Cairo business modeling workshop


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Great job by Aaalto's Steffen Farny, Povilas Valigua & Verta Haataja in Cairo for Global Entrepreneurship Week!

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Cairo business modeling workshop

  1. 1. Faculty of Commerce Workshop: “How ideas become opportunities - First steps of creating your own business model”Workshop Team:Vera HaatajaPovilas ValiaugaSteffen FarnyNorris KruegerGlobal Entrepreneurship Week event of FCCU and Aalto UniversityThe HEI ICI — Project Entrepreneurship Capacity Building between Faculty of Commerce CairoUniversity and Aalto University School of Business
  2. 2. Workshop Objective Introduce the ‘business model’ concept Demonstrate the value of ‘ideation’ Build your first own business model – Tool: Canvas THIS WORKSHOP IS FOR YOU AND YOUR PERSONAL DEVELOPMENT
  3. 3. Workshop Agenda1. What is entrepreneurship?2. What is your idea for venture creation?3. How can you build an executable business model?
  4. 4. Passion for entrepreneurship?• Why are you here?• Why are you interested in entrepreneurship?• What motivates you?• Are you already entrepreneurs or know someone who is?
  6. 6. What is Entrepreneurship? Individual or Business, for- Traits / Actions &Organizational? profit? Characteristics? Behavior? 6 Sources: Gartner 1988; Zahra 1991; Austin et al. 2006
  7. 7. It depends…various related definitions• “Entrepreneurship is the creation of organizations. What differentiates entrepreneurs from non-entrepreneurs is that entrepreneurs create organizations, while non-entrepreneurs do not” -- (Gartner 1988, p.47)• It involves “the processes of discovery, evaluation, and exploitation of opportunities; and the set of individuals who discover, evaluate, and exploit them” -- (Shane & Venkatamaran 2000, p.218)• entrepreneurial opportunity an opportunity to engage in entrepreneurial action seeking to profit by introducing new goods or services -- (Companys & McMullen 2006) Pursuit of opportunity without regard to resources controlled 7 Source: Howard Stevenson, HBS
  8. 8. Various types of entrepreneurship• Corporate entrepreneurship: “those activities that enhance a companys ability to innovate, take risk, and seize opportunities in its markets. It centers on creating new business by penetrating new markets, pursuing new business, or both”. -- (Zahra 1991, 259)• Intrapreneurship: “entrepreneurship within existing organizations”. Involves new business venturing, innovativeness, self-renewal, and proactiveness. -- (Antoncic & Hisrich 2001, p. 495)• Social entrepreneurship: “entrepreneurial activity with an embedded social purpose” -- (Austin et al. 2006, p. 1)• International entrepreneurship: “the identification and exploitation of opportunities for international exchange” -- Ellis (2011) 8
  9. 9. Six types of ventures…smallSocial Startup Small Business Startup Work to feed the familyDriven to Make a Difference • Known product• Improve society Lifestyle Startup • Known customer• Social cause • Notable but low revenues• Profits not main driver • Consulting, construction co’s.• E.g. development banks, microlending Work to live their passion • Work only with what they like • Enough money “just to pay bills” • E.g. chocolatiers, bakers, restaurant, etc. 9
  10. 10. …and not so small Large Startup Scalable Startup Innovate for survival • Part of life cycle • Not good at disruptive innovations • Fund or buy startupsBuyable Startup Born to be big • Want to revolutionize “the world” • Visionary ideas • Funding rounds tens of millions • Grow into large corporationsBorn to flip• Grow to attract buyer• Cost efficient for buyers• Reduced time to market for buyer• Funding $100k - $400k• To be sold for tens of millions + 10
  11. 11. Venture type contributes to differencesin the creation process• Entrepreneur’s goals• Opportunity process• Ideation & Innovation• Business Model• Social venturing• Financing• Growth & Development 11
  12. 12. Entrepreneur’s goals• Pursue a passion?• Job independence or second source of income?• ”Thrill of creation” ?• Make an impact  ”leave your mark” ? 12
  13. 13. Opportunity process – an overview Entrepreneurial opportunity Both supply and demand exist and Either supply or demand is known, the opportunity exists in bringing and the opportunity exists in coming them together up with the “matching side” e.g.: Buying a franchise e.g. New software applications Creation Neither supply nor demand exist, one or both have to be created and economic inventions (marketing, finance, etc.) need to be created for the opportunity to come to life. The creation of new markets. e.g. U-haul; NetscapeSource: Sarasvaty et al. 2005
  14. 14. Making opportunities happen: Causation & Effectuation Causation Logic Effectual Logic- Selecting between a given set of means to - Imagining new possible ends using an existing set achieve a pre-determined goal of means- Presumes a market’s existence and ample - No assumptions about a market’s existence resource and process availability - Starts with entrepreneur’s own knowledge,- Begin with the end in mind & generate resources, networks, affordable loss, and goes from alternatives there Given Means M1 M1 M2 M4 Imagined Given Goal M2 M3 M3 Ends M5 M4 M5 Given Means 14 Source: Sarasvaty et al. 2005; Read et. Al 2010;
  15. 15. Aalto Ecosystem
  16. 16. Aalto Design Factory (Aalto DF)• What is Aalto DF?
  17. 17. STEP 2 - IDEATION
  18. 18. Ideation & Innovation varies from venture to venture Ideation: ”the first in a linear series of progressive activities to form a new business” ”Consciously engaging in an ongoing complex, cyclical, and recursive social process of problem solving and learning, which is integral to and inseparable from the larger cycle of innovation and new business formation” 18Source: Gemmel et al. 2011
  19. 19. Any idea yet? – No worries!1. Finding a team2. Finding an idea3. Building an idea4. Learning to get feedback
  20. 20. STEP 1 - FINDING A TEAM
  21. 21. Match-Making PART 1Prepare your introduction card (post-it)1. NAME2. TWO SKILLS or EXPERTISE3. TWO of your PASSIONS/HOBBIES/STUFF YOU LOVE4. A DREAM 5 min
  22. 22. Match-Making PART 2 – SPEED-MEETINGIn a nutshell:1. Sit down2. Talk and listen for 1 minutes3. Stand up and repeat with the next person when the whistleblowsSuggested conversation topics:1. Yourself: Educational background, work history, skills/specialties, ambitions Why am I here?
  23. 23. STEP 2 - FINDING AN IDEA
  24. 24. Ideation Topic• Based on the features and skills of our team members, what sort of entrepreneurial concept can we come up with?• What is the best thing that we could do together?• What sort of idea can mix positively the nature/skills/passions of this group of individuals?(Service or product, digital or concrete, for-profit ornon-profit, big or small…)
  25. 25. Ideation Round 1: “Quantity is Quality”1. Individual exercise2. 5 minutes to write down as many ideas as possible about the ideation topic.3. Idea quota to aim at: 154. After the time is up, choose your favorite 3 ideas to share with the team (10min)
  26. 26. DECIDE ON 1 IDEA – pick the best elements from each idea and merge them 5 min
  28. 28. CONTEXT MAPS Context Mapping is a mapping technique for capturing emergent conversation themes in complex problems to show integrated context. IDEAL
  29. 29. Ideation Round 2: “Narrowing”• Build a context map for an idea that you would like to build a business model on (10min)
  30. 30. STEP 4 - LEARNING TO GET FEEDBACK - postponed until later -
  32. 32. What do you think is a business model?• Video: Osterwalder
  33. 33. Venture formation starts with the searchfor a business model• What is a business model? – describes how an organization rationalizes the way it captures, creates, and delivers value• Why it is important? – Clarifies the makeup and interlacing of fundamental elements needed by any organization: customers, offer, infrastructure, and financial viability• How is it developed? 34 Source: Osterwalder & Pigneur, 2010
  34. 34. Developing your Startup’s business model 35 Source:
  35. 35. Business model differencesKP KA VP CR CS KR CHC$ R$ 37
  36. 36. Value Propositions• What problem are you solving?• What need do you satisfy?• Is your product/service aligned with customer needs?• Is value based on: – Newness – Performance – Price – Design, etc.BE SPECIFIC! What do you sell? What do people buy from you? 38 Source: Osterwald & Pigneur, 2010
  37. 37. Customer Segments• What groups or organizations of customers are you trying to reach?• Try to be as specific as possible – “all consumers” (mass market) may be your end goal, but perhaps not at the beginning…• Is your market..? – Mass – Niche – Segmented – Diversified – Multi-sided What is the imitability, available of substitutes, competition, and potential market(s) size(s)? 39 Source: Osterwald & Pigneur, 2010
  38. 38. Customer Relationships• What venues will you use to service and preserve customer relationships? – Shop? – Online? – Call center?• How will you monitor/respond to your customers?• Customized/personal experience?• Customer satisfaction? Customer relationships are driven by the intended effect 40 Source: Osterwald & Pigneur, 2010
  39. 39. Key Key Value Customer CustomerPartners Activities Propositions Relationsihps Segments Online retail Customized online Global shopping profiles & consumers (NA, recommendations EU, Asia) Fulfillment by Amazon Developers & Key companies Channels Resources Amazon web services Individuals and companies that need fulfillmentCost Revenue StreamsStructure Source: Osterwald & Pigneur, 2010
  40. 40. Workshop exercise (10 min)Talk with your teammates and:1. Identify all possible benefits/solutions that your idea could/does generate2. Who / which groups of people could/do use or benefit from your idea?3. In which various ways will you communicate with & relate to your customers  how do you get their commitment? (Integrate your stakeholder feedback from last week’s assignment) If you have multiple ideas, do a separate set for each
  41. 41. Customer driven business models Search ExecuteOpportunity Customer Customer Customer Company & B-model Discovery Validation Creation BuildingAssessment iterate pivot startup “regular” firm Paying customers help validate the business model 43 Source: Adapted from Startup Owners Manual by Steve Blank & Bob Dorf
  42. 42. Getting to and servicing customers channels• Clearly define how your startup will acquire and retain customers: – Sales channels - Cannot – Distribution channels rely on ”going viral” – Post-sales channels credibility to achieve growth - Evaluate – - Gives a glimpse of cost structure rationale Partnerships 44 Source: Venture Formation Course, Aalto Ventures Program 2011
  43. 43. Revenue Streams• Generated from successful customer commitments• The type and ”quality” of revenue stream is important: – Asset sale – Usage fee – Subscription-based – Lease – Licensing, etc. Customer-generated revenues is the most convincing evidence of a working business model 45 Source: Business Model Generation by A. Osterwalder and I. Pigneur
  44. 44. Key Key Value Customer CustomerPartners Activities Propositions Relationsihps Segments Online retail Customized online Global shopping profiles & consumers (NA, recommendations EU, Asia) Fulfillment by Amazon Developers & Key companies Channels Resources Amazon web services Individuals and companies that Affiliates need fulfillmentCost Revenue Streams Sales marginsStructure Fulfillment handling fees Web services Source: Osterwald & Pigneur, 2010
  45. 45. Workshop exercise (10 min)Talk with your teammates and:4. How does your product/service get to customers? a. Web sales? Shops? Distributors?5. How do you earn revenues? Is there more than one way? a. add-on services? Customer support? After salesservicing? If you have multiple ideas, do a separate set for each 47
  46. 46. Key Resources• What are your venture’s most important assets? – People? – Technology? – Intellectual property? – Physical resources (e.g. superior IT infrastructure, etc.) – Etc.• Are these owned, leased, outsourced?• How will you get needed but missing resources? Key resources support the rest of the business model 48
  47. 47. Key Activities• Key activities are the most important actions your organization takes to: – deliver value propositions – Attract & retain customers – earn revenues – etc.• They help identify core strengths and your venture’s value-add – Design? – Technology development Key activities link resources with the rest of the business model 49
  48. 48. Key Partners• Who will help you capture and deliver your value propositions?• Which suppliers do you need? Who are the most important?• Buy? Make? Lease?• Time to market?• Would any strategic partnerships help you? – Joint Ventures – Strategic alliances – Coopetition – “preferred” status / relationships 50
  49. 49. Cost Structure• Defines the most important costs related to the other blocks of your business model• Low cost structures are more important to some business models than to others• Despite common knowledge, it is not always about the lowest cost – It’s about the most efficient way to achieve your value props• How do you operate? – Cost or value driven? – Fixed versus variable costs? – Economies of scale and/or scope? 51
  50. 50. Key Key Value Customer CustomerPartners Activities Propositions Relationsihps Segments Fulfillment Logistics Online retail Customized online Global Partners shopping profiles & consumers (NA, IT & S/W Dev. recommendations EU, Asia) & Maintenance Fulfillment by Affiliates Amazon Developers & Key companies Channels Resources IT Amazon web infrastructure services Individuals and companies that Affiliates need fulfillment Global fulfillment infrastructureCost Revenue Streams Sales margins MarketingStructure Fulfillment Technology handling fees and content Web services Fulfillment Source: Osterwald & Pigneur, 2010
  51. 51. Workshop exercise (10 min)Talk with your teammates and:6. What are the most crucial resources within your team and your venture? a. Specific know-how? Geographical knowledge?7. What are the most important activities your venture does or will need to do to create your value propositions?8. Who are your most important partners? a. Distributors? Merchandisers?9. What are your most substantial elements of cost? If you have multiple ideas, do a separate set for each
  52. 52. FEEDBACK/ Ideation exercise (15 minutes) single point per sticky noteUsing sticky notes:• Go around all other teams’ canvases and analyze them – See if you get a clear picture of what the venture does, who its customers/end users are, what tools they are using to achieve their goals• Provide specific feedback and/or ask questions about each of the 9 elements• Two types of evaluators: “Good cop / Bad cop”
  53. 53. The Business Model Canvas Designed by: Date: Iteration #Key Key Value Customer CustomerPartners Activities Propositions Relationsihps Segments What Key Activities do our Value Who are our Key Partners? Propositions require? For whom are we creating value? What type of relationship does each of our Who are our key suppliers? Our Distribution Channels? What value do we deliver to the Customer Segments expect us to establish and Who are our most important Which Key Resources are we Customer Relationships? customer? maintain with them? customers? acquiring from partners? Revenue streams? Which one of our customer’s problems Which ones have we established? Which Key Activities do partners CATEGORIES How are they integrated with the rest of our are we helping to solve? Mass Market; Niche Market; Production business model? perform? What bundles of products and services Segmented; Diversified; Multi-sided How costly are they? MOTIVATIONS FOR Problem Solving are we offering to each Customer Platform EXAMPLES PARTNERSHIPS: Platform/Network Segment? Personal assistance; Dedicated Personal Optimization and economy Which customer needs are we Assistance; Self-Service; Automated Services Reduction of risk and uncertainty satisfying? Communities; Co-creation Acquisition of particular resources and CHARACTERISTICS activities Newness; Performance; Customization; “Getting the Job Done”; Design; Key Brand/Status; Price; Cost Reduction; Risk reduction; Accessibility; Channels Resources Convenience/Usability Through which Channels do our Customer Segments What Key Resources do our Value want to be reached? How are we reaching them now? Propositions require? How are our Channels integrated? Our Distribution Channels? Customer Which ones work best? Relationships? Which ones are most cost-efficient? How are we integrating them with customer routines? Revenue Streams? channel phases: TYPES OF RESOURCES 1. Awareness: How do we raise awareness about our company’s products and services? Physical 2. Evaluation: How do we help customers evaluate our Intellectual (brand patents, copyrights, organization’s Value Proposition? data) 3. Purchase: How do we allow customers to purchase specific products and services? Human 4. Delivery: How do we deliver a Value Proposition to Financial customers? 5. After sales: How do we provide post-purchase customer support?Cost Structure Revenue Streams For what value are our customers really willing to pay? What are the most important costs inherent in our business model? For what do they currently pay? Which Key Resources are most expensive? How are they currently paying? Which Key Activities are most expensive is your business more: How would they prefer to pay? Cost Driven (leanest cost structure, low price value proposition, maximum How much does each Revenue Stream contribute to overall revenues? automation, extensive outsourcing) Value Driven ( focused on value creation, TYPES: premium value proposition) Asset sale; Usage fee; Subscription Fees; Lending/Renting/Leasing; SAMPLE CHARACTERISTICS: Licensing; Brokerage fees; Advertising; fixed pricing; List Price; Product Fixed Costs (salaries, rents, utilities) feature dependent; Customer segment dependent; Volume dependent; Variable costs dynamic pricing; Negotiation( bargaining); Yield Management; Real- Economies of scale time-Market Economies of scope
  54. 54. THANKSGlobal Entrepreneurship Week event of FCCU and AaltoUniversityThe HEI ICI — Project Entrepreneurship CapacityBuilding between Faculty of Commerce Cairo University
  55. 55. Understanding your playing field• Search for a credible assessment of: – Customer segments – -Market sizemarket Is the sufficiently (forgivingly) large? - – Achievable market share about achievability realistic? Are the assumptions - Is there a potential for money here? – Competition – Scalability 57 Source: Venture Formation Course, Aalto Ventures Program 2011
  56. 56. Key Key Value Customer CustomerPartners Activities Propositions Relationsihps Segments Logistics Online retail Customized online Global Partners shopping profiles & consumers (NA, IT & S/W Dev. recommendations EU, Asia) & Maintenance Fulfillment by Affiliates Amazon Developers & Key companies Channels Resources IT Amazon web infrastructure services Individuals and companies that Affiliates need fulfillment Global fulfillment infrastructureCost Revenue Streams Sales marginsStructure Marketing Fulfillment Technology handling fees and content Web services Fulfillment Source: Osterwald & Pigneur, 2010
  57. 57. 59