This presentation will give you deep insight into the nature of business models. It describes traditional and bleeding-edge models and their dynamics, innovation techniques, how to position your model within an intensely competitive landscape, and how to lead the redesign of your own organization’s business model.

1. BUSINESS MODEL GENERATION
Alaa Moustafa
Business Development Manager, eSpace
facebook.com/alaa.moustafa
Twitter.com/alaamoustafa
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2. eSpace Profile
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3. Agenda
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•
•
•
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Business Model vs. Business Plan
Business Model Canvas
Business Models Patterns
Business Model Design
Business Model Design Process
Ref: Business Model Generation
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4. Business Model
How an organization
creates, delivers, and
captures value from
customer.
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Vs.
Business Plan
A formal statement
of a set of business
goals, and how to
reach those goals
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5. BUSINESS MODEL CANVAS
A shared language for describing, visualizing, assessing, and changing
business models.
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6. Business Model Canvas
How
can you
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DESCRIBE
DISCUSS
DESIGN
your
CHALLENGE Business
IMPROVE
Model?
INNOVATE
CHOOSE
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7. Business Model Canvas
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8. 1. Customer Segments (CS)
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9. 1. Customer Segments (CS)
• The Customer Segments Building Block
defines the different groups of people or
organizations an enterprise aims to reach
and serve.
• Examples:
- Mass Market
- Niche Market (Car parts Manufactures)
- Diversified (Amazon)
- Multisided (Credit Card: Holders & Merchants)
- Segmented (Banking Customer over $100,000)
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10. 2. Value Proposition (VP)
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11. 2. Value Proposition (VP)
• The Value Propositions Building Block
describes the bundle of products and
services that create value for a specific
Customer Segment.
• Examples:
- Newness (Cell Phones)
- Performance (Faster PCs )
- Customization (Custom Software Dev.)
- Cost Reduction (CRM Applications)
- Price (Lower Price)
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12. 3. Channels (CH)
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13. 3. Channels (CH)
• The Channels Building Block describes how a
company communicates with and reaches
its Customer Segments to deliver a Value
Proposition.
• Channels Phases:
Awareness
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Evaluation
Purchase
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Delivery
After Sales
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14. 4. Customer Relationships (CR)
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15. 4. Customer Relationships (CR)
• The Customer Relationships Building Block
describes the types of relationships a company
establishes with specific Customer Segments.
Relationships can range from personal to
automated.
• Customer relationships may be driven by the
following motivations:
– Customer acquisition
– Customer retention
– Boosting sales (upselling)
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16. 5. Revenue Streams (R$)
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17. 5. Revenue Streams (R$)
• The Revenue Streams Building Block represents
the cash a company generates from each
Customer Segment. A business model can
involve two different types of Revenue
Streams:
– Transaction revenues
– Recurring revenues
• Way to generate Revenue:
- Asset Sale
- Licensing
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- Usage Fee
- Advertising
- Subscription Fees
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- Renting/Leasing
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18. 6. Key Resources (KR)
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19. 6. Key Resources (KR)
• The Key Resources Building Block describes
the most important assets required to make
a business model work
• Key Resources can be categorized as
follows:
- Physical (Buildings – Machines – Point of Sale System)
- Financial (Cash – financial guarantees)
- Human Resources
- Intellectual (Brands – Customer Databases)
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20. 7. Key Activities (KA)
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21. 7. Key Activities (KA)
• The Key Activities Building Block describes
the most important things a company must
do to make its business model work
• Key Activities can be categorized as follows:
- Production (Manufacturing firms)
- Problem Solving (Hospitals)
- Platform/Network (Visa Card)
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22. 8. Key Partnerships (KP)
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23. 8. Key Partnerships (KP)
• The Key Partnerships Building Block
describes the network of suppliers and
partners that make the business model
work.
• Reasons for creating Partnerships:
- Optimization and economy of scale
- Reduction of risk and uncertainty
- Acquisition of particular resources and activities
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24. 9. Cost Structure (C$)
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25. 9. Cost Structure (C$)
• The Cost Structure describes all costs incurred
to operate a business model. There are two
Classes Cost Structures:
– Cost Driven
– Value Driven
• Cost Structure Characteristics:
- Fixed Costs (Salaries – Rents – etc.)
- Variable Costs (Depends on the produced service like Music Festival)
- Economies of Scale (Larger companies benefit from lower bulk purchase rates)
- Economies of Scope (Same marketing activities may support multiple products)
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26. Business Model Canvas Template
http://www.canvanizer.com
Free and easy tool to design, discuss and share your business model
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28. BUSINESS MODELS PATTERNS
Classification for business models with similar characteristics, similar
arrangements of business model Building Blocks, or similar behaviors.
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29. Business Models Patterns
Un-Bundling Business Models
The Long Tail
Multi-sided Platforms
FREE as a Business Model
Open Business Models
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30. Un-Bundling Business Models
• The concept of the “unbundled” corporation holds that
there are three fundamentally different types of
businesses
• The three types may co-exist within a single corporation,
but ideally they are “unbundled” into separate entities in
order to avoid conflicts or undesirable trade-offs
• Business Types
– Customer Relationship Businesses
– Product Innovation Businesses
– Infrastructure Businesses
• Examples: Private Banking Industry and Mobile Telecom
Industry
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31. Un-Bundling Business Model
Example: The Mobile Teleco
• Traditionally Mobile telecommunication
competed on network quality.
• They realize that their key asset is no
longer the network—it is their brand
and their Customer Relationships.
• What they did in:
– Telecos have outsourced operation and maintenance to equipment
manufacturers.
– Teleco can sharpen its focus on branding and segmenting
customers and services.
– Telecos work with multiple third-parties that assure a constant
supply of new technologies, services, and media content such as
mapping, games, video, and music
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32. The Long Tail
• Long tail business models are about selling
less of more.
• They focus on offering a large number of
niche products, each of which sells relatively
infrequently.
• Examples: Youtube, Facebook and Lulu.com
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33. The Long Tail
Example: Books Publishing Industry
• Old Model:
– The traditional book publishing model is built
on a process of selection whereby publishers
screen many authors and select those that
seem most likely to achieve minimum sales
targets.
• New Model:
– Lulu.com’s business model is based on
helping niche and amateur authors bring
their work to market.
– It eliminates traditional entry barriers by
providing authors the tools to craft, print,
and distribute their work through an online
marketplace.
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34. Multi-sided Platforms
• Multi-sided platforms bring together two or
more distinct but interdependent groups of
customers.
• The platform creates value by facilitating
interactions between the different groups.
• Examples: Visa, Google and eBay
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35. Multi-sided Platforms
Example: Google's Business Model
• The heart of Google’s business model is its
Value Proposition of providing extremely
targeted text advertising globally over the
web.
• The model only works, though, if many people
use Google’s search engine.
• The more people Google reaches, the more
ads it can display and the greater the value
created for advertisers.
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36. FREE as a Business Model
• In the free business model at least one
substantial Customer Segment is able to
continuously benefit from a free-of-charge
offer.
• Non-paying customers are financed by
another part of the business model or by
another Customer Segment.
• Examples: Flickr, Youtube, Skype and Google
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37. FREE as a Business Model
Example: Newspapers Publishing Model
• One industry crumbling under the
impact of FREE is newspaper
publishing.
• Traditionally, newspapers and
magazines relied on revenues from
three sources: newsstand sales,
subscription fees, and advertising.
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38. BUSINESS MODEL DESIGN
The techniques and tools from the world of design that can help you
design better and more innovative business models.
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39. Business Model Design
Customer Insights
Ideation
Visual Thinking
Prototyping
Storytelling
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40. 1. Customer Insights
• Good business model design
views the business model
through customers‘ eyes, an
approach that can lead to the
discovery of completely new
opportunities.
• Successful innovation requires a deep
understanding of customers, including
environment, daily routines, concerns, and
aspirations.
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41. 2. Ideation
• What’s needed is a creative
process for generating a large
number of business model ideas
and successfully isolating the
best ones. This process is called
ideation.
• We can distinguish four
epicenters of business model
innovation:
–
–
–
–
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Resource-driven
Offer-driven
Customer-driven
Finance-driven
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42. 3. Visual Thinking
• By visual thinking we mean
using visual tools such as
pictures, sketches and diagrams
to construct and discuss
meaning.
• Business models are complex
concepts, it is difficult to truly
understand a model without
sketching it out.
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43. 4. Prototyping
• Prototyping is a powerful tool for developing
new, innovative business models. It makes
abstract concepts tangible and facilitates the
exploration of new ideas.
• Prototyping comes from the
design and engineering
disciplines, where it is widely
used for product design,
architecture, and interaction design.
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44. 5. Storytelling
• Storytelling will help you effectively
communicate what it is all about. Good stories
engage listeners, so the story is the ideal tool to
prepare for an in-depth discussion of a business
model and its underlying logic.
• Why Storytelling?
– Introducing the New
– Pitching to investors
– Engaging Employees
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45. BUSINESS MODEL DESIGN PROCESS
The concepts and tools to simplify the task of setting up and executing
a business model design initiative.
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46. Business Model Design Process
Mobilize
Understand
Design
Implement
Manage
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47. 1. Mobilize
• Prepare for a successful business model
design project
• Mobilizing Activities:
– Frame project objectives
– Test preliminary business ideas
– Plan
– Assemble team
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48. 2. Understand
• Research and analyze elements needed for
the business model design effort
• Understanding Activities:
– Scan environment
– Study potential customers
– Interview experts
– Research what has already been tried (e.g.
examples of failures and their causes)
– Collect ideas and opinions
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49. 3. Design
• Generate and test viable business model
options, and select the best
• Design Activities:
– Brainstorm
– Prototype
– Test
– Select
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50. 4. Implement
• Implement the business model prototype in
the field
• Implementing Activities:
– Communicate & Involve
– Execute
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51. 5. Manage
• Adapt and modify the business model
in response to market reaction
• Managing Activities:
– Scan the environment
– Continuously assess your business
model
– Rethink your business model
– Align business models throughout the
enterprise
– Manage synergies or conflicts between
models
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52. ANY QUESTIONS?
Thanks for your time.
Alaa Moustafa
Business Development Manager, eSpace
facebook.com/alaa.moustafa
Twitter.com/alaamoustafa
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