A Practical Guide to Business Modeling

1. LHBS // TOOLBOX — BUSINESS MODEL CANVAS A PRACTICAL GUIDE TO BUSINESS MODELING THE TOOLBOX SERIES: BUSINESS MODEL CANVAS - THE WHY, THE WHAT & THE HOW November 2015 UNDERSTAND TODAY. SHAPE TOMORROW.

2. ABOUT. THE TOOLBOX SERIES At, LHBS, we are passionate readers and learners. What we learn, we like to share. That’s why we’ve created the Tool Box series which is an ongoing sharing of tools, models and frameworks that we like or that we have developed ourselves. This one gives you a new spins on how to better use the business model canvas throughout the different layers of your organization. We hope you enjoy this deck and are able to put it into your innovation process.   For more consumer and industry insights, check out the LHBS Inspiration-Hub platform here. INTRODUCTION UNDERSTAND TODAY. SHAPE TOMORROW. 2 Discover Deﬁne Develop Deliver UNDERSTAND TODAY. SHAPE TOMORROW. LHBS // TOOLBOX — BUSINESS MODEL CANVAS

3. UNDERSTAND TODAY. SHAPE TOMORROW. The easy and ﬂexible framework has helped many businesses, ranging from startups to big corporations, to shape, test, and improve their ideas. Even though it is considered as a rather simple tool, many companies and individuals seem to struggle when it comes to properly using the Business Model Canvas. Plenty of great resources that explain and discuss the Business Model Canvas can be found online; we at LHBS aim to give Business Modelling a new spin, providing you with helpful information, while highlighting crucial aspects, and learnings derived from our experience working with the tool. Tamara Stix Consultant at LHBS lhbs.com | ts@lhbs.com INTRODUCTION 3 INTRO DUCTION. LHBS // TOOLBOX — BUSINESS MODEL CANVAS Business Modelling– especially by using the Business Model Canvas– has proven itself as a highly effective and valuable tool for businesses.

4. UNDERSTAND TODAY. SHAPE TOMORROW. CONTENT. WHAT  is a business model? WHY  business models? HOW  to use a business model? 4 CONTENTLHBS // TOOLBOX — BUSINESS MODEL CANVAS

5. 1. WHAT is a business model? WHAT?LHBS // TOOLBOX — BUSINESS MODEL CANVAS

6. A business model is a   holistic & systematic approach to deﬁne, create & analyse a business or idea. LHBS // TOOLBOX — BUSINESS MODEL CANVAS DEFINITION // WHAT?

7. A Business Model delivers a simpliﬁed but comprehensive overview of how a business functions.     It describes the most important parts of business based on the value creation and acts as a basis for deﬁning, analysing, improving & innovating. Wirtz, 2000Wirtz, 2000 LHBS // TOOLBOX — BUSINESS MODEL CANVAS DEFINITION // WHAT?

8. 8 What are the pillars a business model is built upon? WHO  is your customer? WHAT  do you offer your customer? HOW  do you do this? -Markets -Customer Segments -Products & Services -Solutions -Experiences -Create Value -Deliver Value -Capture Value Value Proposition LHBS // TOOLBOX — BUSINESS MODEL CANVAS BUILDING BLOCKS // WHAT?

9. 9 Building Blocks Pillar: Business model building block: Product Value Proposition Customer Interface Customer Segments Distribution Channels Customer Relationship Infrastructure Management Key Resources Key Activities Key Partners Financial Aspects Cost Structure Revenue Stream LHBS // TOOLBOX — BUSINESS MODEL CANVAS BUILDING BLOCKS // WHAT?

10. 10 Business Model Canvas Key Partners Who are our Key Partners? Who are our Key suppliers? Which Key Resources are we acquiring form partners? Which Key Activities do partners perform? Key Activities What Key Activities do our Value Proposition require? Our Distribution Channels? Customer Relationships? Revenue streams? Value Propositions What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? Customer Relationships What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are the integrated with the rest of our business model? How costly are they? Customer Segments For whom are we creating value? Who are our most important customers? Key Resources What Key Resources do our Value Proposition require? Our Distribution Channels? Customer Relationships? Revenue Streams? Channels Trough which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efﬁcient? How are we integrating them with customer routines? Cost Structure What are the most important const inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? Revenue Streams For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? ValueCapture ValueCreation LHBS // TOOLBOX — BUSINESS MODEL CANVAS BUSINESS MODEL CANVAS // WHAT?

11. *Source: 11IBM Global CEO Study, 2006 Business Plan Business Model Form Textual Visual Format Document Canvas/Model Content Detailed description about   all business aspects An overview of most important aspects of business   & their interconnection Level Explicit & isolated chapters Abstract & integrated Focus Individual aspects of business Interconnection & interdependence   of business aspects Use Thoroughly understanding   each aspect of business Getting the big picture What is the difference between a Business Plan & a Business Model? LHBS // TOOLBOX — BUSINESS MODEL CANVAS BUSINESS PLAN VS. BUSINESS MODEL // WHAT?

12. 12 What differentiates a Business Idea from a Communication Idea? Communication Idea Business Idea Goal attention revenue generation Content involves mainly idea & costs involves internal & external aspects Concept independent (isolated) interconnected (holistic) Focus micro macro Length short-term long-term Complexity low high LHBS // TOOLBOX — BUSINESS MODEL CANVAS BUSINESS IDEA VS. COMMUNICATION IDEA // WHAT?

13. EXAMPLE LHBS // TOOLBOX — BUSINESS MODEL CANVAS EXAMPLE // WHAT? two companies in the hospitality industry with completely different business models

14. Key Partners Key Activities Value Propositions Customer Relationships Customer Segments Key Resources Channels Cost Structure Revenue Streams UNDERSTAND TODAY. SHAPE TOMORROW. AIRBNB Travel community operators Airbnb Travellers Airbnb Home providers Bloggers Legal Institutions Investors Insurance Companies Creating technological infrastructure Community Management Customer Service Marketing & Product Development Brand Community of home providers & travellers Data Base with accommodations Platform development & design HR Marketing Maintenance of payment system trustful & reliable platform free membership 24/7 Support Easy to use rental of unique spaces use of unused value property insurance coverage Support Team Online & Mobile applications Website App Social Media, Blog PR Word of Mouth Commission renters (6-12% of booking fee) Commission appartement owners (3% of booking price) Travelers: Budget Travelers Business Travelers Globetrotter Home Providers: Extra Room LHBS // TOOLBOX — BUSINESS MODEL CANVAS EXAMPLE // WHAT?

15. Key Partners Key Activities Value Propositions Customer Relationships Customer Segments Key Resources Channels Cost Structure Revenue Streams UNDERSTAND TODAY. SHAPE TOMORROW. MOTEL ONE Booking Websites Operation & Management of hotels Hotels at central locations low-budget accommodation combining attractive prices, high quality and central locations no-frills concept combined with modern design hotel-rooms reduced to what guests really need 5* for a 2* Price Standardised offer across locations assures people to get what they expect Own Website Via Mobile Device Booking & Travel Websites Budget Travellers Hotel Operations HR Properties Room fees Extras LHBS // TOOLBOX — BUSINESS MODEL CANVAS EXAMPLE // WHAT?

16. 2. HOW   to best use a   business model? HOW?LHBS // TOOLBOX — BUSINESS MODEL CANVAS

17. *Source: 17 How do organisations actually use Business Modeling? http://blog.strategyzer.com/posts/2015/2/9/why-and-how-organizations-around-the-world-apply-the-business-model-canvas 15% 36% 9% 19% 21% New product/service development within existing business model Strategic Reorientation Others Development of an entirely new business Renovate old   business model LHBS // TOOLBOX — BUSINESS MODEL CANVAS USAGE // HOW?

18. 18 Uses of a Business Model DEFINE DISCOVER DEVELOP DELIVER -current BM -analyse & assess -opportunity  spaces -new, valuable ideas -the right ideas -testing LHBS // TOOLBOX — BUSINESS MODEL CANVAS USAGE // HOW? BM helps to deﬁne & assess the current business model. Identify ‘white spaces’ for growth opportunities. Generate valuable, new ideas & business models. Easy way to test developed ideas & business models.

19. USE IT AS A MANAGEMENT TOOL LHBS // TOOLBOX — BUSINESS MODEL CANVAS MANAGEMENT TOOL // HOW?

20. 20 Business models as a management instrument Orientation Strategy Business Process Business Model TypeofInformation Planning - highly aggregated Architecture - tactical Implementation - operative LHBS // TOOLBOX — BUSINESS MODEL CANVAS MANAGEMENT TOOL // HOW?

21. *Source: 21 Use it on various levels of your organization Quelle: Business Model Management (Wirtz, 2011) Industry Model Industry Level Company Level Business Level Product Level Company business model A Company business model B Business unit Model I Business unit Model II Business unit Model I Business unit Model II Product   Business Model I Product   Business Model II Product   Business Model I Product   Business Model II Product   Business Model I Product   Business Model II Product   Business Model I Product   Business Model II COMPANY A COMPANY B LHBS // TOOLBOX — BUSINESS MODEL CANVAS MANAGEMENT TOOL // HOW?

22. USE IT AS A TOOL FOR INNOVATION LHBS // TOOLBOX — BUSINESS MODEL CANVAS INNOVATION TOOL // HOW?

23. 23 Business Model Innovation is about transforming key elements of your business or   inventing completely new ways of doing business. LHBS // TOOLBOX — BUSINESS MODEL CANVAS INNOVATION TOOL // HOW?

24. *Source: 24 4 Types of Innovation Business Model Innovation, Marc Sniukas Internal External Continuous Discontinuous Operational Innovation Management Innovation Product & Service Innovation Business Model Innovation LHBS // TOOLBOX — BUSINESS MODEL CANVAS INNOVATION TOOL // HOW?

25. *Source: 25 How Business Model Innovation can help… IBM Global CEO Study, 2006 Entrepreneurs Managers Market Entry Growth Commercializing a new technology Competitive Advantage Create new Markets Fend of new entrants LHBS // TOOLBOX — BUSINESS MODEL CANVAS INNOVATION TOOL // HOW?

26. IMPORTANT TO CONSIDER… LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALIDATION // HOW?

27. “No business plan survives   the ﬁrst contact with a customer” Steve Blank LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALIDATION // HOW?

28. At the end, a business model is a hypothesis which needs to be tested & validated before execution. LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALIDATION // HOW?

29. HOW TO TEST ASSUMPTIONS? LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALIDATION // HOW?

30. 30 Test the BM in the canvas by pairing up blocks to check their compatibility Customer Segments Value Proposition Customer   Relations Channels Revenue   Stream Cost   Structure Key Activities Resources Partners Core External Internal Financials ﬁnd   early adopters optimise   message & channel utility   testing currency   testing *Source: http://focus.customerdevlabs.com/ LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALIDATION // HOW?

31. “There are no facts inside the building.   So go outside!” Steve Blank LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALIDATION // HOW?

32. Test your BM directly with your target audience & stakeholders. LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALIDATION // HOW?

33. 33 Research Toolbox – Ask for Feedback: Interviews, Surveys… (Customer & Stakeholders) – Build a prototype – MVP: Minium Viable Product – Pre Sales (Adword Campaign, Kickstarter) – Measure & track clicks – Calculate costs (Break-Even analysis, Cash Flow analysis) LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALIDATION // HOW?

34. 3. WHY business models? WHY?LHBS // TOOLBOX — BUSINESS MODEL CANVAS

35. 35 3% 97% 97%of CEO’s see innovation as a top priority for business. *Source: press.pwc.com ≈ LHBS // TOOLBOX — BUSINESS MODEL CANVAS INNOVATION // WHY?

36. *Source: 36 Business Model Innovators outperform traditional innovators IBM Global CEO Study, 2006 -1 1 3 5 7 Product/ Services/ Market Innovators Operations Innovators Business Model Innovators (% of annual growth rate over 5 years) LHBS // TOOLBOX — BUSINESS MODEL CANVAS ≈ INNOVATION // WHY?

37. *Source: 37 How does Business Modelling create value for its users? http://blog.strategyzer.com/posts/2015/2/9/why-and-how-organizations-around-the-world-apply-the-business-model-canvas Contribution None Small Good Major 1 2 3 4 Better conversations on strategy 3.52 Creating a shared language 3.5 Better ideas & brainstorming 3.42 Better teamwork 3.19 Structured, practical outcomes 3.16 LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALUE CREATION // WHY?

38. A business model describes your idea or business in a brief & visual away,   so its essence can be easily transferred LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALUE CREATION // WHY?

39. The Business Model Canvas is a useful tool to create   a common understanding of your business   & align your stakeholders and employees LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALUE CREATION // WHY?

40. Effective tool for startups that are pitching their idea to   investors in order to secure funding LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALUE CREATION // WHY?

41. Helps to see the big picture and to  detect strengths and weaknesses of your idea or business LHBS // TOOLBOX — BUSINESS MODEL CANVAS VALUE CREATION // WHY?

42. READING LIST LHBS // TOOLBOX — BUSINESS MODEL CANVAS READING LIST

43. 43 Reading List & Tools - Business Model Generation, Osterwalder & Pigneur - Value Proposition Design, Osterwalder & Pigneur - Business Model Management, Wirtz - Business Model Gallery - Strategyzer - Business Model Innovation Glossy Box, LHBS LHBS // TOOLBOX — BUSINESS MODEL CANVAS READING LIST

44. If you have questions about this presentation or would like to discuss how to develop your business model, please get in touch. LET´S GET IN TOUCH 44 Tamara Stix Consultant ts@lhbs.com +49 171 317 9595 LHBS // TOOLBOX — BUSINESS MODEL CANVAS CONTACT

45. UNDERSTAND TODAY. SHAPE TOMORROW. Die in dieser Präsentation dokumentierten Gedanken und Vorschläge sind geistiges Eigentum der   LHBS Consulting Berlin GmbH und unterliegen den geltenden Urhebergesetzen. Die unauthorisierte Nutzung,   die ganze oder teilweise Vervielfältigung sowie jede Weitergabe an Dritte ist nicht gestattet. LHBS Consulting Berlin GmbH Köpenicker Straße 154 10997 Berlin Germany www.lhbs.com THANK YOU