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Business Model Zen - White Paper 2016
VisionArena
Yongho Cho
(brad.cho@visionarena.co.kr)
White Paper v1.1
2016.5.20 (1st ...
Business Model Zen - White Paper 2016
As shown above, jewelry requires that gemstones go through a design and craft proces...
Business Model Zen - White Paper 2016
Nonetheless, the unique virtues of each of the existing methodologies will hold effe...
Business Model Zen - White Paper 2016
-Take a customer-centric approach into business
-Take the Customer–Problem–Solution–...
Business Model Zen - White Paper 2016
- Measure the gap between a business concept and its reality
- Establish a loop lear...
Business Model Zen - White Paper 2016
Outside-In vs. Inside-Out Perspectives
Which perspective do you usually prefer in yo...
Business Model Zen - White Paper 2016
- Problem: a very long pizza ordering time
- Solution: the fridge magnet
- Empathy: ...
Business Model Zen - White Paper 2016
The concept of business model cube concept is from
the above diagram with vertices. ...
Business Model Zen - White Paper 2016
Regarding the solution, it becomes of importance to evaluate COMPETITIVE ADVANTAGE. ...
Business Model Zen - White Paper 2016
imposes purchase, the more customers run away.With only logical persuasion, the comp...
Business Model Zen - White Paper 2016
Ron Adner depicts this sort of cooperations are essential to the performance of comp...
Business Model Zen - White Paper 2016
What are three economic surpluses to run successful business?
If a company wants to ...
Business Model Zen - White Paper 2016
DO is loop execution and learning
One of the common characteristics of successful bu...
Business Model Zen - White Paper 2016
Before executing the BM, for the first time, it’s mostly plan information that is put...
Business Model Zen - White Paper 2016
A birth of business model zen methodology
Business Model Zen is business modeling me...
Business Model Zen - White Paper 2016
Setting whole approach
As shown below, Zen Approach consists of three stages. Despit...
Business Model Zen - White Paper 2016
- To search for business opportunities via market research
- To identify a core prob...
Business Model Zen - White Paper 2016
How to Experiment before Deep-Dive
Why you need experiments
Before you are going fur...
Business Model Zen - White Paper 2016
imagined?That is not rare case, but common.This is why you have to validate your ass...
Business Model Zen - White Paper 2016
Business Model Zen Canvas
The overall model developed in this paper now can be turne...
Business Model Zen - White Paper 2016
How to Create Your Business Model Zen Canvas
Business Model Zen Canvas consists of p...
Business Model Zen - White Paper 2016
Zen Idea Stage
1) Exploring Opportunities
Questions to consider:
- How are customer ...
Business Model Zen - White Paper 2016
- How can you define persona?
2b) Mission
Questions to consider:
- What is the object...
Business Model Zen - White Paper 2016
- What is the closest manner to solving the customer problem among the solutions
exi...
Business Model Zen - White Paper 2016
Zen Design Stage
5a) Solution
Questions to consider:
- Did core solution come out as...
Business Model Zen - White Paper 2016
6b) Cooperator for Market
Questions to consider:
- Who will cooperate with for the m...
Business Model Zen - White Paper 2016
Zen Action Stage
8a) Empathy
Questions to consider:
- How will you attract the empat...
Business Model Zen - White Paper 2016
- What resource and ability will you secure?
- How will you contact early adaptor?
-...
Business Model Zen - White Paper 2016
What to differentiate - CPSE Perspective
Differentiation, must-have to survive and g...
Business Model Zen - White Paper 2016
Fourth, empathy differentiation.
It is about giving customers reason to buy and hand...
Business Model Zen - White Paper 2016
How to Diagnose Your Business Model
Business Model Zen includes feedback system if y...
Business Model Zen - White Paper (2016.5)
Business Model Zen - White Paper (2016.5)
Business Model Zen - White Paper (2016.5)
Business Model Zen - White Paper (2016.5)
Business Model Zen - White Paper (2016.5)
Business Model Zen - White Paper (2016.5)
Business Model Zen - White Paper (2016.5)
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Business Model Zen - White Paper (2016.5)

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Business Model Zen - White Paper (2016.5)

  1. 1. Business Model Zen - White Paper 2016 VisionArena Yongho Cho (brad.cho@visionarena.co.kr) White Paper v1.1 2016.5.20 (1st edition on 2014.05.05) B U S I N E S S M O D E L Z E N , T H E M O D E L I N G O F B U S I N E S S M O D E L W I T H B A L A N C E D I N T E G R I T Y, C U S TO M E R F O C U S A N D S T R AT E G I C T H I N K I N G 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 objectives of a business. For instance, let’s say you have just found something of value for a customer. The next steps of generating, carrying, and monetizing it can get complicated 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 a success A good business is always based on a good concept. We shape a concept into a plan and then realize that plan through 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 is 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: - a good business concept - a plan to shape a concept - an execution to realize a plan A business plan only shapes an 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. Copyright ⓒ 2013 byYongho Cho 1
  2. 2. Business Model Zen - White Paper 2016 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 a rule-of-thumb approach 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 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 next page, 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. Copyright ⓒ 2013 byYongho Cho 2
  3. 3. Business Model Zen - White Paper 2016 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. Business Model Map 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. Copyright ⓒ 2013 byYongho Cho 3
  4. 4. Business Model Zen - White Paper 2016 -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, mean clear success in differentiation. Product augmentation, which is provider-centric, does not help to drive success like it used to. A customer-centric view is not 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 with the business. This framework of the Customer-Problem-Solution-Market is probably the most important foundation for Business Model Zen. - 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 one page or oral report only. Business model canvas variants also help to simplify the core business components into a single page. 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. CONCEPT' PLAN% Copyright ⓒ 2013 byYongho Cho 4
  5. 5. Business Model Zen - White Paper 2016 - 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 the 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, 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. - Eliminate the gap between market and solution - Secure the integrity among concept, plan and execution Succeeding in business does not mean achieving the financial targets given in a business plan. These numbers must employ 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 the 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. EXECUTION) BUSINESS'SUCCESS' Copyright ⓒ 2013 byYongho Cho 5
  6. 6. Business Model Zen - White Paper 2016 Outside-In vs. Inside-Out Perspectives Which perspective do you usually prefer in your business? There are two way of searching the market. One is Inside-Out which means that you are searching market mainly connected to your resource and capability. It can be also called as a supplier driven.The purpose of Inside-Out approach is to maximize the efficiency with your core competency. Another approach is Outside-In which means you are searching customer’s needs first and looking for the way to solve it with your innovative idea.The purpose of customer centric Outside-In approach is to maximize product-market fit and minimizing the gap between you and customers. In reality, good business usually adapt both because you always want to satisfy customer and leverage your asset (resource and capability). But people usually have tendency where to start from by adapting Outside-In or Inside-Out approach.That makes big difference. Even if you are high tech company, you would better think of Outside-In first because the market changing speed exceed your evolvement of past success formula. CONCEPT begins and ends with customers What is a path to go to market? Let’s take an example of an owner of a pizza restaurant who is thinking of ways to increase sales. Provided the solution has been set to improve the return rate ofVIP customers, let us try to define the beginning and the end of a customer-centric view.We simply place a customer and a company (including its product) on a canvas first and then develop their relationship into more complex ones. ‘RedTomato Pizza’ restaurant was located in City Dubai.Average pizza ordering time via phone is more than 5 minutes in Dubai because many people from other countries use different English accents and tones.The ‘RedTomato Pizza‘ restaurant invented the solution, theVIP fridge magnet which is pizza-shaped.When customer clicks theVIP fridge magnet, then payement is processed and the ordering data is automatically transferred to the kitchen in ‘RedTomato Pizza‘ restaurant. To sum up, - Customer:VIP customer (to maximize the performance) Copyright ⓒ 2013 byYongho Cho 6
  7. 7. Business Model Zen - White Paper 2016 - Problem: a very long pizza ordering time - Solution: the fridge magnet - Empathy: a pizza-shaped magnet, a funny demo video clip PLAN builds upon a strategic view What should a company review strategically? By connecting the vertices of ‘customer-problem-solution-empathy’ in a customer-centric view, we get a face.Then by placing another face of ‘strategic thought’ underneath and connect its vertices with the existing ones on top, respectively, we get a cube. Copyright ⓒ 2013 byYongho Cho 7
  8. 8. Business Model Zen - White Paper 2016 The concept of business model cube concept is from the above diagram with vertices. Connected two points are moved onto each one vertice.Two blank vertices will be filled with cooperators and profit model later. The arrow lines connecting each points mean that there are strong and meaningful relevance between the two. MISSION is promise that a company makes to customers.A public statement that “we will deliver this value”. MISSION is directly connected to the reason why company started business. It has been stated earlier that MARKET is a total sum of problems of customers. From a strategic point of view, market’s characteristics need to be evaluated, as well as head counts of customers. If you sum up a whole customer problem, then the sum means market itself. Copyright ⓒ 2013 byYongho Cho 8
  9. 9. Business Model Zen - White Paper 2016 Regarding the solution, it becomes of importance to evaluate COMPETITIVE ADVANTAGE. It is the advantage among competing products that target to solve the same problem of customers. Hence a broader relation needs to be researched, not just that of products in the same category. In the book ‘Blue Ocean Strategy’ written by W.Chan Kim and Renée Mauborgne, the term alternatives is introduced as a products and services that can be selected because they satisfy the same objective of the customer’s. So even if the products and services have different functions and forms, they can compete to win the customer’s choice. About the customer’s objective, professor Clayton Christensen suggested the concept,‘Jobs-To- Be-Done’ which means that the ‘job’ for which customers find themselves ‘hiring’ a product or service. We can find customer’s objective by observing and asking why he buy products and services. Usually customer does not use products and services as intended because he has his own personal issue to hire them. So competition always happens along the line of customer problem, not industry boundary or product category. Lastly, HIGH CONCEPT needs to be in proactive consideration to evaluate if a problem that matters is being addressed by a solution that is appropriate, eventually to obtain empathy from customers.These days it is getting more difficult to attract customer’s attention.The more a company Copyright ⓒ 2013 byYongho Cho 9
  10. 10. Business Model Zen - White Paper 2016 imposes purchase, the more customers run away.With only logical persuasion, the company can not get customer’s true empathy. Emotional and cultural value is still more powerful. So to get empathy, you are highly recommended to combine high concept with products and services. If you are in the right way to focus on meaningful customer value, you may coin a sloan that represents value of products and services appropriately. Four strategic thought can be coined into the example of a pizza restaurant introduced earlier: Which cooperations should company consider? An ecosystem matters.There are two more things you have to consider:The cooperators and profit model. No one can survive and thrive without cooperation today’s ecosystem economics. So you have to seek and lead cooperators’ engagement in an efficient and friendly manner to be a market winner.There are two types of cooperators. One is a cooperator for innovation which enables to make competitive solution possible.The other is a cooperator for market which enables customers to accept and use your solution’s value propositions. Copyright ⓒ 2013 byYongho Cho 10
  11. 11. Business Model Zen - White Paper 2016 Ron Adner depicts this sort of cooperations are essential to the performance of company in his book ‘The Wide Lens:A New Strategy for Innovation’. Often cooperation itself has opportunity and risk. It may generate efficiency, speed and low cost. But sometimes it incurs dependency risk and management costs. (ex. communication cost)To sum up, company should purse cooperation for ecosystem value and manage it also. The simple tactics to cooperate can be divided into two categories by the necessity for cooperators on business model. - Must-have cooperators are integral partners. So you should engage them with any expense. But you should make overall ecosystem value to positive value (+). - Nice-to-have cooperators are relatively less necessary partners than must-have ones. So often company wants to gain benefit on every partnership deal. Copyright ⓒ 2013 byYongho Cho 11
  12. 12. Business Model Zen - White Paper 2016 What are three economic surpluses to run successful business? If a company wants to run the sustainable, profitable and growing business, then there are three kinds of economic surpluses to consider and make all of them positive.They are empathy surplus, profit surplus and ecosystem value surplus.The role of each surplus differs. - If an empathy surplus exists, customer will buy. - If a profit surplus exists, company can survive. - If an ecosystem value surplus exists, company can grow. Copyright ⓒ 2013 byYongho Cho 12
  13. 13. Business Model Zen - White Paper 2016 DO is loop execution and learning One of the common characteristics of successful business models is that their business structure resembles a virtuous circle.To build such a structure, components in business model shall be well defined and then work in harmony in an organic way.Therefore constant pivoting to feedbacks from the market is required.A business model shall be designed to accommodate such feedbacks and learning process. Copyright ⓒ 2013 byYongho Cho 13
  14. 14. Business Model Zen - White Paper 2016 Before executing the BM, for the first time, it’s mostly plan information that is put into the domains of opportunity search, ideation, execution & test, learning & pivot.After execution, the results shall be updated into each domain respectively.   *Before the BM execution *After the BM execution Component Goal 1) Opportunity search To observe extensive trends, market changes and customer needs 2) Ideation To afford a creative ideation with a core problem of customers and its market opportunity taken into account 3) Execution & Test To define: a. components to be required at the time of execution b. a mechanism to build the relationship with customers c. a process to collect data from the market and detailed indexes 4) Learning & Pivot To check the hypothesis on which a business model is based thus to identify potential problems in the business model from analyzing market data. Copyright ⓒ 2013 byYongho Cho 14
  15. 15. Business Model Zen - White Paper 2016 A birth of business model zen methodology Business Model Zen is business modeling methodology that builds upon the disciplines of customer orientation, strategic thinking and loop learning by execution. It is consolidation of the various researches on business models, since 2009, into the form of essential methodologies and toolkits. Business Model Zen provides a single logical frame where a business is systematically modeled and proactively managed, from idea to design and execution. Component Goal 1) Opportunity search To identify the root cause of the gap between the hypothesis and market data collected before and after the execution.Then to tackle the root cause as an opportunity to improve the business model. 2) Ideation To develop ideas for modifying and improving the BM.To compare them with the existing concept thus to identify components to add/remove/replace into or from it. 3) Execution & Test To list up points of improvement that the execution implied.To add new indexes and develop a new process to collect data from the market.To decide whether to run a modified BM in parallel with the existing one or to replace it completely. 4) Learning & Pivot To identify the root cause of the gap between the hypothesis and market data collected after pivoting the BM.To sort out positive and negative outcomes due to new changes brought into the BM Copyright ⓒ 2013 byYongho Cho 15
  16. 16. Business Model Zen - White Paper 2016 Setting whole approach As shown below, Zen Approach consists of three stages. Despite of a market research of whatever scale and depth, more than 80% of new products and services fail in the market. It is simply because of a gap between the product/service and the market. Zen Approach runs on the stages of Concept, Plan and Action and have them repeated in a single loop process. There are work items to do when users design their business model on each stage. For example user is required to do this sort of work when he is on the stage of ‘Zen Idea (concept)’. Stage Goal Zen Idea (Concept)  To create new business idea, centered on the market and the customer Zen Design (Plan) To materialize the concept of the business and design its structure Zen Action (Execution) To win empathy about the solution from customer and repeat execution / learning Tool: ZEN Canvas / Pattern / Cube / Diagnose / Map, etc. Copyright ⓒ 2013 byYongho Cho 16
  17. 17. Business Model Zen - White Paper 2016 - To search for business opportunities via market research - To identify a core problem of customers and estimate its size & integrity - To set the frame of a solution via ideation to initiate a new business All the goal and work items on each stages are summarized in the table below. Copyright ⓒ 2013 byYongho Cho 17
  18. 18. Business Model Zen - White Paper 2016 How to Experiment before Deep-Dive Why you need experiments Before you are going further, there needs some experiments to test business assumptions.When you got recommendation to visit some great places, you cannot reach them because something was missing.That is a map.You cannot reach the destination without map because map let you know the effective course to approach the target place. GPS (Geolocation Positioning System) and compass are always companion to map. That can be applied to our business.We need a way of Business Model Design (map), Business Model HealthCheck (GPS) and business assumption (=hypothesis) check (compass). Visual Action Board can make you to validate value hypothesis of your business model.You can plan an experiment and check the real action status as SCRUM project management do. Identifying Assumptions Assumption is a unquestioned common sense or hypothesis lying under your belief of your idea and business success. It often turns out these sort of assumptions are most major risk of product that didn’t attract target customer. For example you assumed your customer has specific problem and you made innovative product that can solve it. But what if the customer doesn’t have the problem you Copyright ⓒ 2013 byYongho Cho 18
  19. 19. Business Model Zen - White Paper 2016 imagined?That is not rare case, but common.This is why you have to validate your assumption as soon as possible. 1. C-P (Customer to Problem) Assumption: OO customer would have OO problem. 2. P-S (Problem to Solution) Assumption: OO solution would be effective on OO problem. 3. S-E (Solution to Empathy) Assumption: OO way of empathy would be effective on OO solution. How to use it 1. Break down your business hypothesis into 3 parted assumptions. (C-P, P-S, S-E) 2. Plan how to experiment on each assumptions. 3. Set up criteria on completion and success of experiment. 4. Attach experiment post-it toTo-Do area of sprint zone. 5. Move the experiment post-it to Doing and Done as status changes. 6. Reflect the result and share the lesson with your team. 7. Decide if the assumption is validated or not. 8. Modify the old assumption to new one if it is invalidated. 9. All the process is iterative and ordered by C-P, P-S and S-E. Copyright ⓒ 2013 byYongho Cho 19
  20. 20. Business Model Zen - White Paper 2016 Business Model Zen Canvas The overall model developed in this paper now can be turned into business model designing canvas, namely Business Model Zen Canvas. It consists of ten blocks. If you count all components, the number of block is reaching to sixteen blocks. The canvas usually has its own sequence to fill the each blocks. But you don’t have to tie to sequence itself because what is important is the perspective focusing on customer problem. Even if you fill the problem block last, you should diagnose if it is a worth to solve and expect attractive market in early diagnosing stage. If you found that your initial targeting problem was immaterial, then you are suggested to find another customer problem again to be resolved with your solution. Copyright ⓒ 2013 byYongho Cho 20
  21. 21. Business Model Zen - White Paper 2016 How to Create Your Business Model Zen Canvas Business Model Zen Canvas consists of proper questions and guidelines for each blocks. Before we proceed further, the example case of RedTomato Pizza can help understanding how to fill Business Model Zen canvas. Copyright ⓒ 2013 byYongho Cho 21
  22. 22. Business Model Zen - White Paper 2016 Zen Idea Stage 1) Exploring Opportunities Questions to consider: - How are customer needs or customer’s life style changes? - What is the part to look at carefully in terms of social culture? - What are the contents of the technology change that will affect in a middle and long term? - What are the customer’s needs that do not change regardless of this change? - Besides, does the remarkable new business exist? 2a) Customer Questions to consider: - Who is my main customer? - Who is my non-customer (STB, rejecting, potential)? - How is the customer segment divided? Copyright ⓒ 2013 byYongho Cho 22
  23. 23. Business Model Zen - White Paper 2016 - How can you define persona? 2b) Mission Questions to consider: - What is the object I do business? - What is my promise to the customer? - Do object and mission of company and the customer correspond with each other? 3a) Problem Questions to consider: - What is my customer’s unsatisfied need? - Is the customer aware of that problem? - Is the customer aware of it as a meaningful and important problem? - Are competitors also aware of that problem? - How has the customer solved that problem before? 3b) Market Questions to consider: - What is my customer’s unsatisfied need? - Is the importance of desire one customer feels enough? - Is the number of total customers big enough? - Is the feature of the business attractive to enter? 4) Generating Ideas Questions to consider: - What are the potential ideas that can be represented to solve the customer’s problem? Copyright ⓒ 2013 byYongho Cho 23
  24. 24. Business Model Zen - White Paper 2016 - What is the closest manner to solving the customer problem among the solutions existing in the existing market? - Do you think the enough ideas were generated? - Categorize innumerably deduced ideas into three themes. - What are the ideas that finally passed when they were evaluated in the aspect of customer and company? Copyright ⓒ 2013 byYongho Cho 24
  25. 25. Business Model Zen - White Paper 2016 Zen Design Stage 5a) Solution Questions to consider: - Did core solution come out as a result of idea conception? - What is my value proposal on the problem the customer has? 5b) Advantage Questions to consider: - What are competitive goods, substitute goods, and alternative goods of the solution based on the customer’s problem? - Did my solution have the comparative advantage competitors cannot look down on? 6a) Cooperator for Innovation Questions to consider: - Who will you cooperate with for the solution completion? - Is it easy to cooperate with the innovative cooperator? - Do you rely on the irreplaceable cooperation? - Are you overlooking although you need cooperation? Copyright ⓒ 2013 byYongho Cho 25
  26. 26. Business Model Zen - White Paper 2016 6b) Cooperator for Market Questions to consider: - Who will cooperate with for the market advance? - Is it easy to cooperate with market cooperator? - Do you rely on the irreplaceable cooperation? - Are you overlooking although you need cooperation? 7a) Revenue Questions to consider: - What is the main revenue source of my business? - What will account for the greatest portion among revenue source? - What is the revenue source you can secure from the beginning? - What is the total life time value while securing one customer? 7b) Cost Questions to consider: - What is the main cost structure of my business? - What is the fixed cost item? (independent sales) - What is the variable cost item? (subordinate sales) - How much dose it cost to secure/maintain one customer? 
 Copyright ⓒ 2013 byYongho Cho 26
  27. 27. Business Model Zen - White Paper 2016 Zen Action Stage 8a) Empathy Questions to consider: - How will you attract the empathy from the customer? - How will you inform the customer of your potential needs(problem)? - How will you convince the customer that your solution can solve that problem best? 8b) High Concept Questions to consider: - Does my concept have the emotional and cultural aspect? - What short and powerful slogan will you present? - Can you make them your fan without persuasion? 9) Do & Test Questions to consider: - What action will you take specifically for the implementation? - What is the plan to approach to the initial market? - Is there any problem revealing before the practice? Copyright ⓒ 2013 byYongho Cho 27
  28. 28. Business Model Zen - White Paper 2016 - What resource and ability will you secure? - How will you contact early adaptor? - How will you build MVPs? - How will you conduct A/B test? 10) Learn & Pivot Questions to consider: - (Before Action) What are the indexes to measure for the hypothesis confirmation during action? - (After Action) What caused the difference between the action result and hypothesis? - Is a partial amendment enough? Do you need a big change? Copyright ⓒ 2013 byYongho Cho 28
  29. 29. Business Model Zen - White Paper 2016 What to differentiate - CPSE Perspective Differentiation, must-have to survive and grow Differentiation is the unavoidable headache that every planners encounter on their daily life. What do think with which point Nespresso, Starbucks, Dongseo Power Coffee and EDIYA are differentiated? After your read this article, you can identify the exact CPSE point to find differentiation point in most products and services around you. To begin with,What is the CPSE? It is the acronym of Customer-Problem-Solution-Empathy. Those are the zones where differentiation blooms. For example I will explain CPSE view with coffee business cases. C P S E Customer - Problem - Solution - Empathy First, customer differentiation. We can differentiate by conquering people mostly who were not our customers for a long time. When Nestle invented instant capsule coffee machine Nespresso, they tried to sell them as a B2B products. B2B customers are un-cultivated at that time. So if Nestle could hit the market, it would have been a good way to enter the new market. Second, problem differentiation. We can differentiate by discovering new customer problem, needs and wants. Many market insights comes from knowing what customers want exactly. For example, Starbucks concentrated on what the meaning of cafe space to its users. Cafe can be a social solution to who want the space not belonging to office nor home.They found a new customer problem, and it is a big part of differentiation. Third, solution differentiation. We can differentiate by leverage solution itself with price, function, quality.You have to carefully compare between better and different at this point. Mostly new brilliant approach is needed to be different enough with price, function and quality. For example, Dongseo Foods invented powder coffee that is widely accepted today. Frozen coffee powders makes the difference of lowering the price, saving the time and storing easily plus longer all at once. Copyright ⓒ 2013 byYongho Cho 29
  30. 30. Business Model Zen - White Paper 2016 Fourth, empathy differentiation. It is about giving customers reason to buy and handling perception. EDIYA is a cafe brand that have more than 1500 franchisees and high margin structure. It used unique approach called 'Sub Street’ strategy.Which means that EDIYA opens its cafes nearby starbucks.That’s because Starbucks is usually very crowded in lunch time. EDIYA make customers from Starbucks who can not find their seats in there. EDIYA coffee is very cheap and usually offered as a take-out one. Now you can identify differentiation with CPSE viewpoint. In fact CPSE is linked each other. Customer has a Problem. Problem needs Solution. Solution can be sold by Empathy. So you have to consider all the elements. Differentiation comes from your focus on specific element. 
 Copyright ⓒ 2013 byYongho Cho 30
  31. 31. Business Model Zen - White Paper 2016 How to Diagnose Your Business Model Business Model Zen includes feedback system if your business model has some weak points and needs more reviews.This is very powerful because it stimulates as-is business model to be escalated to more evolved status. It can be done within business model zen canvas and you can see the resulting signals (blue, green, red) of the as-is business model. Business coaches and trainers as well as business owner can have benefit from this structured process. Introduction to diagnose Before diagnosing your model, you are recommended to design the preliminary business model with ZEN canvas. Diagnose each blocks one by one following the block number (located in upper right corner of each block). If your business fall in red zone while assessing, it is a important signal to review and redesign your business model again. (blue is OK, green needs some review) For example, you have to consider the question “How big is the sum of problem?” when you diagnose ‘Problem’ area. X axis is the number of customers.Y axis is importance of customer problem (payment inclination).The reference point should be adjusted according to target business size, reference industry and business domain. If you are a big company like GE, then the reference point of X axis can be 10 million customers. If you are a startup, then reference point of X axis can be 0.1 million customers. If you are fall into green zone that requires review, there are questions to hint which direction you should consider.All the diagnose process can be played by group discussion or in-depth analysis with Customer Problem X axis: Number of customers

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