Corporate Profile 47Billion Information Technology
Cairo business modeling workshop
1. Faculty of Commerce
Workshop: “How ideas become
opportunities - First steps of
creating your own business model”
Workshop Team:
Vera Haataja
Povilas Valiauga
Steffen Farny
Norris Krueger
Global Entrepreneurship Week event of FCCU and Aalto University
The HEI ICI — Project Entrepreneurship Capacity Building between Faculty of Commerce Cairo
University and Aalto University School of Business
2. Workshop Objective
Introduce the ‘business model’ concept
Demonstrate the value of ‘ideation’
Build your first own business model – Tool: Canvas
THIS WORKSHOP IS FOR YOU AND YOUR
PERSONAL DEVELOPMENT
3. Workshop Agenda
1. What is entrepreneurship?
2. What is your idea for venture creation?
3. How can you build an executable business model?
4. Passion for entrepreneurship?
• Why are you here?
• Why are you interested in entrepreneurship?
• What motivates you?
• Are you already entrepreneurs or know someone who
is?
6. What is Entrepreneurship?
Individual or Business, for- Traits / Actions &
Organizational? profit? Characteristics? Behavior?
6
Sources: Gartner 1988; Zahra 1991; Austin et al. 2006
7. It depends…various related definitions
• “Entrepreneurship is the creation of organizations. What
differentiates entrepreneurs from non-entrepreneurs is that
entrepreneurs create organizations, while non-entrepreneurs
do not”
-- (Gartner 1988, p.47)
• It involves “the processes of discovery, evaluation, and exploitation of
opportunities; and the set of individuals who discover, evaluate, and
exploit them” -- (Shane & Venkatamaran 2000, p.218)
• entrepreneurial opportunity an opportunity to engage in entrepreneurial
action seeking to profit by introducing new goods or services
-- (Companys & McMullen 2006)
Pursuit of opportunity without regard to resources controlled
7 Source: Howard Stevenson, HBS
8. Various types of entrepreneurship
• Corporate entrepreneurship: “those activities that enhance a
company's ability to innovate, take risk, and seize opportunities in its
markets. It centers on creating new business by penetrating new
markets, pursuing new business, or both”. -- (Zahra 1991, 259)
• Intrapreneurship: “entrepreneurship within existing organizations”.
Involves new business venturing, innovativeness, self-renewal, and
proactiveness. -- (Antoncic & Hisrich 2001, p. 495)
• Social entrepreneurship: “entrepreneurial activity with an embedded
social purpose” -- (Austin et al. 2006, p. 1)
• International entrepreneurship: “the identification and exploitation of
opportunities for international exchange” -- Ellis (2011)
8
9. Six types of ventures…small
Social Startup Small Business Startup
Work to feed the family
Driven to Make a Difference • Known product
• Improve society Lifestyle Startup • Known customer
• Social cause • Notable but low revenues
• Profits not main driver • Consulting, construction co’s.
• E.g. development banks, microlending
Work to live their passion
• Work only with what they like
• Enough money “just to pay bills”
• E.g. chocolatiers, bakers, restaurant, etc.
9
10. …and not so small
Large Startup
Scalable Startup
Innovate for survival
• Part of life cycle
• Not good at disruptive innovations
• Fund or buy startups
Buyable Startup
Born to be big
• Want to revolutionize “the world”
• Visionary ideas
• Funding rounds tens of millions
• Grow into large corporations
Born to flip
• Grow to attract buyer
• Cost efficient for buyers
• Reduced time to market for buyer
• Funding $100k - $400k
• To be sold for tens of millions +
10
11. Venture type contributes to differences
in the creation process
• Entrepreneur’s goals
• Opportunity process
• Ideation & Innovation
• Business Model
• Social venturing
• Financing
• Growth & Development
11
12. Entrepreneur’s goals
• Pursue a passion?
• Job independence or second
source of income?
• ”Thrill of creation” ?
• Make an impact ”leave your
mark” ?
12
13. Opportunity process – an overview
Entrepreneurial opportunity
Both supply and demand exist and Either supply or demand is known,
the opportunity exists in bringing and the opportunity exists in coming
them together up with the “matching side”
e.g.: Buying a franchise e.g. New software applications
Creation
Neither supply nor demand exist, one or both have to be created
and economic inventions (marketing, finance, etc.) need to be created
for the opportunity to come to life. The creation of new markets.
e.g. U-haul; Netscape
Source: Sarasvaty et al. 2005
14. Making opportunities happen: Causation
& Effectuation
Causation Logic Effectual Logic
- Selecting between a given set of means to - Imagining new possible ends using an existing set
achieve a pre-determined goal of means
- Presumes a market’s existence and ample - No assumptions about a market’s existence
resource and process availability - Starts with entrepreneur’s own knowledge,
- Begin with the end in mind & generate resources, networks, affordable loss, and goes from
alternatives there
Given Means
M1 M1
M2 M4 Imagined
Given Goal M2
M3 M3 Ends
M5
M4
M5 Given Means
14
Source: Sarasvaty et al. 2005; Read et. Al 2010;
18. Ideation & Innovation varies from
venture to venture
Ideation: ”the first in a linear series of progressive
activities to form a new business”
”Consciously engaging in an ongoing complex, cyclical,
and recursive social process of problem solving and
learning, which is integral to and inseparable from the
larger cycle of innovation and new business formation”
18
Source: Gemmel et al. 2011
19.
20. Any idea yet? – No worries!
1. Finding a team
2. Finding an idea
3. Building an idea
4. Learning to get feedback
22. Match-Making PART 1
Prepare your introduction card (post-it)
1. NAME
2. TWO SKILLS or EXPERTISE
3. TWO of your PASSIONS/HOBBIES/STUFF YOU LOVE
4. A DREAM
5 min
23. Match-Making PART 2 – SPEED-MEETING
In a nutshell:
1. Sit down
2. Talk and listen for 1 minutes
3. Stand up and repeat with the next person when the whistle
blows
Suggested conversation topics:
1. Yourself:
Educational background, work history, skills/specialties,
ambitions
Why am I here?
25. Ideation Topic
• Based on the features and skills of our team members,
what sort of entrepreneurial concept can we come up
with?
• What is the best thing that we could do together?
• What sort of idea can mix positively the
nature/skills/passions of this group of individuals?
(Service or product, digital or concrete, for-profit or
non-profit, big or small…)
26. Ideation Round 1: “Quantity is Quality”
1. Individual exercise
2. 5 minutes to write down as many ideas as possible
about the ideation topic.
3. Idea quota to aim at: 15
4. After the time is up, choose your favorite 3 ideas to
share with the team (10min)
27. DECIDE ON 1 IDEA – pick the best elements
from each idea and merge them
5 min
29. CONTEXT MAPS Context Mapping is
a mapping
technique for
capturing emergent
conversation
themes in complex
problems to show
integrated context.
IDEAL
30. Ideation Round 2: “Narrowing”
• Build a context map for an idea that you would like to
build a business model on (10min)
31. STEP 4 - LEARNING TO GET FEEDBACK
- postponed until later -
33. What do you think is a business model?
• Video: Osterwalder
34. Venture formation starts with the search
for a business model
• What is a business model?
– describes how an organization rationalizes the way it
captures, creates, and delivers value
• Why it is important?
– Clarifies the makeup and interlacing of fundamental
elements needed by any organization: customers, offer,
infrastructure, and financial viability
• How is it developed?
34
Source: Osterwalder & Pigneur, 2010
38. Value Propositions
• What problem are you solving?
• What need do you satisfy?
• Is your product/service aligned with customer
needs?
• Is value based on:
– Newness
– Performance
– Price
– Design, etc.
BE SPECIFIC! What do you sell? What do people buy from you?
38
Source: Osterwald & Pigneur, 2010
39. Customer Segments
• What groups or organizations of customers are
you trying to reach?
• Try to be as specific as possible
– “all consumers” (mass market) may be your end
goal, but perhaps not at the beginning…
• Is your market..?
– Mass
– Niche
– Segmented
– Diversified
– Multi-sided
What is the imitability, available of substitutes, competition,
and potential market(s) size(s)?
39
Source: Osterwald & Pigneur, 2010
40. Customer Relationships
• What venues will you use to service and
preserve customer relationships?
– Shop?
– Online?
– Call center?
• How will you monitor/respond to your
customers?
• Customized/personal experience?
• Customer satisfaction?
Customer relationships are driven by the intended effect
40
Source: Osterwald & Pigneur, 2010
41. Key Key Value Customer Customer
Partners Activities Propositions Relationsihps Segments
Online retail Customized online Global
shopping profiles & consumers (NA,
recommendations EU, Asia)
Fulfillment by
Amazon Developers &
Key companies
Channels
Resources
Amazon web
services Individuals and
companies that
need fulfillment
Cost Revenue Streams
Structure
Source: Osterwald & Pigneur, 2010
42. Workshop exercise (10 min)
Talk with your teammates and:
1. Identify all possible benefits/solutions that your idea could/does
generate
2. Who / which groups of people could/do use or benefit from your
idea?
3. In which various ways will you communicate with & relate to your
customers how do you get their commitment?
(Integrate your stakeholder feedback from last week’s assignment)
If you have multiple ideas, do a separate set for each
43. Customer driven business models
Search Execute
Opportunity
Customer Customer Customer Company
& B-model
Discovery Validation Creation Building
Assessment
iterate pivot
startup “regular” firm
Paying customers help validate the business model
43
Source: Adapted from Startup Owners Manual by Steve Blank & Bob Dorf
44. Getting to and servicing customers
channels
• Clearly define how your startup will acquire and retain customers:
– Sales channels
- Cannot
– Distribution channels rely on ”going viral”
– Post-sales channels credibility to achieve growth
- Evaluate
–
- Gives a glimpse of cost structure rationale
Partnerships
44
Source: Venture Formation Course, Aalto Ventures Program 2011
45. Revenue Streams
• Generated from successful customer
commitments
• The type and ”quality” of revenue
stream is important:
– Asset sale
– Usage fee
– Subscription-based
– Lease
– Licensing, etc.
Customer-generated revenues is the most convincing evidence
of a working business model
45
Source: Business Model Generation by A. Osterwalder and I. Pigneur
46. Key Key Value Customer Customer
Partners Activities Propositions Relationsihps Segments
Online retail Customized online Global
shopping profiles & consumers (NA,
recommendations EU, Asia)
Fulfillment by
Amazon Developers &
Key companies
Channels
Resources
Amazon web Amazon.com
services Individuals and
companies that
Affiliates
need fulfillment
Cost Revenue Streams
Sales margins
Structure
Fulfillment
handling fees
Web services
Source: Osterwald & Pigneur, 2010
47. Workshop exercise (10 min)
Talk with your teammates and:
4. How does your product/service get to customers?
a. Web sales? Shops? Distributors?
5. How do you earn revenues? Is there more than one
way?
a. add-on services? Customer support? After sales
servicing?
If you have multiple ideas, do a separate set for each
47
48. Key Resources
• What are your venture’s most important
assets?
– People?
– Technology?
– Intellectual property?
– Physical resources (e.g. superior IT infrastructure,
etc.)
– Etc.
• Are these owned, leased, outsourced?
• How will you get needed but missing
resources?
Key resources support the rest of the business model
48
49. Key Activities
• Key activities are the most important actions your
organization takes to:
– deliver value propositions
– Attract & retain customers
– earn revenues
– etc.
• They help identify core strengths and your venture’s
value-add
– Design?
– Technology development
Key activities link resources with the rest of the business model
49
50. Key Partners
• Who will help you capture and deliver your value propositions?
• Which suppliers do you need? Who are the most important?
• Buy? Make? Lease?
• Time to market?
• Would any strategic partnerships help you?
– Joint Ventures
– Strategic alliances
– Coopetition
– “preferred” status / relationships
50
51. Cost Structure
• Defines the most important costs related to the other blocks of your
business model
• Low cost structures are more important to some business models
than to others
• Despite common knowledge, it is not always about the lowest cost
– It’s about the most efficient way to achieve your value props
• How do you operate?
– Cost or value driven?
– Fixed versus variable costs?
– Economies of scale and/or scope?
51
52. Key Key Value Customer Customer
Partners Activities Propositions Relationsihps Segments
Fulfillment
Logistics Online retail Customized online Global
Partners shopping profiles & consumers (NA,
IT & S/W Dev. recommendations EU, Asia)
& Maintenance
Fulfillment by
Affiliates Amazon Developers &
Key companies
Channels
Resources
IT Amazon web Amazon.com
infrastructure services Individuals and
companies that
Affiliates
need fulfillment
Global
fulfillment
infrastructure
Cost Revenue Streams
Sales margins
Marketing
Structure
Fulfillment
Technology
handling fees
and content
Web services
Fulfillment
Source: Osterwald & Pigneur, 2010
53. Workshop exercise (10 min)
Talk with your teammates and:
6. What are the most crucial resources within your team and your
venture?
a. Specific know-how? Geographical knowledge?
7. What are the most important activities your venture does or will
need to do to create your value propositions?
8. Who are your most important partners?
a. Distributors? Merchandisers?
9. What are your most substantial elements of cost?
If you have multiple ideas, do a separate set for each
54. FEEDBACK/ Ideation exercise (15 minutes)
single point per sticky note
Using sticky notes:
• Go around all other teams’ canvases and analyze them
– See if you get a clear picture of what the venture does,
who its customers/end users are, what tools they are
using to achieve their goals
• Provide specific feedback and/or ask questions about
each of the 9 elements
• Two types of evaluators: “Good cop / Bad cop”
55. The Business Model Canvas www.businessmodelgeneration.com Designed by: Date: Iteration #
Key Key Value Customer Customer
Partners Activities Propositions Relationsihps Segments
What Key Activities do our Value
Who are our Key Partners? Propositions require? For whom are we creating value?
What type of relationship does each of our
Who are our key suppliers? Our Distribution Channels? What value do we deliver to the Customer Segments expect us to establish and Who are our most important
Which Key Resources are we Customer Relationships? customer? maintain with them? customers?
acquiring from partners? Revenue streams? Which one of our customer’s problems Which ones have we established?
Which Key Activities do partners CATEGORIES How are they integrated with the rest of our
are we helping to solve? Mass Market; Niche Market;
Production business model?
perform? What bundles of products and services Segmented; Diversified; Multi-sided
How costly are they?
MOTIVATIONS FOR Problem Solving are we offering to each Customer Platform
EXAMPLES
PARTNERSHIPS: Platform/Network Segment? Personal assistance; Dedicated Personal
Optimization and economy Which customer needs are we Assistance; Self-Service; Automated Services
Reduction of risk and uncertainty satisfying? Communities; Co-creation
Acquisition of particular resources and CHARACTERISTICS
activities Newness; Performance; Customization;
“Getting the Job Done”; Design;
Key Brand/Status; Price; Cost Reduction;
Risk reduction; Accessibility; Channels
Resources Convenience/Usability
Through which Channels do our Customer Segments
What Key Resources do our Value want to be reached?
How are we reaching them now?
Propositions require? How are our Channels integrated?
Our Distribution Channels? Customer Which ones work best?
Relationships? Which ones are most cost-efficient?
How are we integrating them with customer routines?
Revenue Streams? channel phases:
TYPES OF RESOURCES 1. Awareness: How do we raise awareness about our
company’s products and services?
Physical 2. Evaluation: How do we help customers evaluate our
Intellectual (brand patents, copyrights, organization’s Value Proposition?
data) 3. Purchase: How do we allow customers to purchase
specific products and services?
Human 4. Delivery: How do we deliver a Value Proposition to
Financial customers?
5. After sales: How do we provide post-purchase
customer support?
Cost Structure Revenue Streams
For what value are our customers really willing to pay?
What are the most important costs inherent in our business model?
For what do they currently pay?
Which Key Resources are most expensive?
How are they currently paying?
Which Key Activities are most expensive is your business more:
How would they prefer to pay?
Cost Driven (leanest cost structure, low price value proposition, maximum
How much does each Revenue Stream contribute to overall revenues?
automation, extensive outsourcing) Value Driven ( focused on value creation,
TYPES:
premium value proposition)
Asset sale; Usage fee; Subscription Fees; Lending/Renting/Leasing;
SAMPLE CHARACTERISTICS:
Licensing; Brokerage fees; Advertising; fixed pricing; List Price; Product
Fixed Costs (salaries, rents, utilities)
feature dependent; Customer segment dependent; Volume dependent;
Variable costs
dynamic pricing; Negotiation( bargaining); Yield Management; Real-
Economies of scale
time-Market
Economies of scope
56. THANKS
Global Entrepreneurship Week event of FCCU and Aalto
University
The HEI ICI — Project Entrepreneurship Capacity
Building between Faculty of Commerce Cairo University
57. Understanding your playing field
• Search for a credible assessment of:
– Customer segments
– -Market sizemarket
Is the sufficiently (forgivingly) large?
- – Achievable market share about achievability realistic?
Are the assumptions
- Is there a potential for money here?
– Competition
– Scalability
57
Source: Venture Formation Course, Aalto Ventures Program 2011
58. Key Key Value Customer Customer
Partners Activities Propositions Relationsihps Segments
Logistics Online retail Customized online Global
Partners shopping profiles & consumers (NA,
IT & S/W Dev. recommendations EU, Asia)
& Maintenance
Fulfillment by
Affiliates Amazon Developers &
Key companies
Channels
Resources
IT Amazon web Amazon.com
infrastructure services Individuals and
companies that
Affiliates
need fulfillment
Global
fulfillment
infrastructure
Cost Revenue Streams
Sales margins
Structure Marketing
Fulfillment
Technology
handling fees
and content
Web services
Fulfillment
Source: Osterwald & Pigneur, 2010