Business Model Design

desi gning ess model e -busin ac ourse prepared er by alex osterwald r a nd yves pigneu spired presentation in lds by Garr Reyno

e-business se rvice design scenario & storytelling ta sk analysis p rototyping ervice qualit y & usability s busi ness process ation bluepr int & visualiz service pr oductivity servic e compliance busine ss model business m odel design ! l innovation service & b usiness mode

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des ign l oop

design evaluate

3 steps of business model design !\" VISUALIZE #\" %\" $\" !! \"#$%&'(#)#*'$+,-) !! 2$$#$$) !! (&2',$30&/)0,) !! 3.&,),#5)/0 (.$',#$$)/0\"#1) $3&#,-34$)2,\") '/7&08#/#,3$)9) ',30)2)7&0:#% 5#26,#$$#$) 0770&3.,'+#$)) &02\"/27)

business model ^ de sign

business model canvas

CLIENT CUSTOMER CLIENT KEY ACTIVITIES CLIENT CLIENT SEGMENTS RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS PARTNER CLIENT CLIENT CUSTOMER CLIENT CLIENT OFFER CLIENT CUSTOMER CLIENT \"&!% NETWORK SEGMENTS SEGMENTS !\"#$% SEGMENTS SEGMENTS !\"&% SEGMENTS SEGMENTS SEGMENTS DISTRIBUTION CLIENT CLIENT KEY RESOURCES CLIENT CLIENT CHANNELS SEGMENTS SEGMENTS SEGMENTS SEGMENTS REVENUE '% CLIENT COST STRUCTURE CLIENT SEGMENTS (% CLIENT CLIENT FLOWS SEGMENTS SEGMENTS SEGMENTS business model canvas

business model co-design

business model visualization

3 steps of business model design !\" #\" %\" $\" ASSESS !! \"#$%&'(#)#*'$+,-) !! 2$$#$$) !! (&2',$30&/)0,) !! 3.&,),#5)/0 (.$',#$$)/0\"#1) $3&#,-34$)2,\") '/7&08#/#,3$)9) ',30)2)7&0:#% 5#26,#$$#$) 0770&3.,'+#$)) &02\"/27)

business model ^ assessm ent

diagnostic

SWOT analysis

strength

weakness ﬂickr 2363952016_97f10be59f_o.jpg

opportunity

threats

STRENGTHS WEAKNESSES Capabilities for advantage Absence of strengths Patents Lack of patent protection Brand name A weak brand name Good reputation among customers Poor reputation among customer Cost advantage from know-how High cost structure Access to rare resources Lack of access to best resources OPPORTUNITIES THREATS For growth and proﬁt Pressures An unfulfilled customer need Shifts in consumer tastes Arrival of new technologies Emergence of substitutions Loosening of regulations New regulations Removal of international trade barriers Increase trade barriers www.quickmba.com/strategy/swot/

question your business model

question your business model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

3 steps of business model design !\" #\" %\" INNOVATE $\" !! \"#$%&'(#)#*'$+,-) !! 2$$#$$) !! (&2',$30&/)0,) !! 3.&,),#5)/0 (.$',#$$)/0\"#1) $3&#,-34$)2,\") '/7&08#/#,3$)9) ',30)2)7&0:#% 5#26,#$$#$) 0770&3.,'+#$)) &02\"/27)

business model ^ innova tion

strategy canvas

ocean” ??? who kno ws the “blue illustrations.fr

no, more serious ??? illustrations.fr

http://www.cartoonstock.com/directory/b/best_selling_book.asp

“ Market boundaries are not given. They are reconstructed by the actions & beliefs of industry players. ” Kim & Mauborgne Blue Ocean Strategy

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 low • align with differentiation AND cost low cost [Kim & Mauborgne (2002) Charting Your Company's Future]

Strategy canvas ... to Kim & M ^ auborgne according a way to visualize the strategic proﬁle based on the factors that affect competition showing the strategic proﬁle of competitors identifying which factors they invest in strategically

CHARTING THE OFFER’S FACTORS [Kim & Mauborgne (2002) Charting Your Company's Future]

eliminate raise the fact ors r s should Which o f Wh ich facto stry take s ll above the th at the in du be raised we be rd? ed should industry 's standa for grant d? eliminate d to rs shoul t ors shou ld W hich fac hich fac e W d that th d well belo w be create b e reduce has never standard? industry the industry's offered? reduce [Kim & Mauborgne (2002) Charting Your Company's Future] create

CHARTING THE VALUE PROPOSITION

vas f or ... ateg y can a str Cirque du So leil ??? rf.snoitartsulli

artistic feel theater & & opera visitors atmosphere stage & manage artistic circus spectacle & without lions higher ticket logistics prices CIRQUE DU SOLEIL

e stage & manag CUSTOMER CLIENT spectacle &SEGMENTS CLIENT KEY ACTIVITIES CLIENT CLIENT RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS logistics PARTNER CLIENT CLIENT CUSTOMER CLIENT CLIENT OFFER CLIENT CUSTOMER CLIENT \"&!% NETWORK SEGMENTS SEGMENTS !\"#$% SEGMENTS SEGMENTS !\"&% SEGMENTS SEGMENTS SEGMENTS artistic DISTRIBUTION theater & CLIENT opera visitors CLIENT KEY RESOURCES CLIENT CLIENT SEGMENTS SEGMENTS circus CHANNELS SEGMENTS SEGMENTS s without lion artistic feel & atmosphere REVENUE '% CLIENT COST STRUCTURE CLIENT (% CLIENT CLIENT FLOWS higher ticket SEGMENTS SEGMENTS SEGMENTS SEGMENTS prices

artistic circus s without lion CHARTING THE VALUE PROPOSITION

“ Pattern in architecture is the idea of capturing architectural design ideas as archetypal and reusable descriptions. ” Christopher Alexander’s idea

business model ^ ns pa tter

business to consumer

B2C © ondrus & pigneur

business to business

n informatio buyer product seller distributor urer manufact supplier payment SCM [Kalakota, 2001]

market place http://www.pbase.com/srijith/image/88605858

e-m arket © ondrus & pigneur

double-sided business

^ Two-sided business ... s acco rding to Evan two distinct sets of customers who need each other who can’t get together easily on their own and for which a platform reduces network effects [Evans, 2006]

Network effects ... “ more interesting to be More people are connected, connected. ”

Metcalfe’s law ... according ^ to Metcalfe states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2) http://en.wikipedia.org/wiki/Metcalfe's_law

back t o the ... customer area

MANY CUSTOMER SEGMENTS CLIENT CUSTOMER CLIENT KEY ACTIVITIES CLIENT CLIENT SEGMENTS RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS PARTNER :;<$&=>? CUSTOMER CLIENT CLIENT \"&!% &BB>? CLIENT CLIENT !\"#$% CLIENT CUSTOMER CLIENT !\"&% NETWORK SEGMENTS SEGMENTS SEGMENTS SEGMENTS <>@=>A$ SEGMENTS SEGMENTS SEGMENTS KEY buyers DISTRIBUTION CLIENT CLIENT CLIENT CLIENT RESOURCES CHANNELS SEGMENTS SEGMENTS SEGMENTS SEGMENTS sellers COST ?>C>A;>3 '% CLIENT CLIENT STRUCTURE (% CLIENT CLIENT SEGMENTS SEGMENTS BD&!< SEGMENTS SEGMENTS DESCRIBING WHO A COMPANY OFFERS VALUE TO

back t o the ... offer area

DISTINCT OFFERS CLIENT CUSTOMER CLIENT KEY ACTIVITIES CLIENT CLIENT SEGMENTS RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS PARTNER :;<$&=>? CLIENT CLIENT \"&!% &BB>? CLIENT CLIENT !\"#$% CLIENT CUSTOMER CLIENT !\"&% buyers NETWORK SEGMENTS SEGMENTS SEGMENTS SEGMENTS <>@=>A$ SEGMENTS SEGMENTS offer for DISTRIBUTION RESOURCESyers KEY bu CLIENT CLIENT CLIENT CLIENT CHANNELS SEGMENTS SEGMENTS SEGMENTS SEGMENTS offer for sellers sellers COST ?>C>A;>3 '% CLIENT CLIENT STRUCTURE (% CLIENT CLIENT SEGMENTS SEGMENTS BD&!< SEGMENTS SEGMENTS DESCRIBING WHO A COMPANY OFFERS VALUE TO

Transaction costs “ main economic role of multi- Reducing transactions costs is sided platforms ”

match making http://www.pbase.com/srijith/image/88605858

audience building

cost saving

DISTINCT OFFERS CLIENT CUSTOMER CLIENT KEY ACTIVITIES CLIENT CLIENT SEGMENTS RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS :;<$&=>? match PARTNER CLIENT CLIENT \"&!% &BB>? CLIENT CLIENT !\"#$% CLIENT CUSTOMER CLIENT !\"&% NETWORK SEGMENTS SEGMENTS SEGMENTS SEGMENTS <>@=>A$ SEGMENTS SEGMENTS making KEY DISTRIBUTION CLIENT cost CLIENT CLIENT CLIENT CHANNELS RESOURCES SEGMENTS SEGMENTS SEGMENTS SEGMENTS audience saving building COST ?>C>A;>3 '% CLIENT CLIENT STRUCTURE (% CLIENT CLIENT SEGMENTS SEGMENTS BD&!< SEGMENTS SEGMENTS DESCRIBING WHO A COMPANY OFFERS VALUE TO

http://upload.wikimedia.org/wikipedia/commons/0/02/Montreux_Jazz_Festival.jpg

back t o the ... ﬁnance area

DISTINCT REVENUE STREAMS CLIENT CUSTOMER CLIENT KEY ACTIVITIES CLIENT CLIENT SEGMENTS RELATIONSHIPS SEGMENTS SEGMENTS SEGMENTS PARTNER CLIENT CLIENT CUSTOMER CLIENT OFFER CLIENT CLIENT CUSTOMER CLIENT \"&!% NETWORK SEGMENTS SEGMENTS !\"#$% SEGMENTS SEGMENTS !\"&% SEGMENTS SEGMENTS SEGMENTS revenue from KEY DISTRIBUTION CLIENT CLIENT CLIENT CLIENT CHANNELS RESOURCES SEGMENTS SEGMENTS SEGMENTS SEGMENTS revenue from sellers buyers COST ?>C>A;>3 REVENUE '% CLIENT CLIENT (% CLIENT CLIENT STRUCTURE SEGMENTS SEGMENTS <$?>#=< FLOWS SEGMENTS SEGMENTS DESCRIBING HOW A COMPANY MAKES MONEY

4/+,197-+ E513F6G+% *#,(/$F$!#-#=('(+) 0#/,#0'E=(#2#0' /,=#04'#0' /,=#04'#0'$ 8*/()-3: 50#,(!$5/0,' 5/0,\"+-,#0' *#05\"/)!' *#05\"/)!'$ 8*/()-3: 2#%$/&54+)' %&3#0' '#--#0' '#--#0'$ 8*/()-3: www.strategy-business.com/press/16635507/03301

back t o the ... process area

^ Value chain ... r to Porte according Set of interdependent activities that add value for the customers to the company products or services

value chain transforming input to output support activities infra-structure human resources technology development procurement main activities inbound outbound marketing after- sale production logistics logistics sales services

... but for mediating companies ??? http://www.pbase.com/srijith/image/88605858

“ Value networks!rely on a!mediating technology !to link!clients who are or wish to be interdependent [...] and facilitate!exchange relationships among customers The ﬁrm provides a networking service.!” Charles Stabell et al. Conﬁguring value for competitive advantage

value network > bank example

VALUE NETWORK H>I CLIENT CUSTOMER CLIENT KEY ACTIVITIES CLIENT CLIENT #:$JCJ$J>< SEGMENTS SEGMENTS RELATIONSHIPS SEGMENTS SEGMENTS infrastructure OFFER eration op PARTNER CUSTOMER network CLIENT CLIENT CLIENT CLIENT CLIENT CUSTOMER CLIENT \"&!% NETWORK SEGMENTS SEGMENTS !\"#$% SEGMENTS SEGMENTS !\"&% SEGMENTS SEGMENTS SEGMENTS promotion service KEY CLIENT CLIENT RESOURCES DISTRIBUTION CLIENT CLIENT CHANNELS SEGMENTS SEGMENTS SEGMENTS provisioning SEGMENTS COST REVENUE '% CLIENT CLIENT STRUCTURE SEGMENTS (% CLIENT CLIENT FLOWS SEGMENTS SEGMENTS SEGMENTS DESCRIBING WHAT ACTIVITIES ARE REQUIRED

Design business model canvas Assessment SWOT questions Innovate Strategy canvas

SWOT analysis rev iew \" strengths \" weaknesses \" opportunities \" threats

strategy canvas rev iew \" visualizing offer’s factors \" showing strategic profiles \" identifying factors

double-sided market rev iew \"two sets of customers \"who need each other \"with network externalities

value NETWORK PROMOTION Nobs Network flow Contract musicians flow SERVICE PROVISIONING flow flow musicians recordings by MJF fit NETWORK Selling recordings INFRASTRUCTURE Contract sponsors fit by Montreux Sounds by MJF network Programming Sponsors Concerts see focus Ticketing flow instruments by MJF tickets by MJF, artists fit flow by MJF, Ticket Corner fit Recording concerts Food & Beverages fit Advertising the MJF by MJF by MJF, caterers, Heineken venues by MFJ, sponsors, media, Production Swiss tourism, Montreux Commerce by MJF by shops share fit Manage infrastructure Merchandising JAZZ by MJF, Municipality Focus: Programming decomposed into its sub-activities (forming a value shop) by MJF flow Manage JAZZ Problem finding by MJF Define concert date and stage to be filled Problem Manage volunteers Evaluation solving by MJF flow Evaluate concert Nobs & staff list music styles and and ticket sales possible artists Legend Put artist in Choose artist Execution program Choice Resource Activity By ACTOR rev iew \"customer management \"service provisioning \"infrastructure operation

Business Model Design

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