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Business Model Zen - Sample Book


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This is a sample book of Business Model Zen. Original full text book is written in Korean and published in 2013.

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Business Model Zen - Sample Book

  1. 1. Business Model Zen If problem discovered, then business also discovered Author. Brad (Yongho) Cho
  2. 2. copyright @ Brad (Yongho) Cho 2013
  3. 3. PROLOGUE Business all begins with the customer 7 Chap. 1 Keep simplifying, see the business essence 10 01 Philosophy of Business Model Zen 11 02 Why an insightful business model matters 15 Chap. 2 Business Tao, Business Model Zen 25 01 CONCEPT begins and ends with the customer 26 02 PLAN is forming strategic views 38 03 DO is looping execution and learning 52 04 3 step approach of Business Model Zen 57 Chap. 3 Zen Canvas 65 01 Introduction of Zen Canvas 67 02 ZEN IDEA stage 72 03 ZEN DESIGN stage 83 04 ZEN ACTION stage 97 05 Business Model diagnosis framework 106 Chap. 4 Zen Patterns 114 01 Introduction of Zen Patterns 115 02 BM#1. Collaborative open production 120 03 BM#2. Mass-customization 124 04 BM#3. Bundled experience 128
  4. 4. 05 BM#4. Stake division 133 06 BM#5. Spatio-temporal division 137 07 BM#6. Simplification-Innovation 142 08 BM#7. Targeting pyramid’s bottom 147 09 BM#8. Shared economy 152 10 BM#9. Ohjakkyo (Connecting Bridge) 157 11 BM#10. Fluidization 162 12 BM#11. Mass-social value 167 13 BM#12. Temporal value optimization 172 14 BM#13. Off-the-box system 177 15 BM#14. Reverse ideation of constraints 182 16 BM#15. Premium 187 17 BM#16. Alternating subsidy 191 Chap. 5 Zen Cube 196 01 Introduction of Zen Cube 197 02 Practical applications of Zen Cube 205 Chap. 6 Playing with Business Model Zen 212 01 Business Model Zen’s equation for external links 215 02 Link to Blue Ocean Strategy 217 03 Link to Business Model Canvas 219 04 Link to user-centric service design 222 05 Link to Lean Startup approach 225
  5. 5. EPILOGUE Some subtitle is needed 229 APPENDIX 231 01 The business model of Business Model Zen 231 02 Zen Canvas approach 232 03 Zen Canvas flows 233 04 Zen Cube 236 05 Zen Patterns – SOFT approach 238 BIBLIOGRAPHY 240
  6. 6. Foreword I’m holding on the palm a little cube just arrived from overseas two days ago. This regular hexahedron of 5 cm in diameter represents a new customer-centric framework of business model ideation that we will discuss herein. We call it ‘Zen Cube’. As we will take a close look into it from now on, this cube begins with the customer and ends with it. In ideation of a business, the customer shall be not only buyer but also a fundamental driver for the ideation itself. Because customer’s problem simply means a business opportunity. And identifying it and its implications becomes no other than market research. A right kind of approach to solve it makes the customer pay and in turn proves the business. Therefore the customer is an entity who proactively enables generating a business, rather than one to be just satisfied. Despite a long-winding opening, this book has a single motivation only. That is, hindsight from my earlier days of coaching industry experts with service design: ‘Market-proven business models do not really guide their practitioners into the essence, i.e. customer-centric business ideation’. Yes, it did strike me that these common business models were in discipline
  7. 7. devised to sophisticate existing concepts and testify their structural components, never to help with ideations. However, without a tight concept in place, these tools help execute something wrong effectively after all. ‘How to help generate good business ideas’ – it has been the question spinning on top ever since, over the year of coaching through more than 100 business plans. Thereafter, I had to publish a few more copies of books while often engaged in consulting and lectures but never stopped the research to answer the question. And, as if planned from the beginning, it suddenly flashed on me. That is, however premature it was, a logical framework of guiding through business ideation just popped up. It then took great amount of time in having this ‘embryo’ idea grow into due sophistication, testing against earlier examples and building execution tools. It’s been interesting yet meaningful time and I am grateful to present the result under the name of ‘Business Model Zen’. Business Model Zen intends to be an insight-centric business model framework. It has simpler yet more stereoscopic structure than existing ones. It also provides three execution
  8. 8. tools of ‘Zen Canvas’, ‘Zen Patterns’ and ‘Zen Cube’. These tools will help build business models, connect them with market opportunities and scale the ideas in a flexible manner, respectively. Down on a personal level, I had to mull things over before finally resorting on the name ‘Zen’. I was at first looking for something Korean that nicely represents ‘meditation’ or ‘contemplation’, but no word perfectly fits. The extent went naturally beyond Korea to Orient, eventually to come across Tao and Zen. Whereas common perception was that Chinese Tao is somewhat close to Taiji (i.e. Yin-yang) or Taoism by Lao-tzu, while Japanese Zen is identified with minimalism by most civilizations in West. Zen was the choice because, after all, this book deals with customer-centric simplification which in turn approximates minimalism. Therefore the Zen mentioned herein stays in the context of Orientalism, minimalism or insightfulness, no more or no less (i.e. nothing national). Got it, no more talks. Let’s get into the Zen. Homepage: !
  9. 9. Chapter 1. Simplify and Focus on the Business Core Business Model Cube
  10. 10. 01 The Philosophy of the Business Model Zen Before we go into the main text, let’s briefly discuss the philosophical roots for the Zen Business Model, because a thorough understanding of the philosophy helps to achieve more in the end. The word ‘Zen” herein reflects a sense of simplicity, balance, and integrity of the utmost degree. These are also the values that were sought by the ancient Orient’s Dhyana and Zen Buddhism.
  11. 11. While today’s modern businesses tend to be hugely complicated, the Zen Cube, which is the iconic object for the Business Model Zen, represents an extreme simplicity. The core of the Business Model Zen is abstracted into a simple and visible image, the cube. Now imagine this simple hexahedron effectively representing your business, releasing you from the huge stress of a complicated business plan.
  12. 12. Balance begins with the knowledge that the Business Model Zen addresses the entire course of a business, including its concept, plan and execution. Unbiased (or equally biased) opinions on customer value, strategic components and loop learning lets the Business Model Zen help you achieve a balanced success. It also provides links to external business methodologies to maximize the mutual benefits.
  13. 13. Integrity means that each component of the Business Model Zen is linked in a reciprocal and organic way. These links connect the business concept, plan and execution, as well as the apparent structural components and the inherent strategic ones. Thanks to loop execution and learning, the components and their connections are confirmed and coordinated towards a better logical coherence, which allows for a higher success rate for your business.
  14. 14. 02 Why an insightful business model matters Let’s define this first. What is a business model? Simply put, a business model is the collection of all the essential components of a business. Commonly included items are: organization, revenue model, process flows and products. Our modern trend is even simpler: value generation, value carriage and value monetization. Why are people interested in business models? It’s because a business model contains practical contents in line with the
  15. 15. objectives of a business. For instance, let’s say you just found something of value for a customer. The next steps of generating, carrying, and monetizing can get complicating as there are thousands of different ways to go about them. A business model is simply a set of choices and the relationships that surround them. More importantly, they are never fixed choices; they may and should change over time. A business model is not something that is chosen by externalities, but is rather an active framework that helps make right choices against them. Why a business model alone does not always guarantee success A good business is always based on a good concept. We shape a concept into a plan and then realize that plan into execution. Out of the three: concept, plan, and execution, which one do you think a common business model framework is intended for? Most likely, it’s a plan since a business model by definition is a kind of plan where the core business components are chosen and then organized. However, to make a business successful, all three domains must be in harmony:
  16. 16. - good business concept - plan to shape a concept - execution to realize a plan A business plan only shapes as existing concept, it does not beautify an unattractive concept nor does it improve a lousy execution capability. As an example, let’s compare a good business concept to a gemstone. The actual gemstone is the business concept, the jewelry design is the business plan, and the craftsmanship of the gemstone is the business execution.
  17. 17. As shown above, jewelry requires that gemstones go through a design and craft process; similarly, the success of any business requires concept and execution to be seamlessly integrated with a solid business plan. What about the common practices in the industry? Shouldn’t there be existing models or methods to help integrate these three domains? Companies typically employ a business proposal to brief a business concept. They then devise a bulky business plan that focuses on detailed execution and financial projections, where the execution is played by ear with no particular set of tools put in place. In this scenario, the business concept, plan and execution operate in silo and lack due efficiency and integrity. Why an insightful business model matters While existing business methodologies help to mitigate the aforementioned structural issues, they still have room for improvement in terms of consolidating the business concept, plan and execution. Granted, there are experts that are capable of combining various methodologies geared towards different business contexts, however, this is not a method of convenience
  18. 18. for everybody. This shortcoming becomes more obvious when we take a comparative analysis across some of the well-known methodologies that deal with innovation. As shown above, no single methodology covers all three domains like the Business Model Zen. However, it does not mean that the Business Model Zen solves all business problems; its core value, simply put, consolidates the business concept, plan and execution into a single canvas, thus restoring organic links among their components.
  19. 19. Nonetheless, the unique virtues of each of the existing methodologies will hold effective, since their legacies also laid the conceptual foundation for the Business Model Zen. Accordingly, and rather organically, linking them with the due reciprocity and synergy came to be of great interest. Chapter 6 will address the details of such links. The Business Model Zen is not just an extension of existing research on innovation and business models, but is also the outcome of the daunting challenge of integrating the three domains: concept, plan and execution. We hope that it will become a practical and integral solution for everyone, and not just one of the many theoretical methodologies out there. Design disciplines of Business Model Zen Although the main goal of Business Model Zen was to integrate the three basic principles to make a successful business, what makes this model truly unique is its fundamental concept. Let’s take a closer look as to what that is.
  20. 20. CONCEPT' - Take a customer-centric approach into business - Take the Customer–Problem–Solution–Market perspective A concept begins with customers at the heart of a business. Putting yourself into their shoes and their glasses, not yours as a provider, may allow you to snatch it. No wonder, customer observation gains growing focus in marketing simply because customer’s potential needs, when discovered, means clear success in differentiation. Product augmentation, which is provider-centric, does not help to drive success like it used to. A customer-centric view isn’t always a success magnet for a business either. It usually requires ideation to be articulated into the shape of a customer- problem-solution-market. Such an approach has a clear advantage: It makes it easier to modify things as you go along
  21. 21. with the business. This framework of the customer-problem- solution-market is probably the most important foundation for Business Model Zen. PLAN% - Simplify it into a single page - Assess the strategic components It takes no more than a single page, not a full-blown business plan, to write out one’s core business strategy and plan(s). Companies recently point out that bulky reports often impact the business efficiency and the time to market. Some of them allow single pagers while oral reports only. Business model canvas variants also help to simplify the core business components into a single page.
  22. 22. Also important is to sustain a strategic focus within simplicity. Shaping a concept into a plan alone can hardly achieve the goal of planning. It also requires the measures to review and diagnose the process, from a strategic point of view, so concepts have due feedbacks. EXECUTION) - Measure the gap between a business concept and its reality - Establish a loop learning mechanism We need an effective frame that can help feed back to the concept and plans the knowledge that is acquired during business executions, e.g. the gap between a concept and its reality, its root cause, etc. No concept is born to be a success. No plan can be made perfect either. Only execution may prove concepts and complement plans through practices. Accordingly,
  23. 23. an ‘execution study book’ comes as important as a business plan. (But we all know that no company carries such a handbook.) Business Model Zen also plays the role of the execution study book. Business execution should be fed back to the original concept and plan so that a loop execution mechanism of correcting the concept and revising the business plan is made complete. BUSINESS'SUCCESS' - Eliminate the gap between market and solution - Secure the integrity among concept, plan and execution Succeeding in business doesn’t mean achieving the financial targets given in a business plan. These numbers must employ
  24. 24. inaccurate assumptions thus make no valid metric to measure a success in most cases. In fact, the success of a business lies where the gap between a real market and company’s solution disappears. It also means migrating from early adopters to an early majority market. In a majority market, concept, plan and execution should be perfectly harmonized with due integrity. A loop learning mechanism as well should run on wheel without a hitch. A market exists where a concept to solve customer’s important problems is correct. There come along profits too. This is how you measure the success of a business, where profits are only a byproduct. On the contrary, profit alone cannot be viewed as a success, for a profitable business that lacks due integrity fails to enter a majority market and is vulnerable to a crisis at any time. !
  25. 25. Appendix. Business Model Zen Canvas Approach (English) Customer Mission Problem Market Solution Advantage Empathy HighConcept Cooperator Cooperator for Market for Innovation Revenue Cost ExploringOpportunities GeneratingIdeas Learn&Pivot Do&Test BusinessModelZenApproach 1 49 2358 6 7 10 ZenIDEAZenDESIGNZenACTIONPhase
  26. 26. Business Model Zen Canvas (English)BusinessModelZenCanvas Customer Mission Problem Market Solution Advantage Empathy HighConcept Revenue Cost Cooperator Cooperator for Market for Innovation ExploringOpportunities GeneratingIdeasDo&Test Learn&Pivot
  27. 27. Business Model Zen Cube (English)
  28. 28. To change your perspective to customer oriented will change your business destiny.