV) • companies • video images • ticketing • exclusive VIP lounges • club cable TV channel • event/concert organizers • channel management • VIP relationship • merchandising • mobile phone TV channel • advertisers management • renting out stadium • … • … • video crew •… •… Cost Structure Revenue Model • team & maintenance • Ticket fees & season tickets • infrastructure management • online TV subscription revenues • • • marketing video < • revenue sharing cable & mobile phone TV renting out stadium for events • advertising revenues • merchandising revenues
  70. 70. the process ofdesigning innovative business models
  71. 71. the focus of the business modelinnovator & designer
  72. 72. user-centered
  73. 73. PARTNER CUSTOMER NETWORK RELATIONSHIPS CORE VALUE CUSTOMERCAPABILITIES PROPOSITION SEGMENTS ACTIVITY DISTRIBUTION CONFIGURATION CHANNELS COST REVENUE STRUCTURE STREAMS
  74. 74. creativity & exploration
  75. 75. Googleplex
  76. 76. 70:20:10
  77. 77. PARTNER CUSTOMER NETWORK RELATIONSHIPS CORE VALUE CUSTOMERCAPABILITIES PROPOSITION SEGMENTS ACTIVITY DISTRIBUTION CONFIGURATION CHANNELS COST REVENUE STRUCTURE STREAMS
  78. 78. continuous innovation
  79. 79. interdisciplinary approach
  80. 80. Grameen Phone Bangladesh
  81. 81. Grameen Bank customer relationships telecom operatorsmicro-credit village phone ladies villager telephony mobile activity telephony configuration source of Grameen phone ladies revenue Bank (billing) billing telecom mobile phone infrastructure revenues
  82. 82. holistic design
  83. 83. Apple iTunes & iPod
  84. 84. content producers lifestyle brand hardware suppliershardware & prod. & softw.softw. dev. design iPod Apple storese-commerce brand management dealer “high-end” iBook network consumer multimedia hardwarerights mgmt distribution multimedia iTunes downloads content content distribution hardware revenues cost structure multimedia revenues
  85. 85. strategic fit
  86. 86. the Amazon.com you know
  87. 87. Amazon Simple Storage Services (S3)
  88. 88. customer partners relationships product selection content selling stuff mass Amazon.com management on the Web customer distribution warehousing Web2.0 Amazon S3 Internet API & distribution companies product search A9 product e-commerce data services Internet search sitesAmazon.com data grid selling stuff IT infra data storage fees marketing search engine revenues
  89. 89. the businessmodeler’s toolbox
  90. 90. co-creation
  91. 91. ideation
  92. 92. visualization
  93. 93. prototyping
  94. 94. the design process
  95. 95. 1. identify interdisciplinary stakeholders -> set-up team
  96. 96. do you have to get the ITteam out of their cubicles?
  97. 97. 2. understand (business) environment –> frame problem
  98. 98. various starting points / depending on context PARTNER CUSTOMER NETWORK RELATIONSHIPS CORE VALUE CUSTOMERCAPABILITIES PROPOSITION SEGMENTS ACTIVITY DISTRIBUTION CONFIGURATION CHANNELS COST REVENUE STRUCTURE STREAMS [Osterwalder (2004) The Business Model Ontology]
  99. 99. 3. suspend reality -> ideate
  100. 100. 4. bring back reality -> prototype
  101. 101. 5. chose suitable design -> decide
  102. 102. 6. sketch out projects & workload -> draw implementation plan
  103. 103. Project Estimated Area name workload 10 Project V1Value man/daysProposition 120 Project V2 man/daysDistribution 38 Project C1Channels man/days …
  104. 104. 7. outline key indicators to follow -> choose measures
  105. 105. Project Estimated KPI Target Area name workload (measure) level 10 Project V1Value man/daysProposition 120 Project V2 man/daysDistribution 38 Project C1Channels man/days …
  106. 106. 8. select the right teams and people -> make responsible
  107. 107. Project Estimated KPI Target Area leader name workload (measure) level 10 Project V1 Mr. JanValue man/daysProposition 120 Project V2 Ms. Tee man/daysDistribution 38 Project C1Channels man/days …
  108. 108. 9. execute the plan -> manage implementation & change
  109. 109. 10. evaluate, learn and redesign -> manage improvement
  110. 110. Exercise
  111. 111. Google’s Business Model Key Partner Key Activities Value Proposition Customer Relationship Target Customer • Platform Management • Managing Services • Expanding Search designing blue Key Resources • Targeted Ads • Free search • Monetizing Content Channel • Advertisers • Web Surfers • Content Owners oceans • Search Platform Cost Structure Revenue Stream • Keyword Auctions • Platform Costs • Free
  112. 112. from bloated head to the long tail
  113. 113. > market boundaries are not given> they are reconstructed by the actions & beliefs of industry players
  114. 114. RED OCEAN BLUE OCEAN• compete in existing markets • create uncontested markets• beat the competition • make competition irrelevant• explore existing demand • create & capture new demand• make the value/cost trad-off • break value/cost trad-off• align with differentiation OR • align with differentiation low cost AND low cost
  115. 115. differentiate your value proposition
  116. 116. working definition value proposition • a customer value proposition gives an overall view of a companys bundle of products, services and client advice. • it is the sum of the total benefits a customer is promised to receive in return for a payment (or other value transfer)
  117. 117. group warm-up what are the 5 most important competitive attributes that characterize a game console’s offer? (e.g. price, performance, design) attribute 1 attribute 2 e.g. performance e.g. price
  118. 118. 5 attributes 1 2 1. most important attribute 2. second most important 3. … 3 4. …4 - -
  119. 119. 1. …2. …3. …4. …5. …
  120. 120. draw a value proposition 5 - high bank’s performance 3 - medium 1 - low [Kim & Mauborgne (2002) Charting Your Companys Future]
  121. 121. live Excel
  122. 122. eliminate raise reduce create
  123. 123. strong & valuable approach, but limited view
  124. 124. PARTNER CUSTOMER NETWORK RELATIONSHIPS CORE VALUE CUSTOMERCAPABILITIES PROPOSITION SEGMENTS ACTIVITY DISTRIBUTION CONFIGURATION CHANNELS COST REVENUE STRUCTURE STREAMS
  125. 125. examples
  126. 126. Goldcorp “geology prize” CUSTOMER 500’000 $US RELATIONSHIPSexploiting CUSTOMER mining mines SEGMENTS DISTRIBUTION research CHANNELS low costs through REVENUE open exploration STREAMS Goldcorp publicly shared all of its geological data and offered US$ 500’000 in prizes for determining where they might find the next 6 million ounces of gold
  127. 127. from copyright to creative commons
  128. 128. Skype “eBay” website deliver voice & free VoIP & value global video quality added services (non segmented) software internet development software large scale development low margin free voice-over-IP VoIP telephony & value-added services
  129. 129. 1291 Cityhomes low-cost hotel/rental in New York City young curious Swiss CUSTOMER RELATIONSHIPS apartment owners keep down low cost costs renting out DISTRIBUTION the cost accommodation rooms CHANNELS sensible New York find demand low cost rents
  130. 130. Tecnovate “import” young curious CUSTOMER Europeans to RELATIONSHIPS India to work low-cost multi-keep down ACTIVITY lingual call DISTRIBUTION European costs CONFIGURATION center CHANNELS corporations outsourcing REVENUE low cost STREAMS business process outsourcing “up-side down” in India
  131. 131. Netflix independent profile filmslarge movie (niche) movies specialized database over the clientele ACTIVITY Internet Web CONFIGURATION COST REVENUE STRUCTURE STREAMS online movie rental (with large niche movie database)
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