Innovation & Business Model & Business Model Canvas 2014
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Innovation & Business Model & Business Model Canvas 2014
- 1. Business Models & Business Model Canvas Serdar Temiz, temiz@kth.se ME2603 Entrepreneurship 6.0 credits 2014 Serdar Temiz & Terrence Brown KTH Stockholm 2014 Terrence Brown terrence@kth.se
- 2. Some Questions • What is Invention • What is Innovation Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 3. There are many inventions, but far fewer innovations. An invention is a novel idea Innovation is the commercialization of that novel idea Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 4. Types of Innovation 1. Technology innovation 2. Process innovation 3. Product & service innovation 4. Business Model innovation Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 5. Process innovation Implementati on of a new or significantly improved production or delivery method Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 6. Technology innovation Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 7. Product / service innovation Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 8. Business Model Innovation It can be, even more, important than tech innovation! Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 9. Business Model Innovation Finding and executing the right business model can be the only/ main reason of the success Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 10. What is this? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 11. What is this? Serdar Temiz & Terrence Brown KTH Stockholm 2014 Haloid Model 914Xerox Model 914
- 12. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 13. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 14. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 15. Why business models matter? Joan Magretta • Who is the customer and what does the customer value? • How do we make money from the business? • How can we deliver value to the customer at an appropriate cost? • Writing a new story • A better way than existing alternatives • Making the number add up • Tweaking on the fly based on feedback Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 16. Business Model Warfare Langdon Morris • Business mortality is high • Technology innovation by itself has rarely been sufficient to ensure the future. • Similar products and services • Advantages resulting from a successful business models are fleeting. Models need to be continuously reviewed and updated when necessary Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 17. How Business Models Emerge (1 of 3) – The value chain is the string of activities that moves a product from the raw material stage, through manufacturing and distribution, and ultimately to the end user. Primary activities are directly concerned with the creation or delivery of a product or service. Support activities help to improve the effectiveness or efficiency of primary activities Raw Material Value Chain Primary & Secondary Activities + Margin Product / Service Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 18. How Business Models Emerge (2 of 3) The Value Chain (again) "Competitive Advan tage: Creating andSustaining superior Performance" (1985). Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 19. How Business Models Emerge (3 of 3) The Value Chain (continued) – Entrepreneurs look at the value chain of a product or a service to pinpoint where the value chain can be made more effective or to spot where additional “value” can be added. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 20. A business Model is.. The business model is a strategic plan to be implemented through organizational structures, processes, and systems in order to need customer needs. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 21. Simple Business Model Value Proposition Revenue Model Production Model Delivery Model Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 22. Simple Business ModelValueProposition 10 RevenueModel 10 ProductionModel 10 DeliveryModel 10 Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 23. Forces affecting the business model • Customer needs • Competition • Technological change • Social change • Legal environment Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 24. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 25. Source: PwC, The future of mobility, October 2013 Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 26. Basic Business Model Map Product/Service Ecosytem Customer EcoSystem Finance Value Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 27. There are different type of Business Model Maps Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 28. Serdar Temiz & Terrence Brown KTH Stockholm 2014By Alexander Osterwalder & Yves Pigneur
- 29. The 9 building blocks for Business Model Canvas 1. Customer Segments 2. Value proposition 3. Channels 4. Customer Relationships 5. Revenue Streams 6. Key Resource 7. Key Activities 8. Key Partnerships 9. Cost Structure Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 30. 1. Customer Segment • For whom are we creating value? • Who are our most important customers? • Customer Segments – Mass Market – Niche market – Segmented - related customer segments: frequent flier program, bank customers with big assets – Diversified: Unrelated customer segments: Amazon – Multi sided: free newspaper-readers and advertisers Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 31. Find a Customer-I • Why? • Who is your customer? Grave, School, hospital, apotek, free newspaper • Can everyone be your customer? • "people who want to buy a flat," • "anyone needs job" • “Everyone who goes to university” Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 32. Find a Customer-II • Find a customer for solving a pain • Use the Customer Profile • Describe who is making purchasing decision? IT ? Operations Group? Management? • Make sure they are happy • Market is important but -do not only think market • Billion dollar market does not start in few minutes Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 33. Q’s for Customer IDENTIFIABLE – what distinguishes them? MEASURABLE – how many belong to your target segment? REACHABLE – how to reach, communicate with each segment WILLING– do they want it? ABLE– they want but can they afford it? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 34. Q’s for Customer - Macro Level • Population size • Population character • Disposable income levels • Educational background • Primary languages • Infrastructure • Regulations • Political affiliation • And so on… Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 35. Keep In Mind -Paradox • Customer is important but you can not give all they want • Learn to stay No, • Learn to focus • Learn to ”change and adopt” • They may not know what they want: buying process is mysterious Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 36. 2.Value Proposition • a bundle that meets that meets a customer's needs or solve his/her problem. • benefits can be tangible and intangible • Reason why customers pick one business or another. • can be – innovative, new disruptive offer – similar to existing offers but just added feature or attribute in some sort of way Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 37. Some Elements that may add to value • newness • customization • getting job done • support • price • design • status/ brand • Accessibility • risk deduction • usability Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 38. 2. Value Proposition - Q’s to answer – • What pain do we solve for customer? • What do we deliver for customer? • What value do we develop for customer • Which need of customer do we satisfy? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 39. 3. Channels • Awareness of products and services, Evaluation of value proposition, Purchase, Delivery, After sales • Direct: Brick and mortal stores, websales, sales force • Indirect: wholesales partner stores, Value Proposition Customer Segment Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 40. 3. Channels- Qs • Through which Channels do our Customer Segments want to be reached? • How are we reaching them now? • How are our Channels integrated? • Which ones work best? • Which ones are most cost-efficient? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 41. 4. Customer Relations • Customer acquisition • Customer retention • Boosting sales (upselling) Value Proposition Customer Segment Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 42. Example Customer Services Can you give some example companies? • (Dedicated)Personal assistance • Self Service • Community • Co-creation • Automated Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 43. 4. Customer Relationships • What type of relationship does each of our Customer Segments expect us to establish and maintain with them? • Which ones have we established? • How costly are they? • How are they integrated with the rest of our business model? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 44. 5. Revenue Streams • For what value are our customers really willing to pay? • One time/ recurring? • For what do they currently pay? • How are they currently paying? • How would they prefer to pay? • How much does each Revenue Stream contribute to overall revenues? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 45. 5.Revenue Streams •ChannelsValue Proposition Customer Segment • Asset sale • Usage fee: use more, pay more • Subscription: monthly, yearly • Leasing/Lending/Renting • Licensing: patents, license fee • Brokerage fees • Advertising Fixed pricing Dynamic pricing Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 46. 5.Revenue Streams Fixed pricingDynamic pricing • List price • Product feature dependent • Customer segment dependent • Volume dependent • Yield management : hotels, airlines • Real-time-market :supply and demand • Auctions Price • Negotiation Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 47. 6. Key Resources Value Proposit ion physical financial intellectual human Key resources can be owned or leased by the company or acquired from key partners. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 48. 6. Key Resources • What Key Resources do our Value Propositions require? • Our Distribution Channels? • Customer Relationships? • Revenue Streams? • What physical resources, intellectual, human, financial resources do we have? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 49. 7. Key Activities • What Key Activities do our Value Propositions require? • Our Distribution Channels? • Customer Relationships? • Revenue streams? • Production- Microsoft • Network/Platform: Facebook, ebay, Visa Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 50. 8. Key Partnerships Why Partnership? – reduce cost, – Reduction of risk and uncertainty: Web standards – Acquisition of particular resources and activities: Nokia Windows, HTC phones • Strategic alliances between non-competitors • Coopetition: strategic partnerships between competitors • Joint ventures to develop new businesses • Buyer-supplier relationships to assure reliable supplies Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 51. 8. Key Partnerships -II • Who are our Key Partners? • Who are our Key suppliers? • Which Key Resources are we acquiring from partners? • Which Key Activities do partners perform? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 52. 9. Cost Structure-I • Business model Cost Structures: cost-driven minimizing costs wherever possible value-driven Premium Value Propositions and a high degree of personalized service Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 53. 9. Cost Structure-II • Cost Structure Characteristics: • minimizing costs wherever possibleFixed costs • Premium Value Propositions and a high degree of personalized serviceVariable costs • average cost per unit to fall as output risesThe same Distribution Economies of scale • Channels for different products and servicesmay support multiple products. Economy of Scope Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 54. 9. Cost Structure • What are the most important costs inherent in our business model? • Which Key Resources are most expensive? • Which Key Activities are most expensive? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 55. Serdar Temiz & Terrence Brown KTH Stockholm 2014By Alexander Osterwalder & Yves Pigneur
- 56. Team, Social Value, Enviromental cost etc. Problems with this canvas? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 57. Serdar Temiz & Terrence Brown KTH Stockholm 2014By Alexander Osterwalder & Yves Pigneur
- 58. Serdar Temiz & Terrence Brown KTH Stockholm 2014By Alexander Osterwalder & Yves Pigneur
- 59. • Strategic Mission? • Customer Segments are Hypotesis for startups • Fits to New and Existing Business but does it work in Start ups? • Metrics? • Competition? Organisational Structure? • Unfair Advantage over competitors? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 60. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 61. Mark Johnson Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 62. Spotify Business Model Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 63. Business Model Canvas – Spotify- September 2014 Key Partners Key Activities Value Propositions • . Customer Relationships Customer Segments Key Resources Channels Cost Structure Revenue Streams Serdar Temiz Stockholm-Sweden Listeners• Legal music for free or minimum payment • Be social when you listen • Music based on mood • Automated service • self service (FAQ) • Community forum • Customer Service • Awareness at social media • Mobile application • Desktop application • Spotify.com Advertisers • self service : on learning how ads are located in the spotify etc. • personal assistance: to put ad, advertisers should get in touch directly • Targeted advertisement- • commercials between songs: make listeners sure to listen • Keep technology up and running • Adding more music, label, artists to Spotify offering • Launching Spotify in different countries • Music, • Server, • Brand • Employees • Labels, • aggregators (e.g merlin network ) • Facebook • License fee • Salaries • Technology cost Serdar Temiz & Terrence Brown KTH Stockholm 2014 • Awareness with social media partners (fb, msn) • Customer center representative Advertisement revenue Subscription of unlimited and premium customers
- 64. Are we done? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 65. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 66. Business Model Canvas – Spotify- September 2014 Key Partners Key Activities Value Propositions • . Customer Relationships Customer Segments Key Resources Channels Cost Structure Revenue Streams Serdar Temiz Stockholm-Sweden Listeners• Legal music for free or minimum payment • Be social when you listen • Music based on mood • Automated service • self service (FAQ) • Community forum • Customer Service • Awareness at social media • Mobile application • Desktop application • Spotify.com Advertisers • self service : on learning how ads are located in the spotify etc. • personal assistance: to put ad, advertisers should get in touch directly • Targeted advertisement- • commercials between songs: make listeners sure to listen • Keep technology up and running • Adding more music, label, artists to Spotify offering • Launching Spotify in different countries • Music, • Server, • Brand • Employees • Labels, • aggregators (e.g merlin network ) • Facebook • License fee • Salaries • Technology cost Serdar Temiz & Terrence Brown KTH Stockholm 2014 • Awareness with social media partners (fb, msn) • Customer center representative Advertisement revenue Subscription of unlimited and premium customers Can add music to their code • developer.spotify.com/ • physical meetups ????++?
- 67. Facebook’s Canvas? Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 68. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 69. iTune’s Canvas Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 70. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 71. Twitter’s Canvass Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 72. Serdar Temiz & Terrence Brown KTH Stockholm 2014
- 73. Thank you! Serdar Temiz @serdar_temiz temiz@kth.se Terrence Brown @terrence_brown terrence@kth.se Serdar Temiz & Terrence Brown KTH Stockholm 2014
Editor's Notes
- The Model 914 used the relatively new electrophotography process, which is a dry process that avoids the use of wet chemicals. In seeking potential marketing partners, Haloid repeatedly was turned down by the likes of Kodak, GE, and IBM, who had concluded that there was no future in the technology as seen through the lens of the then-prevalent business model. While the technology was superior to earlier copy methods, the cost of the machine was six to seven times more expensive than alternative technologies. The model of selling the equipment below cost and making up the difference by large margins in the sale of supplies was not viable because the cost of the supplies was about the same as that of the alternatives, so there was little room to maneuver. Xerox then decided to market the new product itself and developed a new business model to do so. The new model leased the equipment to the customer at a relatively low cost and then charged a per copy fee for copies in excess of 2000 copies per month. At that time, the average business copier produced an average of only 15-20 copies per day. For this model to be profitable to Xerox, the use of copies would have to increase substantially. Fortunately for Xerox, the quality and convenience of the new copy technology proved itself and companies began to make thousands of copies per day. As a result, Xerox sustained a compound annual growth rate of 41% over a 12 year period. Without this business model, Xerox might not have been successful in commercializing the innovation.
- This type of analysis may focus on (1) a single primary activity of the value chain (such as marketing and sales), (2) the interface between one stage of the value chain and another (such as the interface between operations and outgoing logistics), or (3) one of the support activities (such as human resource management).
- A niche market is a focused, targetable portion of a market. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. You can think of a niche market as a narrowly defined group of potential customers. In other words, a very specific market segment within a broader segment. A niche market involves specialist goods or services with relatively few or no competitors.
- Why Swedish start ups are global? Number of Old people increasing.. Which language do you provide service, Customer support language No infrastructure for banking, telecom,