Witmeur - how to design my business model

www.solvayentrepreneurs.be

HOW TO DESIGN MY BUSINESS MODEL?

SESSION 4 (out of 10)

BUSINESS MODEL GENERATION

This session is part of a 10-weeks course given to master students of the SOLVAY BRUSSELS SCHOOL OF ECONOMICS AND MANAGEMENT by professor Olivier WITMEUR.

Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR 2

•  How to capture value?

•  How to generate value?

QUESTIONS AGENDA RESOURCES •  Back to the previous session

•  Introduction to Business Model Generation + Exercises

•  Your road to the final assignment (intro)

•  The business model canvas

Desired Outcomes of the Session

Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR

BACK TO THE DESIGN THINKING SESSION

#1


Previous session was about Problem-Solution fit

How do people feel?

What are their problems/needs (pains and gains)

Features of the solution

Design of the product or service

DESIGN CHALLENGE

EMPATHY MAP

BRAINSTORMING

PROTOTYPING & TESTS


Another view on the design thinking process

5

* Adapted from Tim Brown


An alternative to empathy map: AEIOU Framework Activities

–  What are people doing?

Environment

–  How are people using the environment

–  What is the role of the environment

Interactions

–  Do you see any routines?

–  Do you observe special interactions between people? Between people & objects?

Objects

–  What’s there and being used or not used?

–  Describe engagement with objects

Users

–  Who are the users? What are their roles?

–  Look for extreme users

6

Source: Doblin, Inc. by Rick Robinson and Stef Norvaisis


BUSINESS MODEL GENERATION

#2


One bestseller…

8


Definition

A business model is a conceptual tool that contains a set of elements and their relationships and allows

expressing a company's logic of earning money.

It is a description of

–  the value a company offers

–  to one or several segments of customers and

–  the architecture of the firm and its network of partners for creating, marketing and delivering this

value and relationship capital,

–  in order to generate profitable and sustainable revenue streams.

9


4 MAIN QUESTIONS


4 Main questions = 4 Areas of the framework

11

How?

How much?

Who? What?

The bundle of products & services that create value

The different groups of people or organizations an enterprise aims to reach and serve, + the

tactic to reach them & to develop relationships with them

The configuration of resources, competences,

activities and partnerships to create & deliver the value

The cash a company generates from each Customer Segment

All costs incurred to operate a business model


9 BUILDING BLOCKS


Customer segments

13


Defining a Segment, often a Niche

Type of segments

•  Mass Market

•  Niche Market

•  Segmented

•  Diversified

•  Multi-sided platform

•  …

14


Value Proposition

15


Value Proposition

VP creates value for a Customer Segment through a distinct mix of elements catering to that segment’s

needs. Values may be quantitative or qualitative

Examples:

–  Newness ... ?

–  Performance … ?

–  Customization … ?

–  Design, Brand / Status … ?

–  Price, Cost Reduction …

–  Risk Reduction … ?

–  Accessibility, Convenience, stability … ?

16


Typical Value Propositions / Positionning

17

* Treacy & Wiesema (1994) The Discipline of Market leaders


Channels

18


Channels

•  Own vs Partners

•  Direct vs Indirect

Examples

–  Sales team

–  Point of Sales, Shops…

–  Two-tier retail

–  Integrators, VAR’s (Value Added Resselers)

–  Websites: dedicated or extisting market places

–  OEM (Original Equipment Manufacturers)

–  Franchise

19


Customers Relationship

20


Customers Relationship

•  Personal assistance; human interaction, real customer representative, on- site at the point of sale, call

centers, e-mail, …

•  Dedicated personal assistance: dedicating a customer representative specifically to an individual client.

•  Self-service: no direct relationship with customers. It provides all the necessary means for customers to

help themselves.

•  Automated services: customer self-service with automated processes.

•  Communities: Increasingly, companies are utilizing user communities to become more involved with

customers/prospects and to facilitate connections between community members.

•  Co-creation: More companies are going beyond the traditional customer-vendor relationship to co-

create value with customers.

21


Get, Keep, Grow framework

22

Channels + Customer Relations

=

Get-Keep-Grow

(see sessions on start and growth strategies)


Revenues Mix

23


Mixing Revenues

•  Product sales

•  Usage fees (e.g. Saas)

•  Service fees

•  Long term subscription / Renting

•  Flat vs variable prices

24


Key Activities

25


Linking Value Proposition and Core Activities

26

* Treacy & Wiesema (1994) The Discipline of Market leaders


Key Resources

27


VRIN Resources

Valuable (value generating)

Rare

Inimitable (isolating mechanism)

Non substituable (no subtitutes)

Example

–  Know How, Patent…

–  Brand

–  Location

–  Agreement

28


Key Partners

29


Typical partners

Specialized suppliers

Technology / IP owner

Franchiser

Financial partners

Key people

…

(can be a customer, a channel …)

30


Cost structure

31


Cost Dynamics

Opex vs Capex

Fix vs Variable costs

Direct vs Indirect Costs

Economy of scale?

32


9 blocks to represent a business model

33

* A. Osterwalder & Y. Pigneur, 2010


‘The’ official Business Model Generation Canvas

34


Back to the strategy course!

35

Value Chain theory Blue Ocean Strategy

Strategic and marketing

segmentation

Resources-based view

Strategic Alliances Sourcing


Typical (difficult) questions

Transactional vs Recurring revenues

Product vs Service

Niche vs Mass market

Capex vs Partnerships

Pick the right customer segment

Open vs Closed

Personal vs Automated

Physical vs Virtual

Direct vs Indirect sales

Fixed vs Variable costs

Tailor-made vs Mass production

…

36


Different ways to start new venture

37

Starting from one idea … but looking for a problem to solve

Starting from the customer You know his/her problem

Starting from a unique resource IP, Know-how, location…

Knowing of to optimize P&L


DESIGN your business Model Generate multiple options and test scenario.

38


Make it also as creative as possible.

•  Use brainstorming method

•  What if …

–  No internet

–  Only mobile

–  No frontiers

–  …

•  Post it are very flexible

•  Drawing > Writing

•  Diverge – Converge logic

39


Example: Apple iPod/iTunes Business Model Nespresso Business Model

40


Additional comments

There are multiple other templates for designing business models / strategy.

The BMG tool has limitations, incl.

–  Block definition is debatable.

•  You sometimes have to merge or spilt some of them à Feel free to adapt

–  Nothing about the environment

–  Very little about the organization of the company

–  Static tool? Use colors to explain development stages

41


YOUR ROAD TO THE NEXT ASSIGNMENT

#2

42


The main steps towards your final project.

43

VALUE PROPOSITION

BUSINESS MODEL ROADMAP

Key activities, resources & partners Revenues model & costs structure

Problem-Solution fit Product-Market fit Market sizing Competition

Stages & milestones Get-Keep-Grow Risks & scenario

FINANCE

P&L, cash and balance sheet Financing

CREATE

TEST LEARN

YOU


NEVER STOP WONDERING

& ASKING!


A real passion for entrepreneurship education and entrepreneurs.

•  Student entrepreneurs: 2x

•  Full time entrepreneur: once, in a team of 5

•  Coach: 500+ projects over the last 20 years

•  (Advisory) Board member in multiple new ventures

•  Policy making: 2x

•  Director of Solvay Entrepreneurs

•  PhD in entrepreneurship in 2008

•  … never as an investor

My wife (as Colombo), no kids, one dog (Vicky).

45

Olivier Witmeur (Belgian, 46)


Solvay entrepreneurs is the entrepreneurship center of the Université Libre de Bruxelles. We support entrepreneurs through the development of their venture, from an idea to a successful and sustainable business.

46

Solvay Entrepreneurs


Let’s keep in touch!

47 2014%©%Olivier%Witmeur

FOLLOW US ON

LinkedIn.com/company/Solvay-Entrepreneurs

inFacebook.com/

SolvayEntrepreneurs

fTwitter.com/ SolvayStart

t

SolvayEntrepreneurs.be

wwwYouTube.com/user/

SolvayEntrepreneursFoursquare.com/

SolvayStart