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INDEV308 Class 3 - Business Modelling for Social Entreprise
- 1. INDEV 308: Intro to Social Entrepreneurship Class 3: Business Modelling for Social Enterprise Monday, May 16, 2011 Instructors: Norm Tasevski (norm@socialentrepreneurship.ca) Karim Harji (karim@socialentrepreneurship.ca) 1
- 2. © Norm Tasevski & Karim Harji
- 3. © Norm Tasevski & Karim Harji
- 4. © Norm Tasevski & Karim Harji Agenda • Centre for Social Innovation • What did we learn – Last Week? • What are the components of a business model for social enterprise? • What did we learn – Today? • Next week 4
- 5. © Norm Tasevski & Karim Harji Last Week – What did we learn? 5
- 6. Business Modelling for Social Enterprise… 6
- 7. © Norm Tasevski & Karim Harji A Caveat… When we business model for social enterprise, we focus on the “business”, not the “social”… But don’t worry, we will come back to the “social” later… 7
- 8. © Norm Tasevski & Karim Harji A Second Caveat… “Business “Business Form/Legal Model” Structure” 8
- 9. © Norm Tasevski & Karim Harji A Third Caveat… “Business “Business Model” Plan” Business Model 1st!!! (Business Plan 2nd) 9
- 10. Why business model 1st and plan 2nd? 10
- 11. © Norm Tasevski & Karim Harji Because… It is a cure for “We Need a Plan-itis” 11
- 12. © Norm Tasevski & Karim Harji And… It is a Quick way to assess Profitability/Sustainability – Why spend months building a plan if you don’t have a real sense of profitability/sustainability? – If your model doesn’t make money, even with the most ideal conditions… …STOP! (…and rethink your business model) 12
- 13. © Norm Tasevski & Karim Harji One More… It breaks down highly complex business ideas into easily digestible (and visual) chunks – Gets to the heart of what you need to know to: Make a Go No- Go Decision Set Strategy Make Potential Investors/funders (and business partners) Happy :) 13
- 14. Business Plans Business Models Are big and complex Are small and visual (often 50-100+ pages) (1 page with about 10 supporting pages) Cover many topics Focus on a few topics (business description, financials, marketing strategy, HR strategy, (Will you make $$? How do the Operations Strategy management team, pieces fit together?) etc, etc, etc) Take weeks/months to Take a few days (possibly create hours) to create Are necessary for Feed the business plan!! investors, funders, business partners, etc 14
- 15. © Norm Tasevski & Karim Harji Our Goal for Today We’ll be designing a business model for… 15
- 16. © Norm Tasevski & Karim Harji user networks! franchising! freemium! ! web ads! etc…etc…etc…! licensing! retail! micro-finance! subscription! loyalty! open-source! nonprofit (donation)! solution shops! 16!
- 17. © Norm Tasevski & Karim Harji Some Definitions • “A business model describes the rationale of how an organization creates, delivers and captures value – economic, social, or other forms of value” Wikipedia • “A description of the means and methods a firm employs to earn the revenue projected in its plans. It views the business as a system and answers the question, “How are we going to make money to survive and grow?” BusinessDictionary.com • “A business model describes the specific way the business expects to make money. While a business plan is on paper (lots of paper!) a business model should be small enough to stay in the heads of the owner and staff. If a business model is on paper, it should be one page, and it would be more clearly shown as a diagram than as words.” AudienceDialogue.net 17
- 18. © Norm Tasevski & Karim Harji 18
- 19. © Norm Tasevski & Karim Harji Customer Segments What you need to care about is… – Customer “Pain” – Difference between a “customer” and a “client” 19
- 20. © Norm Tasevski & Karim Harji Empathy Mapping
- 21. © Norm Tasevski & Karim Harji Who are Grameen Bank’s customers? What does their Empathy map look like? 21
- 22. © Norm Tasevski & Karim Harji Value Proposition (the “Offer”) What you need to care about is… – The “value” you are creating for customers (in terms of products/services), and the “pain” you are alleviating – An exchange of value 22
- 23. © Norm Tasevski & Karim Harji Quick… What is the last thing you bought? 23
- 24. © Norm Tasevski & Karim Harji Customer Utility 24
- 25. © Norm Tasevski & Karim Harji What is Grameen Bank’s value proposition? 25
- 26. © Norm Tasevski & Karim Harji Channels What you need to care about is… – How the customer receives the offer/value prop – The physical “movement” of the offer into the hands of the customer 26
- 27. © Norm Tasevski & Karim Harji How does Grameen Bank “touch” its customers? 27
- 28. © Norm Tasevski & Karim Harji Relationships What you need to care about is… – Personal and impersonal interaction with the customer – The “movement” of information (e.g. marketing, communication) 28
- 29. © Norm Tasevski & Karim Harji What relationships has Grameen Bank made with its customers? 29
- 30. © Norm Tasevski & Karim Harji Revenue Streams What you need to care about is… – Cash!!! (specifically, how cash flows into the enterprise) – “Money In” – Pricing models 30
- 31. © Norm Tasevski & Karim Harji How does Grameen Bank bring in cash? 31
- 32. Break 32
- 33. © Norm Tasevski & Karim Harji Key Resources What you need to care about is… – Assets… – …and how these assets create value – Includes human, physical, intellectual, and financial resources 33
- 34. © Norm Tasevski & Karim Harji What are Grameen Bank’s key assets? 34
- 35. © Norm Tasevski & Karim Harji Key Activities What you need to care about is… – Actions (specifically, the actions you plan to take to generate value) – Both “direct” and “indirect” 35
- 36. © Norm Tasevski & Karim Harji What are Grameen Bank’s key activities? 36
- 37. © Norm Tasevski & Karim Harji Key Partners What you need to care about is… – People/organizations that are integral to enabling you to do business – How you partner, and what you partner on 37
- 38. What makes a good partnership? 38
- 39. © Norm Tasevski & Karim Harji A Common Commitment Vision! to Invest in the Partnership! Same Core Values! Discreet Missions! 39
- 40. © Norm Tasevski & Karim Harji Who does Grameen Bank partner with? 40
- 41. © Norm Tasevski & Karim Harji Cost Structure What you need to care about is… – Fixed costs, variable costs, economies of scale…“money out” – At this stage, focus on your cost assumptions! (don’t worry about actual $$) 41
- 42. © Norm Tasevski & Karim Harji What does Grameen Bank’s cost structure look like (in simple terms)? 42
- 43. © Norm Tasevski & Karim Harji 43
- 45. © Norm Tasevski & Karim Harji Lending and Personal collecting $$ s $$ Microloan Government BOP rs Entrepreneu Branches -Branches -Brand -Capital -People Interest rates ts -Capital Cos 45
- 46. © Norm Tasevski & Karim Harji Tip… • Be a Business Model “Alchemist” – You need to go through the business model process many times in order to figure out which model best fits 46
- 47. © Norm Tasevski & Karim Harji “Sticky Ideation”… What we know! What we Don’t Know! Bridging the Gap! ! (turning what we don’t know into what we know)! 47
- 48. © Norm Tasevski & Karim Harji What did we learn? 48
- 49. © Norm Tasevski & Karim Harji Next Week • Deliverable: The “revenue” side of your business model (and your motivations, mission, vision and values) • Readings 49