Business Modeling Starter Kit
Turning ideas into value
and innovation
Presentation by Prof. Dr. Henning Breuer and María del Mar Agudelo, M.A.
May 8th, 2014
Technische Universität Berlin
Fakultät für Wirtschaft und Management

/ INTRODUCTION

From the Latin innovare:“To renew or to change,”
innovation, further than a buzz word, is a decisive
competitive factor in our knowledge based economy.

A large variety of business model definitions, their
components and how-to approaches have been
proposed in the last decade in order to turn ideas
into innovation. However, such complexity called
for a simplified reference model which, in contrast
to the existing ones, emanates from a value-driven
perspective.

That simplified reference model is the Business
Modeling Starter Kit, an out-of-the-box workshop that
empowers entrepreneurial teams to generate new
value-based and customer-focused business models
with the different stakeholders in mind.

Why the Starter Kit was created?
As an answer to recurring requests by innovation teams
to conduct business modeling workshops this Do-it-
Yourself approach was chosen.

What is the purpose of the Starter Kit?
Empowering innovation teams, small business (idea)
owners and students to develop business models based
on real customer needs and relevant value propositions.

The advanced version is now in English language. It also
allows to tackle "wicked problems" such as renewal of
energy business.
Status Quo of the Starter Kit
For more information, see: Breuer, H. & Lüdeke-Freund, F. (2014). Normative Innovation for Sustainable
Business Models in Value Networks [Proceedings of XXV ISPIM Innovation Conference. Dublin]. Manuscript in
preparation.

// THE ELEMENTS OF THE STARTER KIT

Handbook

Playground

Components
Value proposition
It refers to the values a company
provides to its customers and society.
What makes your service or product
unique? Why should customers take
notice of it? Think of the existential
values behind such a proposition...

Stakeholder Segments
Descriptions of the most relevant
individuals or specific groups for your
business. They could be positively or
negatively affected by your business.

Touchpoints
Customers encounter new products
and services along seven touchpoints:
(1) Becoming aware of an offering, (2)
collecting information, (3) acquiring the
chosen product, (4) starting up usage
to develop routines and preferences, (5)
using the product, (6) altering it and
(7) disposing or renewing it.

Distribution
Distribution channels describe, from a
company viewpoint, how the product
gets to the customer (e.g. mobile
or partner stores; agents, retailers,
wholesalers).

Revenue Model
Think about possible combinations
of income sources and price models.
Several revenue models may be
combined.

Partners
These are those alliances you
consider for your business within
the innovation processes. Select
your partner with caution: avoid
one-sided dependencies and
carefully consider which capabilities
you require inhouse, what can be
done through partners.

Cost Structure
The cost-drivers of the model’s
initial costs and their development.
When going back to the stakeholder
segments, consider how to reduce
external costs and values lost through
your activities in order to create a
sustainable business.

More components
When modeling with the Starter Kit you
may consider which components are the
most important for you. If professional
communication is at the core of your
business, you will consider branding and
a corporate vision. If you deal with legal
rights, legalities will be a component to
discuss.

Describe the value and benefit yourproposal generates and who will profit orbe affected.
What have you got to offer the customer?
– Give a brief summary of the consumer’s needs: Whichconsumer problem can your proposal solve?– Which customer ideals and wishes are you addressing with
your proposal?
– Describe how the customer will experience the benefit ofyour product or service.
– What would they tell their friends about the benefits ofyour product or service?
– What are you promising your customer? How will youachieve it and why in such a way?
– What kind of developments could your proposal trigger on
the part of the customer?
VALUEPROPOSITION
FACILITATION CARDS
Facilitation Cards
Instructions
These are the instructions and questions,
which will guide you through the workshop.
Task
This is an overall description of the
working step in question.
The color code and symbol on the card
indicate the corresponding section on the
playground.

Case Cards
NEWS
FOOTBALL JERSEYADVERTISING
Since the 60s, soccer clubshave been accepting jerseysponsorship from businesses.For major clubs, it was soonfollowed by touchline adver-tising, and subsequently byadditional advertising rightsin newer media formats suchas television, newscasts andsocial media platforms. Spon-sored presentation gameshave now become part ofpre-season preparations.
CASE
Tip
Each card displays a clue as to which
component it belongs to. Designating
a card to a particular component must
not always be obvious. Discussion
counts.

>> How can you reestab-lish and strengthen trustamong your customers?
>> How do you proceedfrom the initial transac-tion stage to enduringsustainable customerrelations?
Bottlenecks in the supplychain are causing signifi-cant delays in the deliveryof your product. Custom-ers are complaining andorders are in decline.
CHALLENGE
OI
Challenger Cards
Tip
Challenger cards marked with I
(conceptual ideas) help you to
develop a new business model,
whereas challenger cards marked
O (optimization) help you to
optimize and examine your
business closely.

Value Proposition
Stakeholder Segments
Touchpoints
Distribution
Revenue Model
Capabilities
Partners
Cost Structure
UXBerlinInnovation Consulting
Title
Date
Evaluation
Refinementsheet for Business Modeling
www.uxberlin.com // This sheet is adapted from the Business Model Canvas (BusinessModelGeneration.com)
Refinement
Sheets

/// HOW TO PROCEED

4
31
2
Place the playground on
the table.
Place the Case
Cards on the
playground.
Place the Challenger
Cards on the
playground.
Place the
Facilitator Cards
on the playground.
Setting-up the workshop

• It is the place to write the basic initial idea, vision and
scope to sum up your project (e.g. your plan to provide
sustainable services in Germany).
• The case cards help you to learn how existing business
models can be mapped onto the ideapool.
G R O U N D I N G0

1 DEMAND
This brainstorming exercise gets right to the core of
your business idea. Read the questions on the facilitator
cards and describe what you have to offer to your
customers and why it would appeal to their wishes and
needs.

2 I N T E R A C T I O N
By analyzing touchpoints as focal points of value
creation and experience, you will explore how to
communicate and deliver the value proposition to the
customer. You will also discover what kind of return to
expect. Keep track of all your ideas in the ideapool.

PERFORMANCE3
This exercise addresses the business and human
capabilities and resources required to fulfill your
value proposition and perform the necessary services.
Consider which partners could help you and elaborate
upon the resulting cost structure. Once again, the
facilitator cards will provide the key questions to deal
with during this exercise.

4 M O D E L I N G
Time to harvest your ideas! Compile the most promising
ideas onto a refinement sheet. Each sheet will represent
a distinct business model. Question the proposed
business model in depth. Each challenger card will
confront you with a different scenario, which may
prompt you to rethink your business strategy. Choose
only cards that are relevant to you.

N E X T STEPS5
In the sector “open issues” collect sticky notes with
critical questions that crop up during the course of
the workshop but cannot be discussed immediately.
Dealing with these questions is one of a series of further
steps. You will find follow-up activities on the facilitator
cards.

Idea Pool
Get to know the various aspects of
business models based on examples.
The goal of this exercise is to gain a better understanding of
the individual components and their interaction. There’s no
such thing as a wrong answer. Discussion among your team is
the important factor!
Procedure:
1. Take a stack of the example cards and divide them out
among your team. Each participant reads out one example
card at a time to the rest of the team.
2. Discuss each card with the entire team and think together
strategically about which section of the idea pool would be
most suitable for the card.
3. Discuss the example as a whole: Try to grasp an under-
standing of the interrelation between the individual
components.
4. As soon as you’re finished with the warm-up exercise,
remove all the example cards from the idea pool and move
on to the next step, “Demand”.
Describe the value and benefit your
proposal generates and who will profit
from it.
Which groups of people will benefit from the value you’re
creating?
– Describe your target group: Who will use your service or
product?
– Who are the potential pilot users or early adopters?
– How do your customers live and work?
– Which values and attitudes do they have?
– What’s important in their lives? What excites them?
– How many potential customer segments are there?
– Which private customers and which business customers
do you wish to reach?
Explain how you will fulfill your value
proposition for the customer and what
you expect in return from the customer.
How will your product enter the world of the customer?
How will the customer come into contact with it?
How will the customer navigate from one touchpoint to the
next?
– Where will the customer encounter your offer? How can
you make such encounters a unique experience for the
customer?
– How will customers become aware of your products or
services?
– How can they get informed?
– How can they acquire your service or product?
– Why and how will they use it for the first time?
– How will they use it in their everyday lives?
– How can they modify it and how can they dispose of it?
– How can you offer your customer support in navigating
through the touchpoints?
– How can you encourage long-term loyalty for your offer?
Think about the skills and resources you
need to perform everything you’ve de-
veloped up to now.
Who are your most important business partners and suppli-
ers?
– Identify all the organizations and individuals whose tech-
nology or resources you’re reliant on in order to develop
and market your offer. Describe your current business re-
lationship with these partners. Which dependencies exist?
– How can you identify and reach potential business part-
ners? How can you convince them of the advantages of a
co-operation?
– Which types of co-operations with potential competitors
could make sense?
Consider the risks involved. Describe your
competitive strategy and the opportuni-
ties for growth.
Draw up your business idea
This exercise will challenge you to question and re-think some
aspects of the business model you have just sketched out. Each
challenger card illustrates a scenario that will help you to adjust
your business model in response to common market dynamics.
Cards marked with “O” (Optimization) will help you refine
your ideas with the use of scenarios
Cards marked with “I” (Ideation) will help you generate
new ideas
Procedure:
1. Choose scenarios, which are relevant to your business
model. You can skip the rest.
2. Choose a card, read the scenario out loud and discuss the
outlined challenge with your team. What are the solutions
proposed for your business model?
3. Develop your business model further in relation to the
scenarios outlined. Work on all the various components of
the idea pool simultaneously.
4. Think about how your enterprise can grow in the course of
time and how best to protect it against potential competi-
tors in the market place.
Analyze your current state of progress
and plan out the next steps.
Assess the maturity levels of your ideas
At the end of the session, you should have collected enough
ideas on all components to develop at least one business mod-
el. Should you have come up with several models, choose one,
which you’d like to work on immediately.
You’ve probably already recognized which component offers the
better options and which has accumulated the greater amount
of good ideas, and which one you should take a closer look at.
Evaluate the maturity levels of your ideas for each component
individually.
1. The ideas are worded in a relatively vague manner or you’re
uncertain whether you’ve taken all possible alternatives suf-
ficiently into account. With the aid of research and in-depth
creative exercises, you can put your ideas into concrete
terms.
2. The ideas are straightforward and worded clearly und
you’re certain you’ve taken all the relevant options into
consideration. Describe how you plan to implement your
ideas and analyze the assumptions contained.
3. The ideas are so well defined that they can be implemented
in operational measures straight away and the assumptions
contained are verifiable.
Decide for each component which team member will take over
the responsibility for the next steps. Helpful follow-up activities
can be found in the second part of the user manual.
We wish you the best of success!

//// NEXT STEPS

After the business modeling workshop
Time to:
1. Communicate your ideas with an elevator pitch.
2. Collect feedback from different stakeholders.
3. Elaborate upon and evaluate the risks and
assumptions with respect to the implementation of
your business model.

1. The elevator pitch

What
Describe your business in about three sentences very
much to the point. Make it understood in less than
thirty seconds.

Why
The elevator pitch will help you to focus on the
essentials and to convince potential stakeholders or
investors. It also helps you to spread the word.

How
Try different versions of your pitch with friends,
colleagues and business partners. Do they get a clear
and sufficient understanding? Ask them to explain
your business model to a third party.

Four steps to proceed

1.1 Attract
Start with an interesting statement, quote or
observation to draw your audience attention. Explain
why they should care.

1.2 Distinguish
Explain why your company and proposition are unique
and deserve immediate attention.

1.3 Engage
Engage your audience by asking open question and
sharing a dramatic story.

1.4 Call to action
The pitch ends with a request for a meeting or phone
call. Which response do you want your contact to
complete?

Tip
Consider the most important aspects of your
business: the value you provide and problem
you solve, the market, your revenue model and
competitive advantage, and your unique capabilities.

2. Feedback

What
Collect feedback to your business ideas from
unprejudiced people.

Why
Asking strangers will tell you even more about
the strengths and weaknesses of your idea. Even
though none of these answers will be representative,
challenging your ideas from multiple perspectives
helps to protect you from unpleasant surprises later
on.

How
• Render your idea in tangible ways (brief description,
illustrations and storyboards, films or prototypes).
• Ask your audience open questions; ask them about
their impressions of your idea: what they like about
it, what they do not like and in which situations they
would be interested in your proposition.
• Speak your customer’s language; keep your
questions as simple and as short as possible.

A brief explanation contains:
• The value or problem you address with your idea.
• Your unique or superior solution to this problem.
• How the solution can be provided.

3. Five E

“Learning is the way from great ideas to practice.”The
Five E Framework for Lean Venturing describes the
elaboration and implementation of business models as
a learning process that startups and new business units
need to go through.

This process may be organized by learning objectives
on five levels of maturity —exploration, elaboration,
evaluation, experiments, evolution— and backed up
with scaffolding tools and methods.

Exploration
Explore potential business models
using the Business Modeling Starter
Kit. Conduct several modeling
sessions with different participants
and some time in between sessions.

Elaboration
Desk research, creative exercises and
design thinking methods allow you
to consider the full range of options
for each component and to select and
quantify the most promising ones.

Evaluation
Interpret your ideas as assumptions
and evaluate each of them through
expert and customer development
interviews. Refine them according
to the feedback and analyze the
inherent risks.

Experiments
Some critical issues have to be tested
empirically —e.g. the willingness-to-
pay of potential customers—. Design
a sprint plan of investigation in such a
way that you learn about the reasons
why your assumptions are confirmed
or rejected.

Evolution
Your own ideals and normative vision,
as well as alternative future scenarios
and hints from diverse stakeholders,
provide insights on how to run your
business in a sustainable manner.

Specify and differentiate the assumptions within your
business model, evaluate them with experts and clients
in a test market environment.

///// NEXT STEPS

Only iterative experimentation can overcome barriers
and take advantage of the potential and value of
alternative business models. For more information
about this topic, visit: www.uxberlin.com

THANK YOU!

The information used for this presentation is extracted from the Business Modeling Starter Kit’s handbook and the
article:“Lean Venturing: Learning to Create New Business through Exploration, Elaboration,
Evaluation, Experimentation, and Evolution,”written by Prof. Dr. Henning Breuer for the International Journal of
Innovation Management, Vol. 17, No. 3 (June 2013)*.
* Download it for free from: http://www.worldscientific.com/doi/abs/10.1142/S1363919613400136