Business Model Design

desi gning usine ss mo dels b d a course prepare r by a lex osterwalde and yves pigneur

e -business serv ice design s cenario & s torytelling t ask analysis p rototyping service to business from ueprint & v isualization bl service innovation ess model innovation busin busin ess model usiness mo del design ‣b

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

business model ign ^ des

We believe that if managers adopted a design attitude, the world of business would be different and better [Boland & Collopy, 2004]

the desig ner’s tool kit ...

analyze from the customer perspective PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS KEY DISTRIBUTION RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS

Jan Chipchase (Nokia)

his main weapon

India mobile study

Rich Ling (Telenor)

photo usage study

do you d o if you what don’t h ave an nthropo logist or a logist h andy ? socio rf.snoitartsulli

(customer) empathy map what’s on his/her mind? his/her preoccupations his/her worries what he/she thinks what does he/she what does he/she hear? see? what his/her boss says his/her environment what his/her friends say his/her friends what media inﬂuences him/her what the market offers him/her what does he/she say? his/her attitude how he/she appears in public what he/she tells others [Source: XPLANE, the visual thinking company]

co-designing

computer-aided designing

business model ^ rns pa tte

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

“ long tail” pat tern

it’s about selling less of more…

focus on a small number of products sales with large volume number of products

focus on a large number of products sales with low volume number of products

the “traditional” record company PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS finding talent marketing super-star mass market artists & hits distribution channel KEY DISTRIBUTION RESOURCES CHANNELS retail outlets protected content radio & TV COST STRUCTURE REVENUE STREAMS talent huge revenue s “production marketing from few ar tists ”

New Ways to Discover & Popularize Music…

business model PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS ies niche platform platform for communit segments management musicians & fans/buyers content niche producers KEY DISTRIBUTION segments RESOURCES CHANNELS match-making with taste breadth of online niche platform segments COST STRUCTURE REVENUE STREAMS small revenu music platform es from many subscription maintenanc e artists service?

“do uble si ded” pat tern

^ Two-sided business ... according to Evans 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]

back t o the ... who area

the business model canvas KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS buyers KEY DISTRIBUTION RESOURCES CHANNELS sellers COST STRUCTURE REVENUE STREAMS

back t o the ... what area

the business model canvas KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS buyers offer for RESOURCES buyers KEY DISTRIBUTION CHANNELS offer for sellers sellers COST STRUCTURE REVENUE STREAMS

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

audience building

cost saving

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

the business model canvas KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS match buyers KEY making cost DISTRIBUTION RESOURCES CHANNELS saving audience sellers building COST STRUCTURE REVENUE STREAMS

back t o the ... how much area

the business model canvas KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS KEY DISTRIBUTION RESOURCES CHANNELS COST STRUCTURE revenue from REVENUE STREAMS revenue from sellers buyers

customers who pays? media & television readers/viewers adverFsers adverFsers  (mainly) credit cards cardholders merchants merchants  (mainly) web aucFons buyers sellers sellers  (mainly) www.strategy-business.com/press/16635507/03301

back t o the ... how area

“ 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

the business model canvas KEY PARTNERS KEY ACTIVITIES platform RELATIONSHIPS OFFER CUSTOMER CUSTOMER SEGMENTS management platform promotion service RESOURCESision prov KEY ing DISTRIBUTION CHANNELS COST STRUCTURE REVENUE STREAMS

the business model canvas KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS platform platform promotion management buyers service cost match saving provisioning KEY DISTRIBUTION RESOURCES making CHANNELS audience sellers building COST STRUCTURE REVENUE STREAMS revenue from revenue from sellers buyers

“f ree” pat tern

farm2.static.ﬂickr.com/1177/683534694_3c70cebe3b_o_d.jpg

double-sided market r evi ew ✓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 network by MJF 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 r evi ew ✓platform promotion ✓service provisioning ✓platform management

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Business Model Design

by Yves Pigneur

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