StartUp Accelerator 2014: Key elements of a Business Model by Raman Roy_21st February 2014

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Key Elements of Business Models

Different Scenarios and Successes

Some Thoughts based on

Global Learning and Industry

Experience

Raman Roy

Chairman & MD

New Delhi

21st February 2014

https://www.tie.org/

www.Quatrro.com 2 Quatrro Confidential



Facebook buys WhatsApp for

$19 billion

5 years ago he sat down and created a Business Model and wrote a business plan…..and then executed


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Lets begin with the basics…

What is a Business Model ?

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All the planned activities form the

“Core Building Block”

of a Business Model

and need to be co-related for achieving

the desired business outcome

Business Model –

Set of planned activities designed

to result in a profit in a marketplace

Business Plan –

Document that describes a firm’s

business model

A Business Model is the cornerstone of any business and gives an overview of the business to both the

potential investors and customers alike !


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Understanding the key aspects of

Business Models


“Inherent Aspects”

“Facilitating Aspects”

The adoption of “Facilitating aspects” seem to have emerged as the critical success factor for the 21st century businesses!

Key Aspects of Business Models “Inherent Aspects” and the “Facilitating Aspects”

These aspects have

remained unchanged over

the years irrespective of

the type of business –

B2B or B2C

These aspects have gained into

prominence over the last decade

due to widespread adoption of

technology



“Understanding the Inherent Aspects”:

Key Elements of a Business Model

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2

3

4

5

6

7

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V A L U E P R O P O S I T I O N

R E V E N U E M O D E L

M A R K E T O P P O R T U N I T Y

C O M P E T I T I V E E N V I R O N M E N T

M A R K E T S T R A T E G Y

O R G A N I Z A T I O N A L D E V E L O P M E N T

M A N A G E M E N T T E A M

C O M P E T I T I V E A D V A N T A G E


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Essential Elements of a Business Model:

Value Proposition


The Business Model should answer:

“Why should the customer

buy from you?”

Some of the successful e- commerce value

propositions can be the following:

Personalization / customization

Reduction of product search, price discovery costs

Facilitation of transactions by managing product delivery

1

Value Proposition


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Christensen’s model of Disruptive innovation

Innovation

8

Product 1

Product 2

Product 3

Product 4

Performance

Time

NON CONSUMERS

CURRENT CONSUMERS

• What are we going to sell?

• Who are we gong to sell to?

• How are we going to sell - approach to Market ?

New Market

Disruptive

Innovation

Sustaining Strategy

– bring better

product into an

established market

Low End – Disruptive

Innovation

- Address overserved

customers with a lower cost

business modelMinimum expectation level

• Differentiating Factors

• SME segment

• Platform based decisions

• Leveraged buying acquisitions

• Building BPO around core competencies

• Direct to Customers (TSG)

• Differentiating Factors

• SME segment

• Platform based decisions

• Leveraged buying acquisitions

• Building BPO around core competencies

• Direct to Customers (TSG)

Const

rain

ts-

Wea

lth

Skills

Technolo

gy

Acc

ess

Time

•

• Differentiators -

• SME segment

• Platform based Services

• Leveraged acquisitions

Off Shore

BPO

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“Improvement”, “Innovation”

& “Disruptive Innovation” are all Opportunities


While Improvement & Innovation do not result in a paradigm shift in the

existing business order, disruptive innovation does manage to do that

• Improvement refers to doing

the same thing better

• There are a number of

techniques which businesses

achieve this such as Six

Sigma and Lean

Technologies

Improvement

Source: Wikipedia

• Innovation is the creation of

better or more effective

products, processes,

services, technologies, or

ideas that are readily

available to markets,

governments, and society

Innovation

Source: Wikipedia

• A Disruptive Innovation is

an innovation that helps

create a new market and

value network

• This is done by improving a

product or service in ways

that the market does not

expect, typically first by

designing for a different set of

consumers in the new market

and later by lowering prices

in the existing market.

Disruptive Innovation

Source: Wikipedia


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Value Proposition Revenue Model



“Why should the customer

buy from you?”

Some of the successful e- commerce value

propositions can be the following:

Personalization / customization

Reduction of product search, price discovery costs

Facilitation of transactions by managing product delivery

1 2


“How will the firm earn

revenue, generate profits, and

produce a superior return on

invested capital?”

Major types of Revenue Models:

Advertising revenue model

Subscription revenue model

Transaction fee revenue model

Sales revenue model

Affiliate revenue model

Value Proposition

Revenue Model


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An Overview of Different Revenue Models


Advertising Revenue Model Subscription Revenue Model Transaction Revenue Model

Company charges fees from

advertisers in exchange for

advertisements

Company charges fees from

subscribers in exchange for

access to content or services

Company receives a fee for

enabling or executing a

transaction

Sales Revenue Model Affiliate Revenue Model

Company derives revenue by

selling goods, information, or

services to customers

Company steers business to an

“affiliate” and receives a referral

fee or percentage of the revenue

from any resulting sales

Example

Example

Example

Example

Example


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Existing B2C Business Models



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Existing B2B Business Models





Market Opportunity Competitive Environment


“What marketspace do you intend to

serve and what is its size?”

Marketspace: Area of actual or potential commercial

value in which company intends to operate

Realistic market opportunity: Defined by revenue

potential in each market niche in which company

hopes to compete

3


“Who else occupies your intended

marketspace?”

Other companies selling similar products in the same

marketspace

Includes both direct and indirect competitors

Competitive Environment is influenced by: Number and size of active competitors

Each competitor’s market share

Competitors’ profitability

Competitors’ pricing

4

Market Opportunity

Competitive Environment




Competitive Advantage Market Strategy 5 6

Competitive Advantage

Market Strategy


“What special advantages does your

firm bring to the marketspace?”

Important points to consider:

Is your product superior to or cheaper to produce

than your competitors?

Does your product enjoy First-mover advantage?

Are there complementary resources?


“How do you plan to promote your

products or services to attract

your target audience?”

Important points to consider:

Details on how a company intends to enter

market and attract customers

Best business concepts will fail if not properly

marketed to potential customers




Organizational Development Management Team 7 8

Organizational Development

Management Team


“What types of organizational

structures within the firm are

necessary to carry out the business

plan?”

Describes how firm will organize work

Typically, divided into functional departments

As company grows, hiring moves from generalists to

specialists


“What is the professional

experience / background of the

company’s leaders?”

A strong management team:

Can make the business model work

Can give credibility to outside investors

Has market-specific knowledge

Has experience in implementing

business plans



While the

“Inherent Aspects”

of a Business Model remain as relevant for both

B2B and B2C businesses today

as they were a decade ago……

….however the widespread adoption of technology /

cloud has ensured that the

“Facilitating Aspects”

have emerged as key determinants to success for

global businesses in the

21st century !



Key Facilitating Aspects that need to be built

into the 21st Century Business Models…

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2

3

4

F U N C T I O N A L I T Y

C O N V E N I E N C E

I N N O V A T I V E N E S S

O P T I M A L P R I C E P O I N T S

Emerging Entrepreneurs in both the B2C and B2B space will need to ensure that the “Facilitating Aspects” are built into their new

revenue and profit models for them to remain relevant !


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Off late, Social Media has taken the lead in Cloud

Adoption in the B2C businesses globally

Functionality

Innovativeness

Convenience

Optimal Price Points

“Usability” has played a critical role in the adoption of Cloud Technology

across businesses as most of their content is hosted over the cloud !

1 2

3 4

Knowingly or unknowingly we all are using “Cloud” not because of its architecture benefits but on the account of innovative applications that

are residing on Cloud




In the B2B Context, Functionality and Innovativeness

are driving Cloud Adoption

However, Latin America and Asia Pacific are leading the way for Cloud Adoption

owing to growing number of Large and SMB businesses rating Speed and

Agility as the most important factors for Cloud Adoption.

Leading Applications provided by global

B2B Cloud Service Providers

US based Cloud

Service Providers

have taken the lead in

providing Cloud

Solutions to leading

businesses across the

world.

In Essences, both in B2B & B2C the functionality and innovativeness of apps that reside on the “Cloud Architecture” are driving cloud adoption

rather than the Cloud Architecture itself


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Cloud Providers penetration in India is lagging on

account of absence of Innovative Apps


The need of the hour is incubation of more and more innovative apps hat cater to “Indian Business Needs” that will leverage Cloud Infrastructure

and bring economies of Scale

Even though Social & Professional Networking Sites such as Facebook and LinkedIn

have maximum

number of users based out of India still it doesn’t result in significant service

penetration to Indian Businesses


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Initial signs are encouraging in the Indian B2B

space but there is a long way to go…


While we still have a long way to go to rival the ranks of Facebook and

Twitter(B2C market) in India, there are early signs of apps that

leverage Cloud Architecture

We need to incubate “Game Changing” Service Apps in B2B that will rewrite Cloud adoption and bring Affordable Technology to Indian

Business


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My Journey as an Entrepreneur… The role played by the “Inherent” and “Facilitating Aspects”


Pioneered real time

processing and voice

Established India’s largest

multi process captive unit

Pioneered 3rd Party

operations

Multi faceted services

Acquired by Wipro

Quatrro provides cost

effective and innovative

solutions through a

combination of tools,

platforms and business

processes

(1992-1996)

(1996-2000)

(2000-2005)

(2006 and beyond)

Created four winning businesses

Indian BPO industry

was in its nascent

stage (only sign of

BPO in India was data

entry)

Formerly GECIS

India established as

the premier global

offshoring destination

for call center and

BPO

S P E C T R A M I N D

Started and led

Spectramind into

India’s largest third

party BPO company

Targeting uncontested

service spaces and

pioneering new

service lines Pioneered off-shoring

to India

Established India’s first

captive unit for

Finance/Accounting

Pioneering Business Processing Services

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Key attributes that helped me during my

Entrepreneurial journey

Specialization Offshoring Offshoring 3rd Party

Outsourcing

Platform based

Right-shoring (Mid

Market)

Ideas Bank Shared Services Shared Services B2LB Services B2SMB

B2C Services

Capital Corporate Capital Corporate Capital Private Equity Own Capital

(Majority)

Team Almost same management team

Innovative

Business Models Price per seat Price per FTE Price per minute

Platform as a

Service

Technology Corporate

Technology

Corporate

Technology Client Technology

Internally

Developed + 3rd

Party Technology

Formerly GECIS S P E C T R A M I N D



Raman Roy Chairman & Managing Director

Email: [email protected] | Website: www.quatrro.com

Thank You !

Happy to Answer Questions


mailto:[email protected]

http://www.quatrro.com/

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They have ceased to be disruptive now but

improvements and innovations Continue!!

All of us use the following….

These innovations were disruptive at the time they came

into existence during the last century

Aeroplanes World Wide Web

(WWW) Automobiles Mobile Telephony

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Confidential

Lets think about the time when the

products were introduced.


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StartUp Accelerator 2014: Key elements of a Business Model by Raman Roy_21st February 2014