1. Awesome Journey Inc.
© 2016 Awesome Journey Inc. Page 1
Great Leaders Have A Strategic Business Model
One of the ways that Great Leaders differentiate their business in a
crowded marketplace is they have designed a strategic “Business Model”.
Two of today experts on Business Model design are Alexander Osterwalder
and Yves Pigneur and they define a Business Model as “the rationale of
how an organization creates, delivers and captures value.”
At Awesome Journey we believe that a strategic “Business Model” has four
key building blocks:
1. Define Your “Client Value Proposition”
To understand your “Client Value Proposition” answer the
following questions:
a. Who is your key target client?
b. What is the type of relationship your company has with your
client?
i. Personal
ii. Automated
c. What is the need you are fulfilling for the target client?
d. What is your product and / or service offering?
e. What is your distribution method to reach your key target
client?
i. Two key distribution methods are:
1. Direct Distribution – a sales team or web based
2. Indirect Distribution – through a franchise network,
licensing agreement, partner stores and wholesalers
2. Define Your “Profit Formula”
To understand your “Profit Formula” answer the following
questions:
a. What is your revenue stream?
Is all about understanding how a company creates revenue
streams from its value propositions to its client segments
i. Transactional Revenue stream
1. Product sale
ii. Recurring Revenue stream
1. Rent
2. Franchising

2. Awesome Journey Inc.
© 2016 Awesome Journey Inc. Page 2
3. Licensing fee
4. Usage fee
5. Subscription
6. Leasing
b. What is your pricing model?
i. Fixed pricing model
1. List price
2. Product feature dependent
3. Client segment dependent
4. Volume discount
ii. Dynamic pricing model
1. Negotiation
2. Pricing is dependent on market conditions – Hotels
room and airline seats – price depends on inventory
and time of purchase
3. Auctions – pricing is determined by competitive
bidding
iii. Specific Pricing Models
1. Lowest cost through scale advantages
2. Lowest cost through scope and replication
advantages
3. Premium prices due to unmatchable service
4. Premium prices due to propriety product features
c. What are your cost structures?
i. What are your fixed costs?
ii. What are your variable costs?
iii. What are your economies of scale?
3. Define Your “Key Resources”
What are your key resources that are needed to deliver the
“Client Value Proposition?”
a. People
b. Technology
c. Products
d. Assets – Equipment, Mineral rights, Real Estate
e. Reoccurring revenue streams
f. Equipment
g. Information
h. Partnerships/Alliances

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i. Brand awareness
4. Define Your “Key Support Structures”
To understand your “Key Support Structures” create clarity
as to ‘do we have the right’:
a. People
b. Processes/Systems
c. Practices
d. Tools
Once you have clear understanding of your Business Model, it is time to
bring your team’s creativity to the table and see how we can innovate our
Business Model to differentiate our business in a crowded marketplace or
create a whole new market.
Three Examples of Companies that have innovated their “Business Model”
by challenging long-held core beliefs in their industry about how to create
value for their prospective clients and are winning!
1. What if I could bring client videos via the web and charge them a
monthly fee? – Netflix
2. What if you don’t need to own IT infrastructure in your business? –
Amazon Web Services
3. What if we revolutionized the pricing model and the distribution
model for how people use a taxi service – Uber
Reference Material:
1. “Reinventing Your Business Model”, by Mark W. Johnson, Clayton M.
Christensen, and Henning Kagermann (HBR paper – Dec 2008)
2. “Business Model Generation” by Alexander Osterwalder & Yves
Pigneur (Book – 2010)
3. “Are You Sure You Have a Strategy?” by Donald C. Hambrick &
James W. Fredrickson (Academy of Management Executive – Nov
2001)
4. “Disrupting Beliefs: A New Approach to Business-Model Innovation”,
by Marc de Jong & Menno van Dijk (Mckinsey Quarterly – July 2015)