This document outlines a seminar on business model innovation presented by Marcus Tarrant of Mission HQ, detailing a framework for designing business models. It describes the importance of understanding value propositions, capabilities, partnerships, activities, costs, relationships, channels, revenue, and customer segmentation in business model design. Additionally, it emphasizes the significance of business model design in facilitating planning and optimizing business concepts.

1. Innovate your business modelAn Innovation Catalyst™ SeminarPresented 06/05/10 at 10amPrepared and Presented by Marcus TarrantManaging DirectorMission HQ Pty. Ltd. ATF the Innovate TrustGuest Presenter:Simon CreanOnline ManagerHallmark Cards

2. Contact DetailsMarcus TarrantManaging DirectorMission HQ Pty. Ltd. ATF the Innovate TrustMarcus.tarrant@missionhq.com.au+61 3 9005 9710www.missionhq.com.au© Mission HQ Pty. Ltd. All Rights Reserved2

3. Copyright ©2010 Mission HQ. The content, format, structure and communication technique utilised in this document are the intellectual property of Mission HQ Pty. Ltd.This document is strictly classified as “Commercial in Confidence” and intended only for recipients expressly authorised by Mission HQ. Any modification or distribution under altered expression, by any means, in its entirety or in parts, to any person without written approval from Mission HQ is expressly prohibited. Natural Persons or bodies corporate may not copy, retransmit, distribute, publish or otherwise transfer any copyrighted material to third parties or contractors without the express permission of Mission HQ.This document is intended to reflect MISSION HQ’s high-level overview of the Business Model Design Framework. It does not constitute formal professional advice or a recommendation to potential licensors, tax advisors, inventors or other third parties as to a course of action in respect of the processes addressed, and should not be relied on as such. All care is taken in the preparation of this document but MISSION HQ bears no responsibility as to the contents of this document and disclaims any liability with respect to its use or misuse.Intellectual Property & Disclaimer

4. Seminar Agenda© Mission HQ Pty. Ltd. All Rights Reserved4

5. There are three kinds of companies, those that make new things happen, those that watch new things happen, and those that wonder what happenedAnonymous© Mission HQ Pty. Ltd. All Rights Reserved5

6. About Mission HQ Pty. Ltd.© Mission HQ Pty. Ltd. All Rights Reserved6Some recent past clients of Mission HQ and the team:

7. So what can we use a business model for?© Mission HQ Pty. Ltd. All Rights Reserved7

8. We have used business model design to...Underpin the business planning processProvide an absolutely IDEAL starting point for the creation of a financial model.Create a deeper understanding of you plans with collaborators, partners and suppliersProvide a clear picture of a planned business to investors or internal stakeholdersDevelop business cases for market entryOptimise the value obtainable for a given business conceptAssist in evaluating alignment with organisational strategy© Mission HQ Pty. Ltd. All Rights Reserved8

9. Designing your business modelThe business model matrix© Mission HQ Pty. Ltd. All Rights Reserved9

10. The 9 Element business model Matrix© Mission HQ Pty. Ltd. All Rights Reserved10

11. The business model matrix© Mission HQ Pty. Ltd. All Rights Reserved11Value Proposition – What are you offering? Capabilities/Resources – What skills and capacity do you require?Partnership – Who do you need to work with?Activities – What will you do?Costs – What are your significant costs likely to be?Relationship – What formal and informal relationships are requiredChannel – What are our channels to market?Revenues – What will our customers pay for?Customers – Who are our customers?

12. A real world example.© Mission HQ Pty. Ltd. All Rights Reserved12

13. 1. The Value Proposition© Mission HQ Pty. Ltd. All Rights Reserved13

14. Defining the value proposition-14-Value can occur in any of the following elements

15. Mapping out your value proposition-15-

16. -16-Evaluation ProcessSimplify a customer’s evaluation processExample: ISELECT

17. -17-Value Co-CreationThrough various technological advances the integration and participation of the customer in the value creation process is increasingly possible. Together with the knowledge and networks of customers additional value can be created and facilitated.Examples: Ebay & Amazon

18. -18-Purchasing ProcessCustomers highly value an efficient, simple and convenient purchase process.Example: Creative Mobile Technologies back-seat swipe and entertainment for Taxi Cabs

19. -19-Set-Up/InstallationIn some cases set-up or installation is necessary. The simplification of this process is of enormous value to the customer.Example: Dick Smith: Mobile Techxphert Services

20. -20-Use/OperationIn many cases most of the value in a value proposition comes from the use or operation of an actual product or service. However, to differentiate themselves companies try to create value beyond a simple product or service.Salesforceis carefully creating additional value by offering continuous updating "behind the scenes" and providing easy access to complementary products by third party vendors.

21. -21-Maintenance & aftersales supportValue is often created during the maintenance and after-sales phase. This can be either by offering high quality service or by offering a value proposition that minimizes the need for maintenance & after-sales.Example: The attractiveness of salesforce.com’s value proposition essentially comes from the fact that the hosted software model (application service provider - ASP) minimizes the need of software maintenance by the customer.

22. -22-Ending and value transferIn many cases once a customer does not need a product or service anymore he has to terminate the service or dispose of the product.Example: BMW Recycling Programme

23. 2. Capabilities/Resources© Mission HQ Pty. Ltd. All Rights Reserved23

24. 2. Capabilities/ResourcesWhat physical assets does our business model require?FactoryMachineryEtc.Intellectual AssetsTrademarks (licensed or owned)PatentsProcessesSystemsHuman ResourcesSkillsTeam structuresFinancialAccess to finanance© Mission HQ Pty. Ltd. All Rights Reserved24

25. 3. PartnershipsDescribes the network of suppliers and partners that will make the business model workJoint VenturesStrategic AlliancesLicense agreementsService agreementsOutsourcing arrangements© Mission HQ Pty. Ltd. All Rights Reserved25

26. 4. ActivitiesThe activities outline the most important things that the organisation will do.ProductionProblem SolvingPlatform managementLicense mangement© Mission HQ Pty. Ltd. All Rights Reserved26

27. 5. CostsOutlines the primary areas of cost under the business modelFixed CostsVariable CostsEconomies of scaleKey cost rachet points© Mission HQ Pty. Ltd. All Rights Reserved27

28. 6. Relationships What relationships other than partnerships may be required.Particularly relevant in web 2.0 companies, where a customer has data vested with the company.© Mission HQ Pty. Ltd. All Rights Reserved28

29. 7. ChannelWhat channels to market with the model employ?© Mission HQ Pty. Ltd. All Rights Reserved29

30. 8. RevenueWhat element of our value proposition will our customers actually pay for?Asset SalesUsage feesSubscriptionAdvertising revenueRenting or leasingLicensingFinancing© Mission HQ Pty. Ltd. All Rights Reserved30