Business Model Canvas (Dr. Htet Zan Linn)

Business Model Canvas (Dr. Htet Zan Linn)
BUSINESS MODEL CANVAS Idea to Business Workshop
BBUUSSIINNEESSSS IIDDEEAA Who does What Whom What Outcome
BBUUSSIINNEESSSS MMOODDEELL How Organization creates captures delivers vvaalluuee
BUSINESS MODEL CANVAS 1 1 2 2 5 5 4 4 8 77 8 6 6 3 3 9 9
CUSTOMER SSEEGGMMEENNTTAATTIIOONNSS 1 1  Different groups of people or organizations an enterprise aims to reach and serve
CCUUSSTTOOMMEERR GGRROOUUPPSS ……  Mass market (e.g., consumer electronics)  Niche market (e.g., supplier-buyer relationship)  Segmented (e.g., watch industry)  Diversified (e.g., cloud computing)  Multi-sided (e.g., credit card) CUSTOMER SEGMENTATIONS 11
THE BUSINESS MMOODDEELL CCAANNVVAASS CS mmaassss m maarrkkeett
VVAALLUUEE PPRROOPPOOSSIITTIIOONNSS  the bundle of products and services that can create value for a specific customer segments 1 1 2 2
VVAALLUUEESS MMAAYY BBEE ……  Quantitative (e.g., Price, Speed of Service)  Qualitative (e.g., Design, Customer Experience) VALUE PROPOSITIONS 22
VVAALLUUEESS SSPPEECCTTRRUUMM VALUE PROPOSITIONS 22  Newness  Performance  Customization  Getting the JOB Done  Design  Brand/ Status  Price  Cost Reduction  Accessibility  Convenience/ Usability
THE BUSINESS MMOODDEELL CCAANNVVAASS CS mmaassss m maarrkkeett seamless music experience seamless music experience
CCHHAANNNNEELLSS  how a company communicates with and reach its customer segments to deliver a value proposition 1 1 2 2 3 3
CChhaannnneell TTyyppeess ------------------------------------------------------------------ Sales Force Web Sales --------------------------- Own Stores ------------------------------------------------ --------------------------- Partner Stores Wholesaler --------------------------- Own Direct Partner Indirect CChhaannnneell PPhhaasseess 11.. AAwwaarreenneessss How do we raise aware-ness about our company’s products and services?
CChhaannnneell TTyyppeess ------------------------------------------------------------------ Sales Force Web Sales --------------------------- Own Stores ------------------------------------------------ --------------------------- Partner Stores Wholesaler --------------------------- Own Direct Partner Indirect CChhaannnneell PPhhaasseess 22.. EEvvaalluuaattiioonn How do we help customers evaluate our organization’s Value Proposition?
CChhaannnneell TTyyppeess ------------------------------------------------------------------ Sales Force Web Sales --------------------------- Own Stores ------------------------------------------------ --------------------------- Partner Stores Wholesaler --------------------------- Own Direct Partner Indirect CChhaannnneell PPhhaasseess 33.. PPuurrcchhaassee How do we allow custom-ers to purchase specific products and services?
CChhaannnneell TTyyppeess ------------------------------------------------------------------ Sales Force Web Sales --------------------------- Own Stores ------------------------------------------------ --------------------------- Partner Stores Wholesaler --------------------------- Own Direct Partner Indirect CChhaannnneell PPhhaasseess 44.. DDeelliivveerryy How do we deliver a Value Proposition to customers?
CChhaannnneell TTyyppeess ------------------------------------------------------------------ Sales Force Web Sales --------------------------- Own Stores ------------------------------------------------ --------------------------- Partner Stores Wholesaler --------------------------- Own Direct Partner Indirect CChhaannnneell PPhhaasseess 55.. AAfftteerr ssaalleess How do we provide post-purchase customer support?
TTRRIICCKK  To find the right balance between the different types of channels to integrate them in a way to create a great customer experience, and to maximize revenue
Customer Segments, Value Proposition and Channels 1 1 2 2 3 3 CHANNELS 33
THE BUSINESS MMOODDEELL CCAANNVVAASS VP CR CS CH mmaassss m maarrkkeett AApppplele c coomm retail stores retail stores Apple stores Apple stores seamless music experience seamless music experience
Customer RReellaattiioonnsshhiippss
CCRR -- CCUUSSTTOOMMEERR RREELLAATTIIOONNSSHHIIPPSS  Types of relationships a company establishes with specific customer segments  Range from Personal to Automated CUSTOMER RELATIONSHIPS 44
TTYYPPEESS OOFF CCRR  PPeerrssoonnaall aassssiissttaannccee (human interaction)  DDeeddiiccaatteedd ppeerrssoonnaall aassssiissttaannccee (customer representative)  SSeellff--sseerrvviiccee (no direct relationship with customer)  AAuuttoommaatteedd (self-service with automated processes)  CCoommmmuunniittiieess (connections between community members)  CCoo--ccrreeaattiioonn (beyond the traditional customer-vendor relationship to co-create values with customers) CUSTOMER RELATIONSHIPS 44
Building Strong with Customer Segments, Value Propositions and Channels 4 4 22 11 3 3 CUSTOMER RELATIONSHIPS 44
THE BUSINESS MMOODDEELL CCAANNVVAASS VP CR CS CH AApppplele c coomm switching costs i Tunes store i Tunes store mmaassss m maarrkkeett lovemark switching costs retail stores retail stores Apple stores Apple stores seamless music experience seamless music experience
RREEVVEENNUUEE SSTTRREEAAMMSS 1 1 4 4 2 2 3 3 5 5
RREEVVEENNUUEE SSTTRREEAAMMSS 1. Transaction revenues resulting from one-time customer payments 2. Recurring revenues resulting from ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support REVENUE STREAMS 55
There are several ways to generate Revenue Streams: Asset sale Usage fee Subscription fees Lending/Renting/Leasing Licensing Brokerage fees Advertising 5555
THE BUSINESS MMOODDEELL CCAANNVVAASS VP CR CS CH seamless music experience R$ mmaassss m maarrkkeett Some music revenues Some music revenues switching costs i Tunes store i Tunes store large hardware revenues large hardware revenues AApppplele c coomm lovemark switching costs retail stores retail stores Apple stores Apple stores seamless music experience
KKEEYY RREESSOOUURRCCEESS 1 1 4 4 2 2 3 3 5 5 6 6 The Key Resources Building Block describes the most important assets required to make a business model work
Key Resources can be categorized as follows: KEY RESOURCES 66 1 Physical 2 Intellectual 3 Human 4 Financial
THE BUSINESS MMOODDEELL CCAANNVVAASS VP CR CS Apple brand Apple brand seamless music experience KR CH R$ mmaassss m maarrkkeett Some music revenues Some music revenues switching costs i Tunes store i Tunes store large hardware revenues large hardware revenues AApppplele c coomm lovemark switching costs retail stores retail stores Apple stores Apple stores i Pod hardware i Pod hardware i Tunes software i Tunes software People People seamless music experience
KKEEYY AACCTTIIVVIITTIIEESS 1 1 4 4 2 2 3 3 5 5 6 6 7 7 The Key Activities Building Block describes the most important things a company must do to make its business model work
Key Activities can be categorized as follows: KEY ACTIVITIES 77 1 Production 2 Problem Solving 3 Platform/ Network
THE BUSINESS MMOODDEELL CCAANNVVAASS KA VP CR CS hardware design Apple brand Apple brand marketing seamless music experience KR CH R$ mmaassss m maarrkkeett Some music revenues Some music revenues switching costs i Tunes store i Tunes store large hardware revenues large hardware revenues AApppplele c coomm lovemark switching costs retail stores retail stores Apple stores Apple stores i Pod hardware i Pod hardware i Tunes software i Tunes software People People Content & agreements Content & agreements design seamless music experience
KKEEYY PPAARRTTNNEERRSSHHIIPPSS 4 4 22 11 3 3 5 5 6 6 7 7 8 8 The Key Partnerships Building Block describes the network of suppliers and partners that make the business model work
We can distinguish between four different types of partnerships: 1.Strategic alliances between non-competitors 2.Coopetition: strategic partnerships between competitors 3.Joint ventures to develop new businesses 4.Buyer-supplier relationships to assure reliable supplies KEY PARTNERSHIPS 88
3 motivations for creating partnerships 1. Optimization and economy of scale 2. Reduction of risk and uncertainty 3. Acquisition of particular resources and activities KEY PARTNERSHIPS 88
THE BUSINESS MMOODDEELL CCAANNVVAASS KP KA VP CR CS hardware design Apple brand Apple brand marketing seamless music experience KR CH R$ mmaassss m maarrkkeett Some music revenues Some music revenues switching costs i Tunes store i Tunes store large hardware revenues large hardware revenues AApppplele c coomm lovemark switching costs retail stores retail stores Apple stores Apple stores record companies record companies OEMs OEMs i Pod hardware i Pod hardware i Tunes software i Tunes software People People Content & agreements Content & agreements design seamless music experience
CCOOSSTT SSTTRRUUCCTTUURREE 4 4 The Cost Structure describes all costs incurred to operate a business model 1 1 2 2 3 3 5 5 6 6 7 7 8 8 9 9
Two broad classes of business model Cost Structures: COST STRUCTURE 88 1. Cost-driven 2. Value-driven
THE BUSINESS MMOODDEELL CCAANNVVAASS KP record companies record companies C$ KA VP CR CS hardware design Apple brand Apple brand marketing seamless music experience KR CH R$ mmaassss m maarrkkeett Some music revenues Some music revenues switching costs i Tunes store i Tunes store large hardware revenues large hardware revenues AApppplele c coomm lovemark switching costs retail stores retail stores Apple stores Apple stores i Pod hardware i Pod hardware i Tunes software Content & agreements people people manufacturi manufacturi ng ng OEMs OEMs marketing & & sales sales i Tunes software People People Content & agreements design seamless music experience
The nine business model Building Blocks form the basis for a handy tool, which we call the Business Model Canvas.
THE BUSINESS MMOODDEELL CCAANNVVAASS
THE BUSINESS MMOODDEELL CCAANNVVAASS Key Partners Cost Structure Key Activities Key Resources Value Proposition Customer Relationships Customer Segments Channels Revenue Streams
THE BUSINESS MMOODDEELL CCAANNVVAASS KP record companies record companies C$ KA VP CR CS hardware design Apple brand Apple brand marketing seamless music experience KR CH R$ mmaassss m maarrkkeett Some music revenues Some music revenues switching costs i Tunes store i Tunes store large hardware revenues large hardware revenues AApppplele c coomm lovemark switching costs retail stores retail stores Apple stores Apple stores i Pod hardware i Pod hardware i Tunes software Content & agreements people people manufacturi manufacturi ng ng OEMs OEMs marketing & & sales sales i Tunes software People People Content & agreements design seamless music experience
THE BUSINESS MMOODDEELL CCAANNVVAASS left brain logic right brain emotion
left canvas efficiency Right canvas value
UUnn-- BBuunnddlliinngg BBuussiinneessss MMooddeellss
John Hagel and Marc Singer, who coined the term “unbundled corporation,” believe that companies are composed of three very different types of businesses with different economic, competitive, and cultural imperatives: Customer Relationship businesses, product innovation businesses, and infrastructure businesses. Similarly, Treacy and Wiersema suggest that companies should focus on one of three value disciplines: operational excellence, product leadership, or customer intimacy. Hagel and Singer describe the role of Customer Relationship businesses as fi nding and acquiring customers and building relationships with them. Similarly, the role of product innovation businesses is to develop new and attractive products and services, while the role of infrastructure businesses is to build and manage platforms for high volume, repetitive tasks. Hagel and Singer argue that companies should separate these businesses and focus on only one of the three internally. Because each type of business is driven by diΩerent factors, they can confl ict with each other or produce undesirable trade-oΩs within the same organization. On the following pages we show how the idea of unbundling applies to business models. In the fi rst example, we describe the confl icts and undesirable trade-oΩs created by a “bundled” business model within the private banking industry. In the second example we show how mobile telecom operators are unbundling and focusing on new core businesses.
Early market entry enables charging premium prices and acquiring large market share; speed is key High cost of customer acquisition makes it imperative to gain large wallet share; economies of scope are key High fixed costs make large volumes essential to achieve low unit costs; economies of scale are key Battle for talent; low barriers to entry; many small players thrive Battle for scope; rapid consolidation; a few big players dominate Battle for scale; rapid consolidation; a few big players dominate Employee centered; coddling the creative stars Highly service oriented; customercomes-first mentality Cost focused; stresses standardization, predictability, and efficiency
TThhee PPrriivvaattee BBaannkkiinngg MMooddeell Other Product Providers Advise Product R & D Marketing Platform Management Brand/ Trust Product IP Transaction Platform Platform Management HR: R & D HR: Private Bankers Custom-Tailored Wealth Management Services Financial Products Transaction Management Intimate Personal Relationship Key Account Management Personal Networks Sales Force Transaction Platform Management & Advisory Fees Product & Performance Fees Transaction Fees Wealthy Individuals & Families Private Banks Private Banks Independent Financial Advisors RReellaattiioonnsshhiipp BBuussiinneessss PPrroodduucctt IInnnnoovvaattiioonn BBuussiinneessss IInnffrraassttrruuccttuurree BBuussiinneessss
Unbundling the Mobile Telco
TThhee LLoonngg TTaaiill
TThhee TTrraannssffoorrmmaattiioonn ooff tthhee BBooookk PPuubblliisshhiinngg IInndduussttrryy Old Model
A New Model
LEGO®’s New Long Tail
Multi- Sided Platforms
Google’s Business Model
Wii versus PSP/Xbox Same Pattern, Different Focus PSP/Xbox Focus
Wii versus PSP/Xbox Same Pattern, Different Focus Wii Focus
Apple’s Evolution into a Platform Operator
FREE as a Business Model (How) can you set it free?
Advertising: A Multi-Sided Platform Model Metro
Facebook
Free Advertising: Pattern of Multi-Sided Platforms
Freemium: Get the Basics for Free, Pay for More Flickr
Open Source: Freemium with a Twist Red Hat
Skype
Skype versus Telco 5+ years old 400 million+ users 100 billion+ free calls generated 2008 revenues of U.S. $550 million
The Insurance Model: Freemium Upside Down REGA
“Every industry that becomes digital eventually becomes free.” —— Chris Anderson Editor-in-Chief, Wired Magazine “The demand you get at a price of zero is many times higher than the demand you get at a very low price.” —— Kartik Hosanagar Assistant Professor, Wharton “We can no longer stand by and watch others walk off with our work under misguided legal theories.” —— Dean Singleton Chairman, Associated Press “Google’s not a real company. It’s a house of cards.” —— Steve Ballmer CEO, Microsoft
Bait & Hook Bait & Hook of Free Mobile Phones
Razor & Blades : Gillette
Open Business Models
Procter & Gamble: Connect & Develop Outside-In
GlaxoSmithKline’s Patent Pools
The Connector: Innocentive
“Open Innovation is fundamentally about operating in a world of abundant knowledge, where not all the smart people work for you, so you better go find them, connect to them, and build upon what they can do.” —— Henry Chesbrough Executive Director, Center for Open Innovation Haas School of Business, UC Berkeley “Nestle clearly recognizes that to achieve its growth objective it must extend its internal capabilities to establish a large number of strategic partnering relationships. It has embraced open innovation and works aggressively with strategic partners to co-create significant new market and product opportunities.” —— Helmut Traitler Head of Innovation Partnerships, Nestle “Long known for a preference to do everything in-house, we began to seek out innovation from any and all sources, inside, outside the company.” —— A.G. Lafl ey Chairman & CEO, P&G
Patterns Overview Unbundling Business Models The Long Tail
Multi-Sided Platforms FREE as a Business Model Open Business Models
Customer Insights Building Business Models on Customer Insights
Visual Thinking The Value of Visual Thinking
Different Types of Visualization for Different needs
Telling a Visual Story

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